(COLUMBUS, Ohio)—Ohio Attorney General Mike DeWine today announced that he has filed a motion for the Ohio Public Employee Retirement System to join other pension funds in leading a class of investors in a lawsuit against a Brazilian company for violations of federal securities laws. The litigation against Petróleo Brasileiro SA (“Petrobras”), a semi-public oil and gas company run by the Brazilian government, alleges widespread bribery and corruption on which the company’s business has revolved for over a decade.
“The Ohio Attorney General’s Office has a responsibility to evaluate if companies and their executives are defrauding Ohio pensioners,” said Attorney General DeWine. “The allegations against Petrobras are so egregious we have no choice but to take action on behalf of Ohio’s public employees and retirees.”
Friday's motion comes after recent revelations that Petrobras will likely have to make substantial adjustments to financial statements, including writing down billions in assets for overpayments made above fair asset value being carried on its balance sheet. Separately, Brazilian prosecutors allege that since 2004 Petrobras has been granting projects to members of an alleged cartel of Brazilian construction companies that systematically inflated their costs by as much as 20% and then kicked back up to 3% of a contract's total value in the form of bribes to Petrobras executives and politicians in Brazil.
The complaints on file allege that Petrobras' senior executives inflated the value of the company's construction contracts for the purpose of receiving kickbacks from companies such as Odebrecht S.A. and SBM Offshore NV that were awarded the contracts illegally. Revelation of the alleged illegal activity by Petrobras resulted in losses in the company’s stock value in the billions of dollars. Ohio pension funds lost an amount greater than $50 million as a result of the alleged fraud.
The motion asks the court to consolidate several lawsuits against Petrobras and to name the Ohio Public Employee Retirement System lead plaintiffs.
“The OPERS Board of Trustees has been an active participant in securities litigation cases on behalf of our members and retirees,” said Karen Carraher, OPERS’ executive director. “This is a fiduciary responsibility that we take very seriously, and it is consistent with past actions we have taken to encourage corporate governance reform and to seek compensation for unlawful behavior. We intend to continue an aggressive posture to protect the integrity of the marketplace for all investors and citizens of Ohio.”
Joining the Ohio Public Employees Retirement System in filing for lead plaintiff status are public pension funds in the states of Idaho and Hawaii. The motion was made in the United States District Court for the Southern District of New York.
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