Former Petrobras Exec Sentenced Over Vantage Drilling Contract

Titanium Explorer. File photo credit: Marin Bustraan/MarineTraffic.com

SAO PAULO, Feb 1 (Reuters) – A Brazilian judge sentenced the former head of state-run oil company Petrobras’ international division to 12 years and two months in jail for corruption and money laundering on Monday, part of the country’s largest-ever graft investigation.

 Federal judge Sergio Moro said Jorge Zelada had unduly awarded U.S. company Vantage Drilling a 2009 contract with Petrobras for the drillship Titanium Explorer in exchange for bribes stashed in undeclared accounts in Monaco and Switzerland.

Moro also convicted former Petrobras executive Eduardo Musa and lobbyist Hamylton Padilha, though their sentences were reduced because they signed plea agreements.

Prosecutors said together Zelada and Musa took $31 million in bribes from Padilha and Hsin Chi Su, chief executive of Taiwanese shipping firm TMT, after Padilha and Su, a Vantage shareholder, met at the Four Seasons Hotel in New York to discuss the bribe.

For nearly two years the landmark investigation overseen by Moro has mostly focused on local engineering firms and executives accused of price fixing and overcharging Petrobras for work and then using the extra funds to bribe politicians.

But it has already ensnared some international companies tied to Petrobras. Prosecutors have counted 285 foreign firms that have done business with agents who are under investigation, like Padilha, though they say that does not mean as many firms are being investigated.

Zelada’s lawyer Renato de Moraes said he would appeal the decision and seek acquittal. Zelada led the international division for Petroleo Brasileiro SA, as Petrobras is formally known, from 2008 to 2012.

Moro said in his decision that Zelada’s defense had called Vantage CEO Paul Bragg as a witness, but said the request was not granted because the cooperation treaty between Brazil and the United States only requires compliance with witness requests when called by the prosecution.

Padilha testified that Bragg did not know about the bribe payment, Moro said.

Vantage said in July, when Zelada was arrested, it was fully meeting the terms of the drillship contract and had found no evidence of improper activity. If Padilha committed any illegal acts he was not representing the company, it said.

A judge in Rio also convicted Zelada earlier this month of fraud on a contract awarded to conglomerate Odebrecht SA and sentenced him to a maximum four years in jail. (Reporting by Caroline Stauffer; Editing by Alistair Bell)

(c) Copyright Thomson Reuters 2016.

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