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By Lise Alves, Senior Contributing Editor

SÃO PAULO, BRAZIL – Dow Jones has announced that Brazil’s oil giant Petrobras is no longer a part of its Dow Jones Sustainability World Index (DJSI World). The reason for the removal of the Brazilian company from the index is the widespread corruption scandal known as Operação Lava Jato (Operation Carwash).

Petrobras' Downtown Rio Headquarters, photo by Doug Gray
Petrobras’ Downtown Rio Headquarters, photo by Doug Gray.

The case has accused several former Petrobras directors, construction companies and politicians of taking million dollar bribes in exchange for contract bids. “Recent disclosure of fraud and corruption allegations at the company and its respective communication policy towards investors prompted a review of Petrobras’ standing in the DJSI World,” said the statement released by Dow Jones on March 16th.

Petrobras had been a part of the DJSI since 2006. According to the U.S. organization, the committee reviewed the situation and ultimately decided to remove the Petrobras from the DJSI World and all other associated DJSI benchmarks. The stock will be removed after the close of the markets on March 20, 2016.

Petrobras announced the decision on its website stating that it is working closely with officials in the Operação Lava Jato as well as complying with the requests made by its stakeholders, including the Dow Jones Sustainability Index Committee. According to the oil giant, the Dow Jones committee announced it will monitor the development of the investigations and the oil company’s position throughout the year, and may reconsider its participation in 2016.

The on-going investigation by Brazil’s federal police has investigated more than 232 companies, including some of the country’s largest construction and engineering firms as well as 150 executives and Petrobras directors. Some of those accused have agreed to help investigators in exchange for reduced sentences. The scandal has spilled over into the political scene, where several politicians, including current and former Congressmen and cabinet members, have also been accused of receiving bribes related to Petrobras contracts.

According to the latest estimates by Brazil’s federal police the money diverted through the kickback-for-contract scheme could have bled Petrobras out of at least US$3.1 billion.

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