Investors prepare class action to challenge losses with Petrobras intervention
RIO DE JANEIRO, BRAZIL – Attorney André Almeida, one of the parties behind the class action lawsuit for investor losses resulting from the corruption scheme investigated by Operation Lava Jato, says he is now preparing a similar lawsuit in relation to the company’s loss of market value after intervention by President Jair Bolsonaro.
He claims that the government oversteps its duties as majority shareholder by wanting the company to implement public policies of interest to the federal government. “Petrobras is not a Brazilian government company, it is owned by private shareholders,” he says.
In the Lava Jato lawsuit, which began in 2014, Petrobras ultimately reached an agreement to pay US$2.9 billion (about R$10 billion at the time) to investors. Almeida refrains from estimating amounts for the current lawsuit, but speaks of “billions of dollars.”
The attorney argues that Bolsonaro has long complained about the state-owned company’s fuel price policy and that the change in the company’s leadership is an indication that the controlling shareholder – the federal government – is acting to the detriment of other shareholders.
After the announcement of General Joaquim Silva e Luna’s nomination to replace Roberto Castello Branco as the company’s CEO, shares plummeted in the stock markets. In two days, Petrobras’ market value plunged R$102.5 billion.
Almeida says the company has been suffering “several months of influence and pressure” to hold down fuel prices. “Now this has become clear, with President Bolsonaro’s latest statements,” he adds. “Petrobras has partners, it has a statute, it must comply with the law. It can’t be used to make public policy.”
Since Bolsonaro signaled changes in the state-owned company, he has been questioning fuel prices in Brazil. On Monday morning, he criticized the financial market’s reaction saying that “Petrobras has only one agenda: to serve the interests of a few groups in Brazil.”
And in a conversation with supporters, he even mentioned that Itaipu Binacional, which was headed by Silva e Luna, invested in two bridges and the Foz do Iguaçu (PR) airport runway, where it is headquartered. According to the president, this would be evidence of the general’s efficiency.
“I think the president is confusing things,” commented Almeida. “Ministries are the ones that conduct public policy.”
According to him, the plan is to seek partnerships with foreign offices, as in the case of the Lava Jato class action, in which he worked with Wolf Popper. They were the first to lodge a lawsuit on the issue in the New York courts.
Among the clients in that case were institutional investors, such as pension funds, dissatisfied with the loss in value of the shares they held in the state-owned company. At the time, the settlement closed by Petrobras was the fifth largest in the history of class action suits for stock losses.
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