A Rotterdam District Court decision has enabled a case against Petrobras to move ahead. The court found that Stichting Petrobras Compensation Foundation (SPCF) has standing to pursue investors’ claims against the Brazilian oil company.
In October 2014, Petrobras issued a press release saying that some of its executives were being investigated for accepting bribes and laundering money. In the following months, police and prosecutors in Brazil uncovered a price-fixing and kickback scheme at the state-run company. Both Petrobras executives and Brazilian government officials were found to have accepted bribes from a cartel of construction companies. In return, they had awarded inflated contracts to companies in the cartel for energy-related construction projects.
According to the International Securities Associations & Foundations Management Company, “During the months following the company’s October 27, 2014 press release, Petrobras’ stock price dropped by roughly half, resulting in a massive depletion of the company’s market capitalization and substantial losses to Petrobras’ investors who purchased equity and debt securities around the globe.”
SPCF has been in active litigation with Petrobras since January 2017, focused largely on procedural technicalities regarding standing of the foundation in the case. Last month’s ruling by the Dutch court affirmed that SPCF represents a sufficiently large class of investors and that the collective action process in the Netherlands is an efficient vehicle by which to prosecute the claims of the eligible and damaged class of global investors.
Litigation will now focus on whether Petrobras violated applicable laws, thereby causing damage to shareholders. SPCF has until September 1, 2021, to submit its further arguments and facts regarding the merits of the case.