OPINION: When federal prosecutors in Curitiba, Brazil, released details of a corruption case involving contracts between Petrobras and a joint venture between Seadrill and Sapura, one company with little obvious connection to Car Wash scandal events dating back to 2011 suffered heavy collateral damage.
Golar Power’s chief executive, Eduardo Antonello, was one of those named in the investigation, and the case surfaced just as his company was staging an initial public offering for its new incarnation, Hygo Energy Transition.
Hygo’s plans include bringing LNG to regions relying on dirtier fuels, partnering fuels giant BR Distribuidora in building capacity for liquefied natural gas-powered trucking to Brazil and offering compact liquefaction technology and accessible markets for bio-gas producers.
The Car Wash announcement hit the news wires in the middle of an IPO that then had to be aborted.
Petrobras also blocked the potentially winning bid that Golar LNG had just placed for leasing a re-gasification terminal in Bahia.
In its heyday, the Car Wash probe was wildly popular in Brazil, and warnings about a lack of checks and balances were of little interest to a graft-weary public.
But much of the evidence was obtained from confessional plea bargainers who were held in custody for long periods.
From a broader business perspective, there have been too many cases where legal uncertainties have resulted in onerous or expensive outcomes, often due to injunctions granted to political opponents of Petrobras divestments.
The prize for patience goes to Karoon Gas, still trying to finalise the acquisition of the Bauna field almost five years after starting the process, although this had nothing to do with Car Wash.
The damage to individuals can be incalculable, such as the case of banker Andre Esteves, who was jailed for three weeks in 2015 and saw billions wiped off the value of the bank he led, BTG Pactual, but was acquitted of corruption charges.
Golar, whose Brazilian offices were raided on Curitiba’s orders, is likely to take a close look at reports that federal police in Brasilia decided the Seadrill-Sapura case did not offer grounds to proceed, even though politicians were named in the allegations.
It may be time for Brazil to take another look at those checks and balances.
(This is an Upstream opinion article.)