Petrobras Offers Clarification On ‘Car Wash’ News

(Petrobras, 5.Oct.2018) — Petrobras reports that it received the Official Letter No. 369/2018/CVM/SEP/GEA-1, which requests the following clarification:

Official Letter No. 369/2018/CVM/SEP/GEA-1

“Mr. Director,

  1. We refer to the news published on 09/28/2018 in Veja magazine, Brazil section, under the title: “CAR WASH – ARMADILLO IN THE HOLE,” which includes the following statements:

Contrary to the opinion of technicians, Petrobras entered a confidential and unnecessary arbitration that cost it 150 million reais to Schahin’s benefit.

Along its four years of existence, Car Wash has opened a scheme of corruption of +42 billion reais that almost broke Petrobras and engulfed a good part of the Brazilian political class. But not all the suspicious transactions involving the state-owned company have gone through the magnifying glass of the operation. The one that poured 150 million reais into the coffers of the contractor Schahin is one of them. The transfer, featured as additives to a work that had been completed almost three years before by the contractor, was against the recommendation of two technical committees of the state-owned company and was never investigated by Car Wash.

The 150 million payment was made only because Petrobras agreed to participate in an arbitration process filed by Schahin, hired by the state-owned company to build a 96-kilometer pipeline in São Paulo. Petrobras’ technical area argued that the contractor’s claim was unsuitable, and the matter was a “sure win” case. Therefore, it should be dealt with in ordinary courts, without the need for arbitration, an instrument used to accelerate conflict resolution among private companies. But a sketch of the directors – led by Graça Foster, including the person in charge of the works, José Antônio de Figueiredo, Engineering Director, and Alcides Santoro, Gas and Energy Director – placed Petrobras in the arbitration, which ended up deciding for the benefit of Schahin. The multimillion transfer to the contractor began at the end of 2013 and was completed by early 2014.

  1. In this regard, we request a statement from the company on whether the news is true and, if that’s the case, explain the reasons why it understood that it is not a material fact, as well as comment on other information considered relevant on the matter.”
Clarification

Petrobras informs that its participation in the arbitration procedure mentioned in the news, as a way of solving the deadlock with Schahin, was preceded by technical analysis, as it usually occurs in other arbitration proceedings established by the company, through which legal, contractual, commercial and other aspects were evaluated.

In this sense, the company clarifies that, upon entering the arbitration, it acted according to its technical area opinion, which had pointed to the existence of good arguments to dismiss the lawsuits filed by Schahin.

Despite the arguments presented by Petrobras in the arbitration, an unfavorable decision was rendered against the company, after the review of expert evidence, by an Arbitral Court that was legally established and held recognized qualification, and Petrobras complied with the payment of the amounts determined in said decision.

It is important to clarify that, according to the laws in force, the arbitration awards have the power of an enforceable decision and can only be void in the ordinary courts according to the exhaustive cases provided by laws, which, according to the technical evaluations carried out, were not present in the said case.

Finally, in assessing the materiality of this arbitration, the company understood that it is not a material event that could be disclosed pursuant to CVM Instruction 358/02.

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