Petrochemical giant Braskem agreed to pay $10 million to a group of investors led by the $8.2 billion Boilermaker-Blacksmith National Pension Trust, Kansas City, Kan., which filed a class action alleging that the firm concealed the company’s role in the massive corruption scandal involving Brazil’s state-owned oil company, Petrobras.
The shareholders claimed that Braskem defrauded investors by failing to disclose that bribery helped keep the price of materials low and artificially inflated the stock value. The lawsuit filed in U.S. District Court in New York alleged that Braskem executives failed to disclose at least $5 million in annual payments between 2006-2012 to Petrobras officials and others in exchange for lower prices on naphtha, a critical ingredient in Brazilian petrochemicals. The proposed settlement was filed Thursday and is awaiting judicial approval that is not yet scheduled.
“Braskem investors were sadly the victims of a shadowy bribery scheme and a scandal that has engulfed Brazil and reverberated worldwide,” said Steven J. Toll, plaintiff class lead counsel and co-chair of Cohen Milstein’s securities fraud and investor protection practice, in a statement.
The lawsuit was filed in 2015 after Braskem was implicated in the Petrobras scandal and its stock in the form of American depository receipts, which allow U.S. investors to purchase shares of foreign companies, led to heavy shareholder losses.
Last December, Braskem agreed to pay the U.S., Brazilian and Swiss governments $957 million in criminal and regulatory penalties related to the bribery scheme. Brazil’s attorney general charged former Brazilian Presidents Dilma Rousseff and Luiz Inacio Lula da Silva on Sept. 5 with racketeering for plotting to steal funds from Petrobras. The Petrobras corruption probe into what is known as “Operation Car Wash” is ongoing.