| NEW YORK, March 31
NEW YORK, March 31 Brazilian petrochemical
company Braskem SA must face the main part of a
shareholder lawsuit over its role in a massive bribery scandal
that engulfed Brazil's state-owned oil company Petrobras SA
, a U.S. judge has ruled.
In a decision made public on Friday, U.S. District Judge
Paul Engelmayer in Manhattan said holders of Braskem's American
depositary receipts may pursue claims that the company and
former Chief Executive Carlos Fadigas defrauded them by
concealing how bribery enabled the company to buy naphtha from
Petrobras at below-market prices.
Naphtha is a key ingredient in petrochemicals, and the
complaint said Braskem bought 70 percent of its naphtha from
Mark Gimbel, a lawyer for Braskem and Fadigas, said in an
email the company is "committed to vigorously defending itself,"
and pleased that the judge dismissed several other claims.
Braskem's ADR price fell 20.3 percent on March 11, 2015
after the company was linked to bribery. The scandal arose from
a probe called "Operation Car Wash," and led to dozens of
Last December, Braskem and Brazilian construction company
Odebrecht SA, which together with Petrobras owns Braskem, agreed
to pay at least $3.5 billion to settle bribery-related charges
brought by U.S., Brazilian and Swiss regulators.
In his 55-page decision, dated March 30, Engelmayer said
Braskem was not obligated in regulatory filings to address every
factor in its naphtha pricing.
He also said, however, the ADR investors properly alleged
that Braskem "cherry-picked for public consumption benign
factors" while concealing the "elephant in the room": The
substantial role that bribery played.
The company "was not at liberty to selectively omit what the
fairly alleges as a central determination of that
price: The corrupt arrangement Braskem had struck with the
Petrobras officials it bribed," Engelmayer wrote.
Engelmayer dismissed claims that Braskem exaggerated its
ethics and corporate controls in the filings.
He also dismissed all claims against Odebrecht because it
lacked enough ties to the United States to justify being sued
there. The judge also threw out claims against Fadigas'
predecessor, Bernardo Gradin.
Boilermaker-Blacksmith National Pension Trust in Kansas
City, Kansas is leading the lawsuit on behalf of ADR purchasers
from July 15, 2010 to March 11, 2015.
"The core of the case was the naphtha pricing statements,
and I am pleased to see that was upheld," the investors' lawyer
Steven Toll said in an interview. "The case will go forward."
Michael Carlinsky, a lawyer for Odebrecht, said he was
pleased his client was dismissed from the case.
The case is In re: Braskem SA Securities Litigation, U.S.
District Court, Southern District of New York, No. 15-05132.
(Reporting by Jonathan Stempel in New York; Editing by Steve