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Eletrobras internal probe finds signs of widespread corruption -source
October 6, 2016 / 6:01 PM / a year ago

Eletrobras internal probe finds signs of widespread corruption -source

SAO PAULO (Reuters) - An internal probe at Brazil’s Eletrobras is finding signs of corruption in as many as seven large projects at the state-led utility in addition to the two facilities where police have already made arrests in a graft probe, a source with direct knowledge of the situation told Reuters.

A view of the headquarters of Brazil's power company Eletrobras in downtown Rio de Janeiro August 20, 2014. REUTERS/Pilar Olivares

The internal investigation at Centrais Elétricas Brasileiras SA, as the company is formally known, is analyzing thousands of documents, examining emails and interviewing workers, said the source, who was not authorized to speak publicly.

Police have already made several arrests in a corruption probe at Eletrobras’ Angra 3 nuclear reactor and the Belo Monte hydroelectric power plant.

The findings of the internal investigative task force is the most recent development of a bigger crackdown on bribery in Brazil, which has lasted more than two years and ensnared some of the country’s top politicians and main political parties, including President Michel Temer’s PMDB.

Temer’s party has traditionally controlled appointments for top posts at state-controlled power companies in Brazil, including Eletrobras.

The internal probe is slated to continue even after Oct. 11, when the company has said it will submit evidence to the U.S. Securities and Exchanges Commission (SEC) regarding the costs stemming from the corruption charges, the source said.

Eletrobras declined to comment on the state of its investigations.

The Eletrobras internal probe started after people accused in Operation Car Wash - an investigation into large corruption cases at state-run oil company Petrobras - told prosecutors about bribes paid by companies building Angra 3 and Belo Monte. Both projects then became targets of Brazilian investigators. [nL2N1BR11Q]

In the wake of the revelations, Eletrobras failed to deliver the 20-F forms to SEC. Its auditor KPMG refused to sign off on the documents until more information on the financial impact of the corruption could be assessed.

Trading of Eletrobras shares has been suspended since May by the New York Stock Exchange pending delivery of the information.

“The board and the top management already realized that the investigation has to continue,” said the source. “The first phase ends now with the delivery of the 20-F forms but the probe will go on.”

The Eletrobras internal probe involves around 200 people from law firms Hogan Lovells, WFaria and Pinheiro Neto, the source said.

Risk consulting firm Kroll and auditing companies KPMG and PwC are also taking part in the work, along with an independent commission formed by Eletrobras and led by former Supreme Court Judge Ellen Gracie, the source said.

The investigative group is trying now to access information from projects where Eletrobras is a partner and does not have controlling stakes. Managers in some of these partnerships had in the past refused to deliver information to the task force.

Law firm WFaria, auditors PwC and KPMG and risk assessment firm Kroll declined to comment. Law firms Hogan Lovells and Pinheiro Neto did not immediately answer requests for comment.

Reporting by Luciano Costa; Writing by Marcelo Teixeira; Editing by Lisa Shumaker

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