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Pemex hires independent legal firm to audit Odebrecht deals amid US DOJ Braskem case

Company says no confirmation that U.S. case ivolves Pemex. Move designed to ‘clear up the facts,' legal director says.

Petroleumworld 07 07 2017

Petroleos Mexicanos has hired an independent law firm to review company contracts with Brazilian construction company Odebrecht SA and petrochemicals affiliate Braskem SA amid a U.S. Department of Justice probe into those companies, the company's legal director said.

Pemex, Mexico's state-owned oil giant, hired the firm to carry out an internal investigation and "clear up the facts" around the company's contracts signed since the beginning of its relationship with Odebrecht and Braskem, Jorge Kim, the legal director, said in a telephone interview.

In December, Odebrecht and Braskem both pleaded guilty to conspiring to pay bribes in violation of the U.S. Foreign Corrupt Practices Act. In a statement at the time , the Justice Department said Odebrecht paid about $10.5 million to Mexico public servants between 2010 and 2014 to win contracts, and that payments of as much as $6 million were made to a senior officer of a Mexico state-owned company.

While "there is yet to be an official confirmation that Pemex is the company mentioned" in the report, a legal firm was hired to identify any possible irregularities in Odebrecht and Braskem contracts, Kim said. He declined to name the firm hired.

"One of the best international practices is to hire a third party to do an objective investigation of the matter," Kim said. "This information is going to give one of two things: it will confirm it wasn't Pemex involved or, if irregularities are found, will provide the sufficient elements to be able to contribute to these investigations and continue collaborating."

Biggest Fine

The case against Odebrecht and its affiliate yielded the biggest corruption-related fine ever levied on a company by the Department of Justice. The company agreed to pay more than $3.5 billion to settle the case after facing charges it bribed executives and officials for more than 100 projects in 12 countries.

On April 5, Pemex publicly disclosed four contracts with Odebrecht and Braskem between 2010 and 2015, and reiterated its commitment to cooperate in the investigation by the Mexican Attorney General's Office, known as PGR. The PGR has called for several current and former Pemex officials to appear as witnesses, without disclosing names.

When Odebrecht and Braskem were found in violation of the U.S. Foreign Corrupt Practices Act in December, both the SEC and Justice Department said investigations would continue, opening the possibility more companies could face fines.

If Pemex is found to be the Mexican entity implicated in the DOJ report, the company's contracts fall under U.S. jurisdiction if any of the illicit payments were coordinated via the national banking system or required communication to or from the U.S.

‘Exhaustive Analysis'

Pemex said in December it is in the process of conducting "exhaustive analysis" of contracts with both Odebrecht and Braskem.

"We are taking preventive measures with the objective of clearing up the information in a more efficient way," Kim said. In case it is found Pemex was the company implicated in the DOJ report, Pemex "will strengthen its processes to avoid future cases of a similar manner," he said.

Story by Isabella Cota and Adam Williams from Bloomberg.

07 06 2017

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