Braskem’s name has come up in the corruption probe
surrounding Petrobras. Braskem is accused of bribing Petrobras officials to
secure construction contracts between 2006 to 2012
Bloomberg reported, Braskem SA –the biggest petrochemical company because
of revenues is the new victim of the corruption scandal that has surrounded Petroleo Brasileiro Petrobras.
The petrochemical giant got stuck in the corruption scandal after
a witness claimed that the company made under the table payments to Brazilian oil company in order
to get contracts. As per the evidence given by Paul Roberto Costa –former executive of the company and
confessions by Alberto Youssef who were involved in money laundering Braskem used to make a payment of $5 million
between the year 2006 and 2012. These bribes were given to acquire crude oil prices derivatives
like naphtha and propylene at lesser price. The evidence was made public on the
website of Brazilian Supreme Court earlier in March.
Naphtha is the main element for making petrochemicals, and
contains almost 50% of the whole production cost. Moreover, around 70% of
naphtha demand for naphtha is provided by Petrobras.
The appeal by Mr. Youssef and Mr. Costa does not allow their
lawyers to say any anything related to the bribery and corruption scandal that
happened in one of the biggest energy company of the world.
Braskem rejected the claims,
its $750 million worth of bonds carrying a 7% coupon rate with a time period of
5 years dropped by 9.6% and traded at $0.97 last week.
After the fragile performance of bonds, the petrochemical giant
informed their bond holders via Bloomberg that the company still has around $1.8
billion worth of cash available beside other facility of credit line, which is
enough to safeguard its debt commitments for nearly 2 years.
The company disclosed that its growth is linked with dollar, which
is strengthening against the home currency.
The entitlement against Braskem shows the penetration level due to the
scandal. The interrogation took place has knotted the rig makers, Brazilian
builders and officials of government. Moreover, it has also caused 1 million protestors to come out against Dilma Rousseff’s way of handling the issue.
These kinds of claims can seriously hurt the petrochemical
company’s stock price, as shareholders might prefer to sell their ownership
instead of holding it due to the ongoing investigation. In such situation,
shareholders overlook the sufficient financial position of the company.
While talking about the current development Petroleo Brasileiro Petrobras said, “All the payments and contracts
between Braskem and Petrobras followed the legal requirements and
were approved in a transparent manner in accordance with the governance rules
of both companies
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