Petrobras Suspends Top Compliance Officer

By Paul Kiernan Features Dow Jones Newswires

BRASÍLIA -- Brazilian state-run oil firm Petróleo Brasileiro SA suspended its top compliance official Wednesday over a potential conflict of interest, in a blow to the company's image as it seeks to move past a massive corruption scandal.

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Petrobras' board decided to temporarily suspend João Adalberto Elek Jr., director of governance and compliance, after determining that his division awarded a no-bid contract to auditing firm Deloitte while it was in the process of hiring his daughter. The one-year contract, worth 25 million Brazilian reais (about $8 million), was awarded on an urgent basis in December 2015.

Petrobras didn't immediately respond to a request for comment by Mr. Elek

The suspension of Mr. Elek comes a day after prosecutors filed charges against his boss at the time, former Chief Executive Aldemir Bendine, for soliciting bribes from construction firm Odebrecht SA shortly before arriving at Petrobras. Both Messrs. Elek and Bendine joined Petrobras' management in early 2015 with the stated purpose of cleaning up the rampant graft and mismanagement that prompted the so-called Car Wash investigation.

Mr. Bendine has denied wrongdoing.

Petrobras said its compliance division hired Deloitte to investigate allegations fielded by its corruption hotline. It awarded the contract without a bidding process to expedite its internal investigations, which "was justified considering the risks that could be created for the company, such as delays and/or the interruption of the task, including the weakening of Petrobras' governance," the company said.

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The potential conflict of interest between Mr. Elek and his daughter's employer was flagged via that same hotline in September 2016. Petrobras said it didn't consider the situation a conflict of interest because Mr. Elek's daughter had already passed the initial stages of the hiring process at the time Deloitte won the contract.

A government ethics commission disagreed, however, and Mr. Elek will remain suspended while he appeals.

Write to Paul Kiernan at paul.kiernan@wsj.com

BRASÍLIA -- Brazilian state-run oil firm Petróleo Brasileiro SA suspended its top compliance official Wednesday over a potential conflict of interest, in a blow to the company's image as it seeks to move past a massive corruption scandal.

Petrobras' board decided to temporarily suspend João Adalberto Elek Jr., director of governance and compliance, after determining that his division awarded a no-bid contract to auditing firm Deloitte while it was in the process of hiring his daughter. The one-year contract, worth 25 million Brazilian reais (about $8 million), was awarded on an urgent basis in December 2015.

Petrobras didn't immediately respond to a request for comment by Mr. Elek

The suspension of Mr. Elek comes a day after prosecutors filed charges against his boss at the time, former Chief Executive Aldemir Bendine, for soliciting bribes from construction firm Odebrecht SA shortly before arriving at Petrobras. Both Messrs. Elek and Bendine joined Petrobras' management in early 2015 with the stated purpose of cleaning up the rampant graft and mismanagement that prompted the so-called Car Wash investigation.

Mr. Bendine has denied wrongdoing.

Petrobras said its compliance division hired Deloitte to investigate allegations fielded by its corruption hotline. It awarded the contract without a bidding process to expedite its internal investigations, which "was justified considering the risks that could be created for the company, such as delays and/or the interruption of the task, including the weakening of Petrobras' governance," the company said.

The potential conflict of interest between Mr. Elek and his daughter's employer was flagged via that same hotline in September 2016. Petrobras said it didn't consider the situation a conflict of interest because Mr. Elek's daughter had already passed the initial stages of the hiring process at the time Deloitte won the contract.

A government ethics commission disagreed, however, and Mr. Elek will remain suspended while he appeals.

Write to Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

August 23, 2017 20:41 ET (00:41 GMT)