Pomerantz LLP

Partner Jeremy A. Lieberman with Partner Jennifer Pafiti

Partner Jeremy A. Lieberman with Partner Jennifer Pafiti


In March 2015, New York U.S. District Judge Jed S. Rakoff appointed Pomerantz to lead a consolidated group of securities class actions over revelations of rampant corruption at Brazil’s state-run oil company, Petroleo Brasileiro SA (“Petrobras”). Pomerantz represents lead plaintiff Universities Superannuation Scheme Ltd. (“USS”). On July 9, 2015, Pomerantz won a major victory for Petrobras investors when Judge Rakoff rejected defendants’ motion to dismiss the action.

The class action against Petrobras, brought on behalf of all purchasers of common and preferred American Depositary Shares (“ADSs”) on the New York Stock Exchange, as well as purchasers of certain Petrobras debt, alleges that Petrobras and its senior executives engaged in a multi-year, multi-billion dollar money-laundering and bribery scheme, which was, of course, concealed from investors. Senior management has openly admitted its culpability. In testimony released by a Brazilian federal court, the executive in charge of Petrobras’ refining division confessed that Petrobras accepted bribes “from companies to whom Petrobras awarded inflated construction contracts” and “then used the money to bribe politicians through intermediaries to guarantee they would vote in line with the ruling party while enriching themselves.” The overstated amounts paid on inflated third party contracts were carried as assets on the balance sheet. 

The Petrobras Headquarters, Rio de Janeiro, Brazil

The Petrobras Headquarters, Rio de Janeiro, Brazil

The decade-long duration of the corrupt scheme, as well as the enormity of its impact, resulted in over $19 billion in asset impairment and charges as announced on April 22, 2015. Not only Petrobras executives, but also members of the ruling Workers’ Party, as well other political parties, have been implicated. As of August 12, 143 individuals are being investigated for 31 criminal complaints that include allegations of corruption, drug trafficking, crimes against National Finance System, organized crime, money laundering, and other crimes; five politicians have been arrested. New allegations and revelations surface almost daily.

Brazilian President Dilma Rousseff is battling accusations that she knew about the corruption at Petrobras while she served on its board, and calls for her impeachment, from both the public and the government, are growing. An increasing number of legislators see impeachment of Rousseff as a potential way out of Brazil’s deepening economic and political crisis.

Petrobras officials have pegged the total of all bribes at nearly $3 billion, a figure that makes the scandal at FIFA, world soccer’s governing body, seem like the work of amateurs. . . . In Brazil, [the Petrobras scandal] has convulsed the country with fury and a stinging sense of betrayal.

The company has lost more than half its value in the last year, about $70 billion in market cap. . . . That plunge has had repercussions for investors worldwide. Petrobras had been a favorite investment for big emerging-market bond funds sold to United States investors, for instance.

In Brazil, Petrobras’s plunge is so cataclysmic, according to analysts, that it is a major reason the economy is expected to contract by more than one percentage point this year. Unemployment is up, and Standard & Poor’s has cut the nation’s long-term debt rating to one notch above junk status.

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“For Petrobras to say, ‘We’re the victims,’ when their executives were perpetrating this scheme suggests that they haven’t learned their lesson,” said Jeremy A. Lieberman of the Pomerantz law firm, which has been appointed lead counsel in the case. “This is not just an incident of a few rotten apples on an otherwise pristine tree.”

Pomerantz’s Petrobras litigation is overseen by Senior Partner Jeremy Lieberman.