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Brazil: Why was the million-dollar lawsuit against Petrobras suspended?

Petrobras has been losing for four consecutive years; the demand for more than 4,500 million dollars would threaten the bankruptcy of the state company

Brazil: Why was the million-dollar lawsuit against Petrobras suspended?

The Federal Supreme Court of Brazil suspended the demand of 17 billion reais (more than 4,500 million dollars) that Petrobras has been facing by the Superior Labor Court for 11 years. At the end of June, a sentence was passed in favor of the workers, with 13 votes to 12. However, Judge José Antonio Dias Toffoli decided to stop the compensation taking into account "the risk of irreparable damage resulting from the immediate fulfillment of that decision ( ...), which can impact especially in the finances (of Petrobras), with undeniable effects on the economy of the country as a whole".

Leer en español: Brasil: ¿Por qué suspendieron la demanda millonaria de Petrobras?

The controversial fine that Petrobras is facing shows that close to 59,000 employees, including active and retired employees, have not been remunerated for special work conditions, such as overtime and night shifts. The workers' victory means that Petrobras will have to pay 15 billion reais (4 billion dollars) in back wages, and an increase in 35% of the salary, which would leave a breach of 2 billion reais (close to $ 540 million USD) per year. While it is a relief for the employees, the immediate payment would leave Brazil's largest oil company on the verge of bankruptcy, considering that it has not recovered from the serious losses it has suffered for the following reasons:

Corruption scandals

One of the most serious cases of corruption in Brazil is discovered by the Lava Jato operation investigation, which exposes a money laundering network in Petrobras that caused a loss of more than 2,000 million dollars between 2003 and 2014, in addition, to involve high profile entrepreneurs and politicians. The case resulted in the dismissal of former President Dilma Rousseff, the conviction of former President Lula Da Silva and even splashes current President Michel Temer.

Leja em português: Brasil: Por que foi suspensa a ação judicial de milhões de dólares contra Petrobras?

To this is added an American fine for almost 3 billion dollars that Petrobras agreed to pay to avoid a lawsuit brought by investors who bought shares in Petrobras and who claim to have lost money after the corruption scandal of the Brazilian state.

Oil drop

After the Lava Jato operation, the then president of Petrobras, Pedro Parente, made the decision to readjust salaries and increase the price of gasoline to try to reduce the debt of the state oil company and adjust daily to barrel prices. oil to avoid losses. This new pricing policy caused an increase of 50% in the price of gasoline between 2017 and 2018 for the same dates.

According to the newspaper El País, "in the first three weeks of May (...) prices rose 17 times, following the pace of the rise in oil." Although the policies applied by Pedro Parente managed to stabilize the state oil company a little, the decisions were highly criticized, which caused a domino effect that was difficult to stop.

Truckers strike

Although Pedro Parente's policies alleviated Petrobras financially, it produced an explosion that seriously damaged the company and the rest of the country. Due to the rise in gasoline prices, the truck drivers declared closing the roads, which left Brazil paralyzed. The pressure of the strike caused the resignation of Pedro Parente. "When announcing the resignation of Parente the fall in the value of the shares was so dizzying that the transaction had to be suspended for a few minutes", assured El País in June 2018.

Referring to this case, Judge Dias Toffoli assured that Petrobras in June registered a loss that could have had "a financial impact of $ 4,500, dozens of collective actions and thousands of individual actions in process", for which he considered the condition vulnerable state oil company and finally led to the suspension of demand by workers. The judge comes to the decision to freeze the compensation process for employees because one more blow to Petrobras would greatly condition the Brazilian economy.

 

LatinAmerican Post | María de los Ángeles Rubio

Translated from "Brasil: ¿Por qué suspendieron la demanda millonaria de Petrobras?"

 

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