Braskem in graft scandal; sued by shareholder

Brazilian petrochemicals company Braskem is being sued for involvement in a graft scandal by one of its shareholders. According to court documents, Douglas W. Peters is seeking class action status for the lawsuit, filed in the US on behalf of individuals or institutions that purchased Braskem's American depositary receipts between 2010 -2015.

Braskem and four executives working for or linked with the company are accused in the suit of making "materially false and misleading statements regarding the company's business, operational, and compliance policies."

The list of defendants include Braskem’s CEO Carlos Fadigas, his predecessor, Bernardo Gradin, and Marcela Drehmer, the chief financial officer of engineering/construction firm Odebrecht, that has a controlling stake in Braskem.

The lawsuit follows the arrest of Marcelo Odebrecht, who is the head of Odebrecht, by Brazilian police last month. His family-run conglomerate has been accused of spearheading a US$2.1 billion bribery scheme at state-run oil company Petrobras that also has a stake in Braskem. More than 100 people have been indicted on charges that include corruption, money laundering and racketeering in the investigation of an alleged cartel of engineering firms fixing prices on contracts with Petrobras.

Petrobras also has its own problems. The company posted a net loss of US$6.7 billion in 2014, and has the Brazilian government breathing down the oil giant to become more profitable. Last month, Petrobras said it will sell assets worth US$15.1 billion in 2015-16, and another US$42.6 billion in 2017-18. According to news reports, Petrobras may also divest its 36.1% interest in Braskem, and is seeking buyers. Braskem has long-term contracts to buy naphtha from Petrobras.

São Paulo-based Braskem is Latin America's biggest petrochemical producer. Annual revenue last year was about US$23 billion. It has 8,000 employees worldwide at 36 production facilities, including five in the US. Braskem SA trades on the New York Stock Exchange.