CT-BATTEA-GLOBAL-LITIGAT
Battea Global Litigation Research, Inc. believes today was a big milestone win for a large group of international investors supporting a coalition of law firms and the Dutch Stichting Petrobras Compensation Foundation (“SPCF” or “Foundation”) in the Netherlands, in their litigation over losses relating to the Petrobras “Lavo Jato” or “Operation Car Wash” scandal.
The Rotterdam District Court ruled on whether the Foundation representing investors, who purchased securities outside of the United States, has the right to sue Petrobras in Dutch courts.
Petrobras has been fighting investors both in the U.S. and internationally and has sought to drag investors to arbitration in Brazil. However, on January 3, 2018, Petrobras announced that in connection with the losses investors suffered from the “Lavo Jato” bribery scandal, it had agreed to a USD $3 billion settlement with investors who purchased ADRs (American Depository Receipts/American Depository Shares) and USD denominated bonds in the U.S.
The U.S. litigation and settlement left investors that purchased primary shares of Petrobras traded in Brazil and via linked markets in Europe and bonds bought outside the U.S., without any compensation for their investment losses in those securities and subject to Petrobras’ continued claims of innocence and calls for any dispute to be resolved via arbitration in Brazil.
Today, the Dutch court ruled that the Company’s own articles calling for arbitration, did not meet the standard for which Dutch courts determine to be valid ground to deny the investors and the Foundation constitutional access to bring litigation and claims against Petrobras in the Netherlands. It is important to note that Petrobras has multiple subsidiaries, including Petrobras Global Finance B.V., which are headquartered in the Netherlands and the impact of the briberies and other fraud related acts extends to the Netherlands and involves Dutch companies and provides a strong nexus for jurisdiction for international investors to demand litigation and ultimately restitution there.
The ruling is a big step toward investors’ outlook for recovery of some of the billions lost, whether losses incurred in U.S. dollars, Euros, Brazilian Reals (Real) or other currencies. The arbitration requirement has been much touted by Petrobras and reflected in the media. In the opinion of Battea Global Litigation Research, Inc., today’s ruling is definitely a big blow to Petrobras’ arbitration strategy.
Petrobras’ controversial statements of innocence is in stark contrast to its agreement to a USD $3 billion settlement for securities traded in the U.S. alone. Strong and growing skepticism to any meaningful outcome resulting from Petrobras’ calls for arbitration at the Brazilian stock exchange, have prompted institutional investors from around the world to rally for proper objective court litigation and a fair resolution in the Netherlands.
Peter Hansen, Chairman of Battea Global Litigation Research, commented: “We have been following the U.S. Petrobras settlement, as well as the litigation efforts taking place outside of the U.S., very closely. Pricing of Petrobras securities, whether traded in Brazil, the U.S. or elsewhere, are very closely linked in real-time markets. In fact, the Petrobras fraud impacted investors, on a global scale, with the same relative ratio of losses.” Hansen continued, “It would be absurd, if Petrobras was able to get away with paying only holders of U.S. ADR shares and U.S. issued bonds and it would be nothing short of inequitable, to use $3 billion in company funds to make a “special distribution ”, to only a select group of shareholders and investors, and conversely, have the remaining group of international shareholders and investors pay for it!”. Hansen concluded that “the Dutch ruling, restores normalcy in shareholders avenues for recourse and expectation of equal treatment”.
On a more technical level , the Dutch courts today in summary ruled for granting jurisdiction in the Netherlands as follows:
Dutch Defendants
The court accepted jurisdiction in respect of the Dutch defendant PETROBRAS GLOBAL FINANCE B.V., for below allegations:
1. The initiation and maintenance of the large-scale fraud;
2. The unlawful concealment of fraud;
3. The publication of inaccurate, incomplete and/or misleading financial information;
4. The issuance of Petrobras securities (shares and bonds) based on inaccurate, incomplete and/or misleading information;
5. The issue of Petrobras securities during the fraud period (i.e. knowing that the funds obtained would be misused);
6. Consciously inspiring the confidence of investors during the fraud period (i.e. saying that the company was highly transparent, had a proper whistle blower arrangement in place, etc.);
7. Acting in violation of (other) applicable regulations (i.e. breaching various (mainly) Brazilian governance and other legal obligations).
The court also accepted jurisdiction in respect of allegations against the special purpose vehicles PETROBRAS OIL & GAS B.V and PETROBRAS INTERNATIONAL BRASPETRO B.V. for their role in the fraudulent scheme, notably certain specified projects.
Brazilian Defendants
In respect of PETRÓLEO BRASILEIRO S.A. - PETROBRAS (Petrobras Brazil), Gabrielli, Foster and the other Brazilian defendants, the court accepted jurisdiction for below allegations:
1. The unlawful concealment of fraud;
2. The publication of inaccurate, incomplete and/or misleading financial information;
3. The issuance of Petrobras securities (shares and bonds) based on inaccurate, incomplete and/or misleading information;
4. The issue of Petrobras securities during the fraud period (i.e. knowing that the funds obtained would be misused);
5. Consciously inspiring the confidence of investors during the fraud period (i.e. saying that the company was highly transparent, had a proper whistle blower arrangement in place, etc.)
Next Steps in the Dutch Litigation
With the favorable ruling announced on September 19, 2018, the District Court schedule in Rotterdam is as follows:
- October 18, 2018: Petrobras to file a skeleton argument-statement listing the various defenses Petrobras intends to present on both the merits and the standing of the Foundation;
- November 14, 2018: The Foundation can respond to that statement;
- December 18, 2018: A potential case management hearing will take place. Confirmation of the date of when this hearing will be decided by the court after November 14, 2018.
The coalition and Foundation leading the litigation, have significant support from institutional investors from around the world including investors in the U.S., UK, Brazil, Netherlands, France, Germany, Spain, Italy, Nordic countries, South Korea, Japan and others. Individual institutional investor losses range in the millions, tens of millions and in some instances close to 100 million Euros.
International, including U.S. investors, who purchased shares of Petrobras purchased in Brazil on the Brasil Bolsa Balcão S.A. or B3 - Brazil (formerly BM&FBOVESPA) and linked markets in Europe and also bought primarily non U.S. dollar denominated bonds outside the U.S. and believe they were damaged by losses related to the “Lavo Jato” or “Operation Car Wash” scandal, should contact the coalition’s administrator, or the Dutch counsel representing the Foundation. For you convenience, we have included their contact information below.
***********************
CONTACT INFORMATION
INVESTOR PARTICIPANT ADMINISTRATION
For administration
purposes, the Dutch Foundation has appointed International Securities
Associations & Foundations Management Company (ISAF) to coordinate all
administration with investors, including contingency success fee based
funding of all investor litigation cost. www.isafmanagement.com
.
ISAF
Management, Adam Foulke, +1-203-252-3378
afoulke@isafmanagement.com
LEGAL – FOUNDATION COUNSEL
Lemstra Van der Korst N.V., Flip
Wijers, Martijn van Dam & Jurjen Lemstra +31 (20) 2050567
f.wijers@lvdk.com
, m.vandam@lvdk.com
, j.lemstra@lvdk.com
STICHTING PETROBRAS COMPENSATION FOUNDATION
Stichting
Petrobras Compensation Foundation
board@pbcompensation.com
www.pbcompensation.com
BATTEA GLOBAL LITIGATION RESEARCH, INC. (“BGLR”)
Battea
Global Litigation Research, Inc., Peter Hansen, +1-203-987-4949
hansen@battea.com
Battea Global Litigation Research, Inc. is comprised of the world’s foremost corporate research analysts providing research and litigation support relating to business valuation and complex securities litigations. BGLR’s experience in the United States and Internationally, combined with our industry knowledge and expertise in economics, finance and complex business litigation research make us uniquely qualified to assist international investors in evaluating litigation events, coalitions and participation procedures.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180919005868/en/
Contact:
Battea Global Litigation Research, Inc. Peter Hansen, +1-203-987-4949 hansen@battea.com
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