PHOTO: REYNALDO ZANGRANDI
Another American Story
How Petrobras negotiated to pay six times more for an oil and gas area in the United States
Daniela Pinheiro | Edição 102, Março 2015
Translated by Flora Thomson-Deveaux
Case file number CV10343 lies on the shelves of the Denver District Court. The file contains two thick folders bulging with depositions, attachments, and names and addresses of the parties involved in an intricate lawsuit. The story combines legal wrangling between American and Brazilian attorneys, exchanges of harsh e-mails, and memoranda raising suspicions about negotiations, transactions involving stratospheric sums, ironic references to the “Brazilian psyche”, and a heavyweight supporting actor. The supporting actor was Petrobras – the largest Brazilian corporation, whose reputation and net worth were rapidly melting thanks to an explosive mix of misguided policy decisions, systematic corruption, and a chaotic international economic scenario.
The story begins like this: just over six years ago, a company called West Hawk Energy, with headquarters in the United States, sued the multinational corporation Encana Oil & Gas, accusing it of obstructing a sizeable deal that was about to be signed with Petrobras. West Hawk’s case is spelled out in more than 200 pages, claiming financial damages from Encana for aborting the deal with the Brazilian state-run company. After months of hearings, the judge ruled that West Hawk had no grounds to sue, and he even sentenced the company to reimburse Encana for its legal costs. Case dismissed. But the legal proceedings reveal picturesque details of Petrobras and it dealings outside of Brazil.
In 2008, in the middle of Luiz Inácio “Lula” da Silva’s second term as President of Brazil, José Sergio Gabrielli was the CEO of Petrobras; chairing the company’s Board of Directors was then-Chief of Staff Dilma Rousseff; the company’s International Area was headed by recently-nominated Jorge Luiz Zelada. Board directors included Paulo Roberto Costa (Supply), Renato Duque (Services), and Maria das Graças Foster (Gas and Energy), who replaced Gabrielli as CEO in 2012 and later resigned in February 2015, blindsided by the worst crisis in the company’s history.
In April 2008 the CEO of West Hawk, Chilean Gonzalo Torres-Macchiavello, approached Petrobras with a proposal for prospecting and exploring oil and gas in the Piceance Basin, one of the biggest natural gas reserves in the United States. According to Macchiavello, his company already detained a share in one of the area’s largest blocks, called Figure Four Ranch.
The exploration and productions rights to Piceance belonged to multinational energy giant Encana. Macchiavello claimed to have West Hawk’s commitment to negotiate the purchase of two more blocks, but admitted that his company lacked the money. He wanted Petrobras to join the deal as financial partner.
After graduating from the University of Brasília, with a Master’s from the Getulio Vargas Foundation, Macchiavello had built his career in Latin America, Brazil, and the United States. He was a familiar face at Petrobras. According to his internet bio, he had already participated in other joint ventures with the Brazilian state-run company, like thermoelectric plants in Duque de Caxias, Rio de Janeiro, and Durango, Mexico.
The Piceance Basin is located in the Northwest United States, in the middle of the Rocky Mountains. Exploration in this area is extremely tricky. The soil’s low porosity makes drilling an expensive, slow, and complex process. The gas is trapped inside rock as hard as concrete, separated by thin layers of shale. The volume of hydrocarbons in the area is considered incalculable. Even though Petrobras was concentrating its investments in deep-water exploration, the company was interested in the deal. Another advantage was the possibility of Brazil’s breaking its heavy dependence on Bolivian gas.
Petrobras representatives met in Rio with Macchiavello and two other executives – the American Mark Hart, a member of West Hawk’s board, and consultant Miloud Hassene, a foreign national living in Brazil who, according to the court proceedings, formed the bridge between Petrobras and West Hawk. During the meeting, an extensive exploration and production project was presented with details on deadlines and the estimated natural gas output. One month later the parties signed a Memorandum of Understanding (MOU), corroborating their mutual interest in the joint venture.
At the time, directors of the two companies made public statements on the ambitious project. “The new International Management Team at Petrobras intends to invest 4.8 billion dollars until 2012 in oil and gas projects,” Macchiavello declared in a press release published on the website. “Petrobras is seriously examining the project as a very strong potential candidate to become our first natural gas project in the United States,” announced Jorge Zelada of Petrobras. “We know the qualities of the Piceance Basin and the developments that are taking place there. Certainly, it is a place to be.”
Over the course of discussions with West Hawk, Petrobras became interested in expanding the deal: the company wanted the exploration rights for three blocks rather than only one at Figure Four Ranch. According to the court records in the U.S. case, Macchiavello was in charge of communicating the Brazilian company’s interest to Encana. Throughout nearly the entire negotiation, West Hawk acted as the intermediary between Encana and Petrobras. Macchiavello delivered the messages, arranged contacts, and passed versions back and forth on the project’s development.
On July 16, West Hawk and Petrobras signed a draft with the deal’s terms. According to the document, West Hawk would transfer 85% of the rights for blocks 1 and 2 to Petrobras for joint exploration. The deal amounted to 273 million dollars. According to the draft, West Hawk also claimed priority to purchase the exploration rights to block 3, to be negotiated at a later stage. On Petrobras’ side, the draft was signed by special coordinator for Institutional Relations, Venâncio Igrejas, engineers Sócrates Fernandes and Mario Jorge Alves Borges, and Pedro Augusto Cortes Xavier Bastos from the International Area.
Acareful reading of the case depositions at the Denver District Court reveal that West Hawk had no rights to blocks 2 and 3 in the Piceance Basin. The three companies had even discussed a possible joint venture for exploring the area, but had not gotten beyond a verbal agreement. By that time, West Hawk had already accumulated 10 million dollars in debt, which had prevented it from signing exploration and production contracts in the same area. According to the court proceedings, Encana already had misgivings and had conditioned its operation with West Hawk on the presence of a heavyweight financial partner. Encana did not trust West Hawk.
The two companies had clashed in the past. In another joint exploration project in Piceance, West Hawk had failed to meet deadlines and had even defaulted on several suppliers. Why was Encana still doing business with a company that it considered irresponsible? According to the court records, Encana continued the conversations because West Hawk appeared to be arm-in-arm with Petrobras – then the third biggest oil company in Latin America and the fifth largest in the world. It was like a safeguard for the deal. But a question remained on Petrobras’ side: why would the state-run company sign a commitment to a partnership with a company with no valid contract and a bad track record with suppliers? Even so, all the parties gave the green light for the deal.
With the “West Hawk project” on the horizon, Petrobras hired the New York law firm Fox Horan & Camerini, which in turn outsourced to the Ducker, Montgomery, Aronstein & Bess firm in Denver. The latter had extensive experience in oil and gas deals and specialized in transactions in the Piceance Basin. In practice, they were all watching out for Petrobras’ interests.
In the second week of August, the American attorneys and representatives of the three companies met in Colorado. Petrobras was represented by Venâncio Igrejas of Institutional Relations and attorney Danilo Zeitel. The group visited the natural gas area and met on the following day in Encana’s office in Denver.
However, by that time Encana had already learned that West Hawk was offering Petrobras the rights to explore the blocks for 273 million dollars. In court, Encana representatives claimed that their company had never been informed of this parallel transaction during discussions of the project. According to them, the deal was anything but that. Under the official agreement, West Hawk would pay 46.5 million dollars to Encana for the exploration rights on two blocks. According to Encana, that was the amount Petrobras would pay in the Piceance deal.
As the attorneys for Encana explained, and the judge agreed, West Hawk was playing both sides. For Petrobras, it was inflating Encana’s price, while telling Encana that 46.5 million dollars was the price Petrobras was going to pay. And West Hawk expected to grab a big slice of the deal between the two giants, duping both sides. West Hawk argued in its defense that the price was higher because the company had already invested heavily in block 1, installing well infrastructure and making numerous improvements. It later turned out that the story was not all that simple.
When the group met in Denver, Encana presented a new proposal: from then on, West Hawk would no longer be part of the deal. Given West Hawk’s track record of defaulting and Petrobras’s interest in buying, it made no sense to maintain a go-between in the deal. Encana now proposed to sell the same area in Figure Four Ranch – a total of some 10 mil acres – directly to Petrobras for 46 million dollars, six times less than West Hawk’s offer. The difference was 227 million dollars.
At the end of the meeting, Venâncio Igrejas from Petrobras asked the New York and Denver attorneys to prepare a due diligence report. In a commercial transaction, due diligence is like an audit of the acquisition process, proving that the deal has been thoroughly investigated before signing. The orders were to include everything that had been discussed in the meeting. Encana submitted its own proposal to the attorneys with the terms of the new agreement.
As one of the American lawyers said after the meeting, Igrejas compared West Hawk to “a drowning man trying to grab a lifesaver”. The lifesaver in this case was Petrobras. According to the American, Igrejas said that “if the rest of the people at Petrobras don’t like what I’m saying about West Hawk, then I don’t need this job. I have a number of other adequate possibilities for what to do with my life.” Another attorney commented on how impressed he had been with Igrejas’ integrity.
The American attorneys attending the meeting drafted the due diligence report exactly as agreed. Their text listed all the previous problems with West Hawk and spelled out the defaults in detail. In item 13, they presented the proposal that had appeared in the meeting under the subtitle “Surprise Offer from Encana”, with details on the new amounts and conditions.
The report was sent to Venâncio Igrejas and Danilo Zeitel, with a copy to the “Brazil Legal Team”, which had not appeared previously in the documents involved in the negotiations. The team consisted of Rio de Janeiro attorney Sergio Chermont de Britto and his partner, Ana Maria Lauria Gonçalves. With a 40-year legal career, Chermont de Britto is a respected and well-known figure in Rio de Janeiro society. His clients include retired soccer superstar Pelé and entertainment entrepreneur Ricardo Amaral.
Two weeks later, a surprise came. The American legal team received a different version of the due diligence report. In the new wording, which according to the Americans had been edited by Chermont de Britto, Encana’s offer had simply disappeared. There was no mention of the amount, the company’s intent to negotiate directly with Petrobras, the transaction’s advantages, nothing. All the evidence disqualifying West Hawk had also been deleted.
If that report were sent to the Petrobras Board of Directors for approval, the company would be unaware of a significantly better offer, or that it would be signing a deal with a known troublemaker. Petrobras would suffer a loss of at least 227 million dollars. Or somebody would pocket the difference of 227 million. Up to that point, everything pointed to West Hawk. But again, things were not that simple.
When he opened the new version of the due diligence report on his computer in New York, attorney Norman Resnicow of Fox Horan & Camerini was dumbfounded. What he saw on his screen was not what they had heard, written, or agreed to. And his name was there, as one of signatories in the proposal to be submitted to the Petrobras board as proof to back the deal. On September 5, Resnicow e-mailed Rio attorney Sergio Chermont de Britto to report his surprise and demand an explanation.
Denver attorney Robert Lewis was also shocked. How could such an offer have been deleted from the terms of negotiation? Was Petrobras aware of the real proposal by Encana or not? Why had Petrobras done that?
Three days passed before Chermont de Britto replied to the questions. He worded his long letter as interlocutor for the state-owned company. He claimed that Petrobras was “fully aware” of Encana’s offer, but that “for some unknown reason” the company was declining. He said that “members of the International Area at Petrobras” had read the report’s original version, but that “unless certain parts are omitted, it won’t be approved by the Board of Directors”.
Eucana attached a copy of part of this e-mail to the legal briefs in the United States to prove that, in the words of the defense attorneys, a “scheme” had been assembled in the negotiations involving Figure Four Ranch. Chermont de Britto’s message ends as follows: “In this event [the non-omission of certain information], the International Area would lose what they consider to be an excellent business opportunity and we would lose the client, since our legal assistance would terminate.”
In the photo illustrating his bio on the Fox Horan & Camerini website, Norman Resnicow sports a moustache à la Mario Bros and a jolly smile. It takes some imagination to conjure up his facial expression while he was writing a harsh letter to his office colleague Donald Fox, who had a direct line to Sergio Chermont de Britto. Encana’s attorneys also attached excerpts from this e-mail to the briefs in the case, under the title “West Hawk Attempted Fraud”.
In a grave tone, Resnicow classified the Rio lawyer’s e-mail as “astounding”. According to him, Petrobras had hired the group of attorneys. The attorneys thus had the ethical and moral duty to advise the company of an offer on the table that was six times cheaper. “I would point out that the issue involves perhaps close to 227 million dollars. This is certainly a material amount, even for Petrobras,” he wrote.
Resnicow reaffirmed that he had not written the second version of the due diligence, that he had not signed it, and that he refused to sign it. “The International Group people at Petrobras want to do everything possible to ensure a deal with West Hawk. I seriously question why anybody at Petrobras would want to do that. Can you explain?” he asked his partner, Donald Fox. He further said that he didn’t care what Petrobras wanted to do in the Piceance Basin – buy the rights from Encana, buy from West Hawk, pay a compensation to the firm, whatever –, he would not be an accomplice. Further on he expressed his outrage at the “dishonesty”” of Venâncio Igrejas from Petrobras, “who personally heard and saw everything we put in our August report” – who had criticized West Hawk, had ordered everything to be included in the report, and who now authorized the omission of information. “I can never trust him again,” wrote the American lawyer.
In the most virulent paragraph, Resnicow emphasized: “This situation cannot be explained away with blithe allusions to the ‘Brazilian Psyche’ or cultural differences. I have represented Brazilian clients (including the Brazilian Government), so they are not a mystery to my legal and personal experience. Venality is venality, cover-up is still cover-up, whatever the nationality.” Resnicow ended his message by saying that if Fox failed to warn Petrobras immediately, he would do so himself.
The American attorney Donald Fox was vacationing at a vineyard hotel in Spain when he received Resnicow’s outraged e-mail. In a succinct message, he advised his partner in the firm to forget about the matter: “I write you personally and diplomatically to urge you not to jump to such conclusions on the basis of insufficient factual knowledge.” He also warned that if Resnicow had sent a copy of the original due diligence report to Danilo Zeitel at Petrobras, it would have been “not only disloyal to me, but subversive and destructive to the firm”. Two days later this entire exchange of e-mails had reached the hands of Sergio Chermont de Britto, Gonzalo Torres-Macchiavello, and Miloud Hassene.
From his office in Rio, Chermont de Britto contacted Venâncio Igrejas, who was in Portugal, and told him what had happened. Right afterwards the Americans received a communiqué signed by Igrejas advising that the law firms should focus on “legal matters only, and should not include business and technical matters”. The briefs in the U.S. court case also quote this excerpt from the e-mail.
There was another recommendation by Igrejas, according to what Chermont de Britto forwarded to the Americans: Donald Fox should send an urgent e-mail to Carlos César Borromeu, head of the international legal department at Petrobras, explaining that the due diligence sent by Resnicow was merely “a preliminary report”, that it was worthless because it had still not been finalized.
In the days that followed, Denver attorneys Norman Resnicow and Robert Lewis were taken off the “West Hawk project”. The information is in both the lawsuit briefs and an e-mail sent by Sergio Chermont de Britto, in which he claimed to speak for Venâncio Igrejas of Petrobras.
Several days later a third (and final) version of the due diligence report was produced, this time revised by both Sergio Chermont de Britto and Donald Fox in New York, in collaboration with West Hawk and the International Area at Petrobras. The document was written unbeknownst to Norman Resnicow and Robert Lewis. Again, no offer by Encana appeared in the report.
The case evokes a pattern, a modus operandi, undeniably similar to an incident that occurred shortly before. Less than two years previously, Petrobras had finalized its purchase of the Pasadena Refinery in Texas, an operation in which the Brazilian state-run company dished out 1.8 billion dollars for a dilapidated refinery that had been negotiated a year before for 42 million. The company lost nearly 700 million dollars in the deal. Later, the so-called Car Wash Operation by the Brazilian Federal Police revealed that the difference represented bribes that were funneled into the coffers of political parties and Petrobras employees.
According to a recent estimate by Morgan Stanley Bank, based on information obtained through plea bargaining with former members of the Petrobras Board, embezzlement from the company may reach 21 billion reais (7 billion dollars at today’s exchange rate). The whistle-blowers cite bribes of 200 million reais to slush fund operators in the PT, PMDB, and PP political parties. Pedro Barusco Filho, former head of Engineering and Services, confirmed under oath that he received 250 million reais in bribes beginning in 1997 – that dating back to the first two terms of former President Fernando Henrique Cardoso.
Due to a report based on “incomplete information” and a “technically and legally flawed” expert opinion, current President Dilma Rousseff – then Chair of the Petrobras Board of Directors – justified the purchase of the Pasadena Refinery. In the case of the Piceance Basin, the report was neither flawed nor incomplete. In the opinion of the American attorneys, it was blatantly negligent, false, and corrupt. At least two representatives from Petrobras – Venâncio Igrejas and Danilo Zeitel – had been eye witnesses to the cheaper offer by Encana and the new conditions for signing the deal. Nothing justified the omission of such information from the report.
Until then, Denver attorney Robert Lewis had limited himself to making phone calls to his colleagues in New York saying how stunned he was by the case. On September 23 he decided to take steps, although trampling the terms of his contract. Under the agreement between the U.S. law firms, the Denver office was supposed to report to New York, never directly to Petrobras. In a six-page memorandum addressed to the entire Petrobras Board of Directors in Brazil, Lewis laid out the details of what was happening in the deal’s backstage. “Several employees and outside lawyers of the International Group of Petrobras may seek the approval of the Board of Directors, without disclosing to the Petrobras Board important information,” he wrote. He told about the offers by West Hawk and Encana – the latter six times cheaper – and quoted the e-mail from Sergio Chermont de Britto, in which the omission of certain information was the condition for the approval of the deal by the Petrobras Board. Lewis also stated that the due diligence reports had been altered behind the attorneys’ backs and that even though the offer had been made in the presence of two Petrobras board members, the state-run company had never contacted Encana for more information.
Concerning the report’s third version, Lewis listed seven points that had also been omitted and that were potentially injurious to Petrobras. These included the fact that West Hawk had no legal right whatsoever to block 3 and that it only detained the wellbore rights on the other two, rights which were not acknowledged under Colorado state laws. This means that West Hawk only detained the right to the product, to what came out of the ground, but not to the area itself. In short: nothing that West Hawk was offering Petrobras was feasible.
Lewis concluded his explanation with market data, saying that based on his 27 years of experience in the area, West Hawk’s offer amounted to extortion. According to him, Danilo Zeitel of Petrobras had encouraged him to disclose this to the company’s board. Lewis finally signed off, embarrassed. “We regret that our first introduction to the Petrobras Board arises under these circumstances. However, our legal and ethical duties require us to notify the Petrobras Board of the matters set forth above.” All seven Board members received the document: Sergio Gabrielli, Jorge Luiz Zelada, Guilherme Estrella, Almir Barbassa, Renato Duque, Paulo Roberto Costa, and Maria das Graças Foster. The manager of the legal area at Petrobras, Nilton de Almeida Maia, was also notified. According to a former Petrobras board member, speaking on condition of anonymity, this kind of disclosure, although still incipient, would never have reached the Board’s Chair, occupied at the time by then-Minister Dilma Rousseff.
The negotiations broke off. When Encana glimpsed that the deal might flounder, the company lowered its offer even further. It was willing to sell the package to Petrobras for 25 million dollars, nearly half of its initial offer. But in October, Petrobras gave its last word and advised Encana that it was no longer interested in the deal. The official argument was the world economic crisis knocking on the door in 2008.
By e-mail, Petrobras press advisors explained that the purchase of a share in the Piceance project had been canceled “due to a technical and economic assessment carried out by the internal staff”. In a second contact, questioned about what this meant, the company said it had already given its answer.
The state-run company admitted to having received complaints of irregularities and had thus conducted an internal inquiry in the case. It provided no further explanation on the details of the investigation. The company merely informed that the measure taken had been “the adoption of improvements in company procedures for acquisition projects”. There was no punishment or warning for the parties involved in the case. From that point on, Petrobras reported, no further business had been done with West Hawk.
Two months after the deal with Petrobras failed, West Hawk filed suit against Encana, accusing the company of sabotaging the negotiations. In its claim, West Hawk sued for 415 million dollars in compensation for lost profits and investments the company had allegedly made in one of the prospected blocks. The judge dismissed West Hawk’s allegations. He found it unlikely that Encana would try to obstruct a deal where it stood to make a profit.
In its defense, Encana contended that the operation was shady. The attorneys explicitly wrote in the briefs that “Clever control and manipulation over the flow and content of information make it appear that the deal being discussed with Encana was a 273 million-dollar deal, rather than a 46 million concept.” West Hawk was even ordered to reimburse Encana for 400 thousand dollars in attorneys’ fees – an unusual ruling in U.S. court proceedings.
West Hawk Energy closed down entirely in mid-2010. Since then, according to Gonzalo Torres-Macchiavello’s bio, he has spent time at various companies in the United States and Canada. In 2011 the Colorado Oil and Gas Conservation Commission banned him from doing business in the area of energy on grounds that he had abandoned eight wells in mid-contract, and the company was fined nearly a million dollars. The sentence was overruled in 2012. He currently lives in the United States and has failed to answer requests for an interview.
The press advisors of Austin Exploration, where Mark Hart (former board member of West Hawk at the time of the negotiations) now works, say they do not comment on the company’s South American holdings. Hart also ignored the request for an interview in the United States.
Keith D. Tooley, attorney for Encana in the lawsuit, says he does not comment on cases involving clients. Doug Hock, spokesman for Encana in Denver, replied that the matter had already been heard in court and that the company had further nothing to say. In a second contact, he said that the company’s lawyers had orders not to participate in the news story.
Contacted since last December, none of the U.S. attorneys involved in the case replied to requests for interviews.
In February, Miloud Hassene, who keeps an office in Barra da Tijuca, Rio de Janeiro, brushed the episode off. “I was just a consultant. Nothing more than that,” he explained over the phone in a strong Welsh accent. “The company is already closed, the deal never happened. So what’s the interest?” he asked.
In 2012, then-CEO of Petrobras Maria das Graças Foster fired board members Paulo Roberto Costa, Renato Duque, and Jorge Zelada. One of the main protagonists in the plea-bargaining in the Car Wash Operation, Costa is suspected of having received more than 320 million reais in bribes through embezzlement from Petrobras business deals.
Zelada’s lawyer, Eduardo de Moraes, asked that his client’s clarifications for this story be submitted in writing. In an e-mail in late February, Zelada stated that the signing of a Memorandum of Understanding by West Hawk and Petrobras was merely the intent to examine a deal, without any commitment. Therefore, there was no reason to claim that the deal had been canceled, since it had never even existed.
“The project lacks the appeal for such large investment in exploration, especially when compared to the opportunities in Brazil, impacted by the recent discovery of the Pre-Salt reserves, generating an intense internal debate over the strategies to be adopted by Petrobras,” said Zelada. Therefore, in his opinion, what had happened in the United States was merely initial business prospecting, with no practical consequences.
Having retired from Petrobras, where he worked for 37 years, Venâncio Igrejas wrote a long and detailed e-mail reply about his role in the West Hawk case. According to him, his role as special coordinator of Institutional Relations, which reported to the International Area, was limited to following the steps in the negotiations. He had no command or decision-making power.
“It is very important to emphasize immediately that West Hawk’s proposal was never accepted, and the topic was always treated conditionally,” he stated. He also emphasized that Petrobras had not spent a nickel on the project.
He said that Encana’s offer had been deleted from the due diligence report because it represented “non-compliance”. Since Encana had not even signed a Memorandum of Intent to sell to Petrobras – nothing beyond conversations – it made no sense for the offer to appear in a report on West Hawk. According to him, the new offer would have to appear in another due diligence report. “They were distinct proposals and analyses, which generate distinct expert opinions, documents, and reports.” He failed to comment on the reason for deleting the evidence that disqualified West Hawk in the deal.
The difference in the amounts, according to Igrejas, could be explained by the fact that a basin’s value varies according to its location, geological formation, accessibility, potential for reservoir formation, and legal regularization.
In his opinion, the entire episode can be summed up as a power struggle in the state-run company and a misunderstanding between lawyers. According to him, when Jorge Zelada took over the International Area, he announced a “management shock”. “Which certainly upset some interests”, he stated. Zelada replaced Nestor Cerveró, who is now under arrest on charges of money-laundering and collusion. The West Hawk case, according to Igrejas, was one of the first topics discussed by the new administration. Over the course of its term, the Board of Directors also reduced outsourcing, hired new employees that had passed in public admissions tests (rather than political appointees), and changed certain accounting standards. “This and a lot more upset some people,” he explained.
According to Igrejas, not all the members of the legal team agreed on the final wording of the due diligence report. And this became a crucial problem, aggravated by the fact that some were taking the case personally. “Directly criticizing my work, they could not understand, or refused to understand, that I wasn’t acting as an attorney, but as an advisor to the Board.” That’s why he asked the American attorney Donald Fox to go to directly to the head of the Petrobras legal department, Carlos Borromeu, and also that the American attorneys limit themselves to legal aspects of the case.
According to Igrejas, because of cultural issues or legal interpretation, the Americans refused to understand why Encana’s offer should be written into a separate report. “It was a question of where to place information obtained from secure sources after they were analyzed by the proper technical areas,” he said.
Last year, Jorge Zelada and Venâncio Igrejas were charged by the Public Prosecutor’s Office in Rio de Janeiro for fraud in a public tender in order to benefit the Odebrecht construction company. The charges were based on an internal audit by Petrobras.
Attorney Danilo Zeitel no longer works for Petrobras. Despite numerous contacts, including attempts through members of his family, he was not located for comment.
In early February, Rio attorney Sergio Chermont de Britto told me he had never worked for Petrobras. He claimed having participated in the discussions involving the “West Hawk project” at the behest of attorney Donald Fox, partner at Fox Horan & Camerini and a longtime friend. During a second telephone contact, with his son, partner, and namesake Sergio Britto speaking on his behalf, both stated that they could not provide any more details on the subject, claiming “attorney-client privilege”.
In late February, the Brazilian Congress named a Congressional Inquiry Committee for the third time to investigate alleged corruption in Petrobras.