In its explanatory note, Moody’s cited the ongoing corruption scandal rocking the company, in which contractors are alleged to have colluded to overpay on Petrobras deals. With no clear figure as to the scale of the losses caused by the scheme, creditors are anxious to see last year’s fully-audited results. Though the company has a 30 April deadline, it has already indicated it may be unable to produce the results until June. “Extended delay carried the risk that creditors could take actions that lead to a declaration of technical default, followed by payment acceleration,” Moody’s warned.
While the downgrade was expected, the government attempted to minimise its significance. “Petrobras has not arrived at the point that it should lose its investment status,” Edison Lobão, the mines and energy minister, said. “This is a storm that the company is passing through and which it will overcome.” Former president Lula da Silva (2003-2011) held a rally in support of Petrobras on the day of the downgrade, in which he recalled the company’s achievements and urged President Dilma Rousseff to be bolder in her defence of the oil major.
For the opposition, however, the news was catnip. Aloysio Nunes Ferreira, from the Partido da Social Democracia Brasileira (PSDB), said Moody’s decision showed the size of the hole Petrobras was in. “It is yet another consequence of the tragedy in which the PT (the ruling left-wing Partido dos Trabalhadores) staffed Petrobras with a gang of thieves.” Ferreira added that the consequences of Moody’s decision went beyond the company itself, to affect the Brazilian economy as a whole. “The oil and gas sector in Brazil provides 13% of GDP. It’s a sector already in recession, and now it has been hit again.”
Politics
Though the economic impact of Moody’s decision may take a while to be felt, the political consequences of the scandal are just around the corner. Later this week, the attorney general, Rodrigo Janot, is due to announce the names of those politicians he wishes to see charged, or investigated further, over their involvement in the scheme.
For the government, the best possible outcome is that all parties stand accused. So far, the spotlight has been on the PT and its allies. The justice minister, Jose Eduardo Cardozo, is under pressure for meeting with the legal team of one of the construction companies implicated in the team. Allegedly, he told one of UTC’s lawyers that the construction company’s chief executives had little to fear as the police investigations would implicate all political parties equally.
The latest congressional inquiry (CPI) into the scheme is already beset by credibility problems before it has even begun work. Most of the deputies on the inquiry panel have received substantial election campaign donations from the very companies accused of participating in the scheme. The president of the CPI, Hugo Motta, who belongs to the PT-allied Partido do Movimento Democrático Brasileiro (PMDB), received 60% of his funding from companies under investigation.
As for the companies themselves, their lawyers have been arguing strongly that any systematic attempts at punishment could grind Brazil’s struggling economy to a halt. As Elio Gaspari, a columnist writing for O Folha de São Paulo put it, their argument echoes those of slave traders in the 19th century. “The law may forbid it, but if the law is applied, the coffee plantations will fail. But there is one big difference: Dom Pedro II did not take donations from the slave owners.”
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