Gates Foundation sues Petrobras, PricewaterhouseCoopers over bribery scandal

Bill & Melinda Gates Foundation, the world’s largest private foundation, has reportedly lost tens of millions of dollars through their holdings in the WGI Emerging Markets Fund, which is managed by Westwood Global Investments.

“This case arises from a pervasive bribery and money-laundering scheme carried out by Petrobras and willfully ignored by PwC”, Kenneth Warner, lead attorney representing the claimant, said in a complaint.

Petrobras, whose formal name is Petroleo Brasileiro SA, is facing a slew of USA class-action litigation claiming that years of corruption, including bribery, inflated the value of more than US$98 billion of its stock and bonds.

Gates foundation and WGI Fund alleged that Petrobras misrepresented its operations and financial situation time and again in order to raise capital from investors.

The trust manages the endowment assets and took the decision to sue own its own as it is hoping that in this way the foundation might recoup much of its losses on Petrobras’ American depositary shares. A Brazilian affiliate of Petrobras auditor PricewaterhouseCoopers (PwC) is also a defendant.

Shares of Petrobras (PBR – Get Report) closed down by 1.69% to $4.07 on Friday, as the Bill & Melinda Gates Foundation sues the company to recover stock losses resulting from the Petrobras corruption scandal.

According to the suit, accounting giant PwC played an important role in misleading investors by attesting to Petrobras’ financial statements.

“The lawsuit relates to investments made by an external manager who invests on behalf of the trust that holds the assets supporting the foundation’s activities”.

Petrobras’ market value has plunged more than 90% from almost $300 billion seven years ago. Bribes paid to Petrobras executives from construction and engineering companies over a decade is estimated at $2bn, according to prosecutors.

The lawsuit, filed late Thursday night in a Manhattan federal court, is just the latest legal attack against Petrobras.