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Providence, R.I., sues Brazil's Petrobras

The city contends the scandal has lowered the value of its investment.

By Ed Adamczyk
Petrobras is being sued by the city of providence, R.I. CC/wikimedia.org
Petrobras is being sued by the city of providence, R.I. CC/wikimedia.org

PROVIDENCE, R.I., Dec. 26 (UPI) -- The city of Providence, R.I., has sued the Brazilian state-run oil company Petrobras for bond losses the city sustained in a company corruption scandal.

The lawsuit, filed Wednesday in New York, claims Petrobras made false statements that inflated the company's value, and when the corruption scandal was revealed in Brazil, the city's investment declined.

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Several other U.S. investors who bought financial instruments, known as American Depository Receipts (ADRs), have sued Petrobras, but the Providence suit names several of the company's executives as defendants.

Thus far, 39 people in Brazil have been indicted on corruption, money laundering and racketeering in the scandal. The Brazilian Federal Police say the indicted members of the group moved over $3.9 billion in what they term "atypical" financial transactions. Brazilian courts have blocked about $270 million in assets of the suspects.

On Friday, the bond rating company Moody's Investors Service placed Petrobras' credit rating on review for a possible downgrade, and shares of Petrobras' ADRs fell 1 percent.

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