Jail time for OAS executives
06 August 2015
José Aldemario Pinheiro Filho, the former president of Brazilian contractor OAS, and four other company executives have been sentenced to jail for their part in the Petrobras corruption scandal. It is the second wave of convictions in the case, following the prosecution of senior figures from Camargo Corrêa last month.
Mr Pinheiro was sentenced to 16 years and four months in prison having been found guilty of conspiracy, bribery and money laundering. Lawyers for Mr Pinheiro are reportedly planning an appeal against the ruling.
Unlike Dalton Avancini and Eduardo Leite of Camargo Corrêa who were sentenced to house arrest following plea bargain arrangements, no such deal appears to have been offered to the former OAS management. The judge in the case, Sergio Moro, is reported to have said OAS should have come clean early in the Operation Lava Jato (Operation Carwash) investigation into corruption at Petrobras.
OAS is also in the midst of bankruptcy protection proceedings, which were initiated in April. Since then it has presented a recovery plan to its creditors. It has also received a BRL 800 million (US$ 230 million) debt in possession (DIP) loan from Australian infrastructure operator Brookfield Infrastructure to keep the business running. This is a special form of finance for financially distressed companies, which is considered senior to equity claims as well as other debt.
OAS has put its stake in Brazilian infrastructure operator Invepar up as collateral against the loan. The company said in December that it planned to sell its holding in Invepar, and has since added that it will repay Brookfield’s loan when a deal comes to fruition.
According to sister magazine Construction Latin America (CLA), OAS is the 4th largest contractor in Brazil and the 5th largest in Latin America.