Brazilian government lifts interim ban on Saipem

Petrobras building in Rio de Janeiro, Brazil. (Photo credit: Adobe Stock)

Brazil’s Office of the Comptroller General of the Union (CGU) reclassified the ban – originally issued in December 2022 – against Saipem to a two-year temporary suspension, the company confirmed on 12 January.

The CGU announced its final rulings in the administrative proceedings initiated against Saipem, which stemmed from “alleged irregularities” on a federal gas pipeline project from more a decade ago.

According to news reports, an investigation discovered evidence of a bribe prior to the origination of a December 2011 contract between Saipem and Petrobras, a state-owned Brazilian oil and gas production and exploration corporation.

It was alleged that a Saipem commercial representative paid bribes to an ex-Petrobras director to win the roughly US$140 million deal.

The work was for the installation of a subsea natural gas pipeline in the Santos Basin of the Atlantic Ocean, roughly 300-km southeast of Santos, Brazil.

KHL Group, reporting back in 2019, noted dozens of politicians were caught up in a broad scandal, which included former Brazilian President Luiz Inacio Lula Da Silva. As part of ‘Operation Car Wash’ – a multi-year government corruption scandal that started to unravel in 2014 – the former president was found guilty of receiving a beachfront apartment by engineering firm OAS in return for his help in winning contracts with Petrobras.

In December of 2022, CGU ordered an interim ban on Saipem doing work in Brazil, and the company has been barred from signing new contracts since.

Even though the two-year suspension is an improvement for Saipem compared to a total prohibition, the company noted it will appeal the most recent ruling.

“[Saipem intends] to appeal the decision in the appropriate jurisdictions, considering it to be inconsistent with what [was] demonstrated during the proceedings,” stated the company. It also added that, “The sanction has no impacts on the ongoing projects in Brazil since it applies solely to potential new contracts and concerns exclusively [on] dealings with the Public Administration.”