Brazilian Bribery Claims Splash to Electric Utility

     MANHATTAN (CN) – Shareholders sued Brazil’s largest electricity company Eletrobras in New York on Wednesday making bribery allegations that mirror those a federal judge recently advanced against the nation’s oil company, Petrobras.
     The Brazilian investigation “Operation Carwash” has been associated for more than a year with corruption claims against Petrobras, which led to more than 40 indictments on racketeering, bribery and money laundering charges in an investigation implicating thousands of others.
     Investor lawsuits against the oil company poured into the Southern District of New York in late 2014, around the time word got out that the Securities and Exchange Commission put Petrobras under investigation.
     U.S. District Judge Jed Rakoff advanced their consolidated class action earlier this month.
     The first shareholder class action against Eletrobras landed in the same courthouse on Wednesday.
     Representing a class of “at least hundreds” of shareholders, lead plaintiff James Franklin claims that Eletrobras kept its investors in the dark for more than a year that the CEO of its subsidiary Eletrobras Termonuclear S.A. (aka Eletronuclear) allegedly took bribes.
     The class period begins in Feb. 10, 2014, when Electrobras announced its winning bid for the nuclear power plant Angra 3.
     Only months later, on April 30, 2015, would Eletrobras put out a press release disclosing that a cooperating witness in the “Operation Carwash” investigation said during a plea bargain that “there were discussions negotiating the payment of alleged bribes to the CEO of Eletronuclear, Othon Luiz Pinheiro da Silva” regarding that plant.
     Eletrobras tapped the U.S.-based law firm Hogan Lovells to lead an internal probe, the Financial Times reported in June.
     The shareholders seek unspecified compensatory damages against Electrobras, its CEO Jose da Costa Carvalho Neto, and CFO Armando Casado de Araujo, for two counts of securities violations.
     They are represented by Phillip Kim of the Rosen Law Firm, P.A.

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