To his excellency the substitute federal judge of the 3rd federal criminal court of rio de janeiro

Introduction

Petróleo Brasileiro S/A (hereinafter referred to as ‘Petrobras’), a partly government controlled company with its head office in Rio de Janeiro and a majority of its voting capital owned by the Brazilian Federal Government, employs a number of such units in the domestic production of oil.

From the end of the 1990s, there was an increase in the use of FPSOs by Petrobras, and an initial question arose as to whether to purchase such units or to lease them.

Although some purchases were made, such as P-57, in most cases Petrobras elected to lease, for periods ranging between 5 and 30 years, FPSOs which had been constructed specifically for use in the intended field of exploration.

Normally, the leasing contract for an FPSO is related to a contract for the operation of the same FPSO, at a lower value. The Exploration and Production Department, with considerable input from Marine Engineering, was in charge of the leasing contracts for FPSOs, whilst the now non-existent Services Department (whose activities have been taken over by the newlycreated Department of Engineering) dealt with the operating contracts.

In the case of purchases of FPSOs, such as P-57, all activities were handled by the Services Department, with little participation by the Exploration and Production Department.

The contracts for FPSOs did not need to be submitted to the Board of Directors of Petrobras, approval by the Executive Board being sufficient.

The Dutch firm SBM Offshore N.V., present on the Brazilian market, as in African countries, with its main registered office in Monaco, commenced supplying FPSOs to Petrobras during the 1990s and continued to do so until the present. The FPSOs are used in the exploitation of oil discovered in the sub-salt stratum. Among the main competitors of SBM were Modec, Teekay, BW Offshore, Bumi Armada, Omni and Bluewater.

As regards Brazil, the principal sales agent for SBM Offshore was JULIO FAERMAN, who more recently started to be assisted by his partner LUIS EDUARDO CAMPOS BARBOSA DA SILVA.

FAERMAN was employed by Petrobras between 1964 and 1968. On leaving Petrobras, he continued to work in the oil industry and set up a company called Serpetro.

During the 1990s, FAERMAN represented the American company IMODCO, which was then acquired by IHC, the parent company of SBM. Consolidation followed, with the result that FAERMAN became the representative of SBM in Brazil.² In order to sign consultancy and representation agreements with companies in the SBM Offshore group, FAERMAN set up the company FAERCOM Energia Ltda in Rio de Janeiro in June 1995. The members were Marcello Faerman and Eline Faerman (JULIO FAERMAN’s children), along with Luiz Marcelo BittencourtFersura, as director, and Carlos Eduardo BittencourtFersura (JULIO FAERMAN’s stepchildren), each one holding 25% of the shares. JULIO FAERMAN was a director of the company. He and his wife NeideBittencourtFersura (or NeideBittencourt Faerman) were beneficiaries of the company.

FAERCOM signed various sales consultancy agreements with companies of the SBM group, signed by FAERMAN with representatives of SBM such as DIDIER KELLER, ROBERT ZUBIATE, Hanny Tagher and “TONY” MACE.

His commissions varied between 3% and 10%, depending on the type of contract between SBM and Petrobras or another company, the material supplied, and/or whether or not there was a bidding process. FAERMAN invariably received 1% in Brazil in FAERCOM accounts, with the issue of invoices and Central Bank registration, while SBM transferred the rest to the Swiss accounts of offshore companies belonging to FAERMAN, registered mainly in the British Virgin Islands and in Panama, in most cases by the Swiss banks themselves, such as J. Safra³, Pictet and Lombard Odier.

From these accounts in Switzerland, FAERMAN directed the banks to transfer funds to employees of Petrobras, based on the contracts of Petrobras with SBM, the top management of which not only acquiesced in the payments but also set up this financial structure to enable them to be made. At least one of them, ZUBIATE, Vice-President for the Americas, received transfers in Switzerland from Faerman on the basis of contracts between SBM and Petrobras.

In 2005, FAERMAN started to work with LUIS EDUARDO CAMPOS BARBOSA DA SILVA, who from the outset supplied services to FAERCOM through his company OILADVISE Consultoria e Engenharia Ltda ME, set up by LUIS EDUARDO on 08/07/2005 in Rio de Janeiro with his brother Luiz Felipe Campos Barbosa da Silva.

In February 2006, JULIO FAERMAN, acting as an individual and through his company FAERCOM, formed, together with LUIS EDUARDO CAMPOS BARBOSA DA SILVA, OILDRIVE Consultoria em Energia e Petróleo Ltda, with its registered office at the same address as FAERCOM, namely Rua da Glória, 344, salas 101/102, Glória, Rio de Janeiro/RJ. FAERCOM took 51% of the shares, and LUIS EDUARDO 49%. Nevertheless, profits were shared between FAERMAN and LUIS EDUARDO in the proportion of 50% for each of them. OILDRIVE took over the role of FAERCOM in the contracts with SBM, while FAERMAN and LUIS EDUARDO set up, with the help of the local banks in Switzerland, accounts in the name of offshore companies whose ownership was shared between them.

Both FAERCOM and OILDRIVE represented other companies, such as Lauritzen, Quantum, Progress Ugland, Wellstream and Rolls Royce, but the main company in terms of contracts, activities and income was always SBM.

At the end of January 2012, an attorney for the American company Noble Energy became aware of conduct involving the payment of bribes by SBM in Angola and Equatorial Guinea.

In the light of repercussions from the alarm raised by this attorney, the CEO of SBM, BRUNO CHABAS, who had taken up the post at the end of 2011, suspended payments to SBM sales agents worldwide, including FAERMAN and LUIS EDUARDO, as well as payments to offshore companies such as Bien Faire of JULIO FAERMAN, Madrill, connected with suspected payments of bribes in Angola, and Moswen, connected with suspected payments of bribes in Equatorial Guinea, with Hanny Tagher, ex-director of SBM, being active in both African countries as sales agent.

Subsequently SBM created the post of Chief Governance and Compliance Officer – CGCO, and contracted SIETZE HEPKEMA. An internal enquiry was set up, which decided to inform the authorities in the Netherlands and the United States of the case. The Netherlands is the country where SBM shares are traded (on the Amsterdam stock exchange), and a company of the SBM group is registered in the United States (in Houston), where the laws against corruption of foreign authorities are usually enforced very effectively. SBM did not notify the authorities in Monaco, where its management activities are centered, of the matter, or in Brazil, Angola or Equatorial Guinea, countries where the risks related to illegal activities are greater. Following this, SBM engaged the Dutch law firm De Brauw Blackstone and the American firm Paul Hastings to conduct an enquiry, part of whose conclusions and documentation were sent to the Dutch prosecuting authorities in 2014.

In October 2013, Jonathan David Taylor, a former employee of SBM who had taken part in the internal enquiry up to a certain point and had left the company in June 2012,⁴ posted an article on Wikipedia⁵ in which he stated that SBM was trying to cover up the fact of having regularly made improper payments, between 2005 and 2011, to persons in certain countries: Equatorial Guinea, Angola, Brazil, Malaysia, Italy, Kazakhstan and Iraq. As regards Brazil,⁶ JULIO FAERMAN and his companies were named as the main intermediary for improper payments made by SBM to employees of Petrobras.

According to the ex-employee of SBM, in statements made on 27/03/2012, Hanny Tagher (referred to as “HT”)⁷ confirmed that the 3% commission payable to JULIO FAERMAN, as set out in a specific contractual amendment, would be divided in the proportion of 1% to JULIO FAERMAN himself (“JF”) and 2% to employees of Petrobras (“Petrobras officials”).

Furthermore, according to the ex-employee of SBM, a document from the SBM internal audit, dated 17/04/2012, showed a total payment of US$ 139,216,000.00, during the years studied, to companies of JULIO FAERMAN: Faercom, Oildrive, Bienfaire, Jandell, Journey Advisors and Hades Production Inc.

In fact, as already pointed out above, FAERCOM and OILDRIVE are connected to FAERMAN. The other 4 companies mentioned (BIENFAIRE, JANDELL, JOURNEY ADVISORS e HADES PRODUCTION INC), as confirmed in this investigation, are also connected to JULIO FAERMAN. They are registered in the British Virgin Islands and own accounts in banks located in Geneva, Switzerland.

The ex-employee of SBM also referred to emails between representatives of SBM, mentioning, among other matters, a future meeting with the head of engineering at Petrobras, Figueiredo, in order to extend the lease of an FPSO, without a bidding process⁸.

Jonathan Taylor⁹ alleges that there was an intention at the very heart of SBM management to conceal any irregularities, especially as regards Brazil.¹⁰

Between February and March 2014, Petrobras set up an Internal Commission of Enquiry, whose Final Report, with documents, was sent to the Federal Public Prosecutor’s Office – FPPO. It was limited in its powers and investigative techniques, and did not succeed in finding definite proof of the matters disclosed through Wikipedia. However, it investigated various matters such as records of access to the company and telephone records, enquiries made to SBM in the Netherlands and various interviews, which produced valuable information for the ongoing state investigation.

As to the leaking of confidential information, as recorded in the Wikipedia article,¹¹ Petrobras found evidence of its existence, because there were administrative communications (emails) from SBM with 2 confidential documents of Petrobras,¹² one of them arising from the email of JULIO FAERMAN.

The total values of all contracts between Petrobras and SBM¹³ amounted to US$ 26,455,000,000.00 for leasing and operational services, as well as R$ 2,203,000,000.00 for construction work.¹⁴It should benoted that Petrobras refers to figures of US$ 26,455 billion and R$ 2,203 billion contracted throughout the whole period of business between the two groups, even though this does not correspond with the amounts actually paid to SBM, bearing in mind that the business also involved long term contracts, which could amount to 30 years (as in the case of FPSO Cidade de Anchieta – Espadarte), while others involved a 20 year period (FPSO Cidade de Paraty, FPSO Cidade de llhabela, FPSO Cidade de Maricá, FPSO Cidade de Saquarema).

As regards evidence of the existence of improper payments, according to the final report of Petrobras Internal Commission of Enquiry this consisted of:

1) the high value of commissions paid [to JULIO FAERMAN and subsequently also to LUIS EDUARDO CAMPOS BARBOSA DA SILVA];

2) commissions paid to various companies of one supplier of services;

3) payments to companies in tax havens – British Virgin Islands – BVI;

4) “complaint” filed by ex-employee Hanny Tagher [Jonathan Taylor surely?];

5) SBM’s knowledge of two confidential documents of Petrobras.

On 13/05/2014 SBM posted on its website the results of its concluded enquiry,¹⁶ stating that it had not found any definitive proof of corruption, but that it had come across certain indications (which it called “red flags”) and it confirmed the payment of US$ 139.1 million dollars¹⁷ to sales agents connected with Brazil, by way of sales commissions, during the years 2007 to 2011.¹⁸

On 12/11/2014, the Dutch Public Prosecutor’s Office(OpenbaarMinisterie, FunctioneelParket) issued a press release,¹⁹ announcing an out of court criminal settlement with SBM Offshore with regard to corruption in foreign countries (expressly mentioning Equatorial Guinea, Angola and Brazil), under which the company agreed to pay a fine of US$ 40,000,000.00 and a further US$ 200,000,000.00 in compensation (disgorgement). As regards Brazil, the Dutch Public Prosecutor’s Office confirmed the illegal payments made by SBM sales agents in Brazil to Brazilian officials:²⁰

“Brazil

“•the high amounts (in absolute terms) of commission that were paid to the sales agent and its companies;

“•a split between commissions paid to the sales agent between its Brazilian and its offshore entities; and

“•documents indicating the sales agent had knowledge of confidential information about a Brazilian client.

At the end of the day, the Brazilian criminal investigation may conclude that SBM paid a substantial part of the sums due to the companies FAERCOM and OILDRIVE not to Brazil but to accounts in Switzerland in the name of offshore companies registered in tax havens such as the British Virgin Islands (BVI), controlled by their sales agents JULIO FAERMAN and LUIS EDUARDO CAMPOS BARBOSA DA SILVA. These offshore companies, with which SBM had no contract, never issued any commercial or tax document referring to these sums.

JULIO FAERMAN and LUIS EDUARDO had recourse to accounts of the following offshore companies, all of them set up by the banks concerned, in order to receive in Geneva most of the commissions paid by SBM:

These improper payments were used to obtain different treatment for SBM,²¹ such as information on competitors and estimates of the price expected by Petrobras in bidding processes. It is certain that the payments helped, if nothing else, to improperly strengthen the links between SBM and its agents and officials at Petrobras who had decision-making powers, at least as regards the technical aspects of the FPSOs and other projects agreed between these companies.

2. Criminal conduct relating to contracts between Petrobras and SBM

1.1Leasing and operation of FPSO II and the beginning of the indicted criminal conduct

The contracts signed were BDC 101.2.159.96-1 and BDC 101.2.160.96-1 (relating to leasing and operation respectively), as well as 4 amendments to the leasing contract and 2 amendments to the service contract, which increased the value of the contracts, among other changes.²²

At the time of signature, SBM was represented by Terminal Installations Inc., through DIDIER HENRI KELLER,²³ and SBM do Brasil Ltda became an intervening party (Amendment 02 to the leasing contract).

JULIO FAERMAN was already the representative of SBM in Brazil, through FAERCOM Energia Ltda, and by virtue of the contract signed by him on 01/10/1996 with SBM Production Contractors, represented by DIDIER KELLER, played a specific part in the negotiations relating to FPSO II.

In this capacity, JULIO FAERMAN signed, for example, Amendment 02 to the FPSO II services contract.

The term of the contract was 5 years, starting from 11/03/1997, the date of acceptance of the FPSO by Petrobras.

The total value of the contracts was US$ 153,333,040.90.

In this contract, JULIO FAERMAN, with the knowledge and approval of DIDIER KELLER, then President of SBM, and ROBERT ZUBIATE, company Vice-President for the Americas, commenced making improper payments to employees of Petrobras.

The first beneficiary was PAULO ROBERTO BUARQUE CARNEIRO,²⁴ whom FAERMAN knew through ZUBIATE.

As FAERMAN states (statement made 14/05/2015, 17:30 – doc. 01), “the first payment commitment signed between the deponent and CARNEIRO was contained in the contract relating to FPSO 2 and subsequently in the contracts for FPSO Brasil, FPSO Espadarte, FPSO Marlim Sul and FPSO Capixaba”. CARNEIRO was paid by SBM and its agent, according to FAERMAN, by way of “voluntary remuneration for work carried out to facilitate the contracting process, a kind of remuneration for success in researching new technologies”.

CARNEIRO did not own any patent which guaranteed him legal remuneration for his work. The actual form of payment shows the illegality and the improper benefit: payments made from the accounts of the offshore companies Jandell Investments Ltda, Bien Faire Inc. and Valinor Consulting S.A.,²⁵ all owned by JULIO FAERMAN, held at J. Safra Bank in Geneva, with no basis in any contract, which were sent to an account in the name of an offshore company (Seashell) connected to CARNEIRO, at the Pictet Bank in Geneva, without appearing in the accounts of the payers.

The payments made to CARNEIRO represented a guarantee to SBM that he, acting in his official capacity, would favor the adoption by Petrobras of technology which he himself had helped to develop for SBM.

The value of the payments to CARNEIRO were equivalent to 0.25% of the contract values, according to FAERMAN. They were made in the period between 1999 and 2012 and related to the contracting of the following FPSOs by Petrobras from SBM:

1. FPSO II;

2. FPSO Cidade de Anchieta (Espadarte);

3. FPSO Brasil;

4. FPSO Marlim Sul; and

5. FPSO Capixaba.

CARNEIRO was a member of the Negotiating Committee for the contracts with SBM for these FPSOs.²⁶

The total amount that CARNEIRO received from FAERMAN, by way of the Jandell, Valinor and Bien Faire accounts, was at least US$ 8,498,603.73, divided between 139 transfers.

The actual total is greater, because the earliest payment that can be seen in these accounts dates from 03/03/2003 (account of offshore company Jandell),²⁷ in the sum of US$ 75,490.55, and it has been established that, as FAERMAN himself recognized, the payments to CARNEIRO commenced in 1999. It should be noted that the last known payment to CARNEIRO occurred on 20/01/2012. It came from the Bien Faire account and amounted to US$ 21,323.72.

Questioned at the first Petrobras Internal Commission of Enquiry into the SBM case as to his relationship with FAERMAN, CARNEIRO omitted to disclose that the latter was best man at his wedding: “On being questioned, the deponent considered the relationship with JULIO FAERMAN normal, without it being very close socially. Lunches only when they were at a meeting and afterwards went out for a working lunch. He states that he was invited to the 70th birthday party of JULIO FAERMAN, but did not go.”²⁸

ROBERT ZUBIATE, at a meeting in Rio de Janeiro, played a direct part in the decision to make improper payments to CARNEIRO, as FAERMAN revealed: “at a certain point the deponent and ZUBIATE decided to pay PAULO ROBERTO CARNEIRO a ‘fee’ for his technological contribution to the project by way of licensing; that at the time PAULO ROBERTO CARNEIRO was an employee of Petrobras; the deponent states that the decision to pay PAULO ROBERTO was made, as far as he remembers, in Brazil, probably at the office of FAERCOM, in the presence of the deponent and ZUBIATE” (statement made on 26/05/2015, 14:45 – doc. 02).

ZUBIATE not only took part in the decision regarding improper payments, but also benefited from them. During the same period in which FAERMAN arranged payments to CARNEIRO, he also made improper payments to ZUBIATE, at the same rate of 0.25% on the contracts of SBM with Petroras, firstly in Switzerland to the account of an offshore company named Bret (at Coutts Bank in Zurich), run by ZUBIATE, and later to an account in Uruguay.

Both these accounts belonged nominally to a friend of ZUBIATE, an Argentinian citizen whose surname was Cretacotta. Considering simply the Bret account (Bret being the name of ZUBIATE’s son), JULIO FAERMAN sent funds from his accounts for Journey Advisors (Pictet Bank), Bien Faire (J. Safra Bank), Valinor Consulting S.A (J. Safra Bank) e Jandell Investments Ltd (J. Safra Bank – all in Geneva), from at least 25/03/2004 until 15/06/2011, making a total of US$ 6,815,338.59, divided into 108 transfers. The total amount received by ZUBIATE, however, was certainly more than this figure, because it is clear from the statements made by FAERMAN and from the date the FPSO II contracts were signed that the payments commenced at least as early as 1999.

In summary, these were the sums agreed between FAERMAN, ZUBIATE and CARNEIRO, for payment to each of the latter:

These statements are corroborated by the financial structure set up to make the payments to FAERMAN, without DIDIER KELLER having sought to bring the payments within even the most basic compliance rules. SBM spent years making very large payments to offshore companies with which it had no contract, without any receipt or tax invoice being issued by these companies so as to record them in their accounts.³⁰ In the words of FAERMAN, “these offshore companies had no contract with SBM and did not issue any tax invoice or receipt to the Dutch company”.And again: “there was an agreement with SBM, through DIDIER KELLER, for payment abroad of part of the amounts contractually owed to FAERCOM” (statement of 14/05/2015, at 14h30m – doc. 03).

Incidentally, it was not only the payments which were confidential at SBM, but also the contracts. This is shown by the fact that they were kept in the safe of the CEO “TONY” MACE.³⁵

Under the contracts for FPSO II, there were also improper payments by SBM, via FAERMAN, to PEDRO JOSÉ BARUSCO FILHO.³⁶

As FAERMAN describes it, the first contract in which he had contact with BARUSCO concerned FPSO II, when BARUSCO, who had somehow guessed that there was an agreement with CARNEIRO, also asked for a “commission” and was offered 0.25%, the same as CARNEIRO and ZUBIATE.

FAERMAN stated that “both the deponent and SBM executives were convinced that if commission was not paid to BARUSCO, he would certainly cause problems for the business relationship between SBM and Petrobras, including placing obstacles in the way of new business between the companies” and that “Zubiate was not only aware of the agreement with BARUSCO, but even before the meeting between the deponent and BARUSCO, he had told the deponent that something would have to be done with regard to BARUSCO, otherwise he would not let them work” (statement of 21/05/2015, at 10h30m – doc. 05).

The payments from FAERMAN to BARUSCO came principally from the accounts of the offshore companies Jandell Investments Ltd, Bien Faire Inc, Valinor Consulting S.A, and Avellaneda Trading S.A,³⁷ all at the J. Safra Bank in Geneva, and from Journey Advisors at Pictet Bank in Geneva.

Later, in other contracts, now with LUIS EDUARDO CAMPOS BARBOSA DA SILVA playing a role, the latter and FAERMAN used the accounts of the offshore companies Hades Production Inc, Tori Management Corp. and Boslandschap Services Inc., all also held at J. Safra Bank in Geneva.

In total, there were at least 168 transfers from FAERMAN to BARUSCO, and LUIS EDUARDO was involved in at least 22 of these transfers.

BARUSCO received these improper payments (bribes), as regards SBM, in accounts held by Tropez Real Estate S.A, Marl Trader Services Ltd and Dole Tec Inc, as well as in account no. 601244 in his own name, all at J. Safra Bank in Geneva.

According to FAERMAN, the amount of the payments to BARUSCO equalled 0.25% of the contracts during the period between 1999 and 2012, and related to the contracts for FPSO II, FPSO Cidade de Anchieta (Espadarte), FPSO Brasil and FPSO Capixaba. Subsequently BARUSCO started to demand larger amounts, around 1%, when he took up the post of Executive Manager of Engineering in the Services Department, reporting to RENATO DE SOUZA DUQUE, with whom he jointly commissioned the offences of passive corruption and other offences. As stated by JULIO FAERMAN, referring to the SBM contracts in which commissions of 1% were paid to BARUSCO (turret for P-53, two mooring buoys for PRA-1 and purchase of P-57): “BARUSCO was now Executive Manager in the Services Department, and his attitude changed, because, as stated, he started to demand payment of commission at the rate of 1%, saying that he ‘needed’ to receive such sums, with the implication that he would be passing on part of them to someone else. The deponent and LUIS EDUARDO were present at the meeting in which BARUSCO demanded a rise in his commission to 1%.” (statement of 21/05/2015, 10h30m – doc. 05).

Although the agreements FAERMAN made with CARNEIRO, ZUBIATE and BARUSCO, with the blessing of KELLER, occurred at different times, the payments naturally commenced on subsequent dates, because the improper payments depended on (i) the execution of the contracts, (ii) subsequent payment by Petrobras to SBM and, finally, (iii) payment by SBM to FAERMAN.

The improper benefits received directly by PAULO ROBERTO BUARQUE CARNEIRO and PEDRO JOSÉ BARUSCO FILHO (who was in a management position) with regard to FPSO II originated by virtue of their status as employees of Petrobras,and were promised and agreed by ROBERT ZUBIATE and JULIO FAERMAN, and paid by the latter, on the orders of DIDIER KELLER.

The part played by BARUSCO, and, principally, by CARNEIRO was essential for SBM to be technically able to be contracted directly by Petrobras, as there had been no bidding process for FPSO II.

The fact that these sums were paid outside Brazil was not declared to the relevant Brazilian federal authorities by FAERMAN, BARUSCO or CARNEIRO.

The nature, origin, location, movement and ownership of these sums, the proceeds of crimes committed against the public purse, were concealed and disguised, inter alia through the use of companies set up in tax havens, especially in the British Virgin Islands.