Eletrobras Said to Ready Delayed SEC Report With Graft Loss

  • Utility has postponed 2014 annual report to U.S. three times
  • Six executives said on leave after 1st phase of internal probe

Centrais Eletricas Brasileiras SA, the Brazilian state-run utility, has concluded the first phase of an internal investigation into alleged graft and is planning to take a writedown because of corruption when it files its long-delayed U.S. financial statements in mid-May, said two people with direct knowledge of the matter.

The company known as Eletrobras will present the 2014 annual report to its auditor, KPMG LLP, and the board for approval before sending it to the U.S. Securities and Exchange Commission by a May 18 deadline, said the people, who asked not to be identified because the matter is private. Eletrobras postponed the filing three times since April 2015 after KPMG refused to sign off on the report while the company investigated allegations of graft at its Angra 3 nuclear power plant in Rio de Janeiro.

Eletrobras hired a team of lawyers and specialists to carry out an internal investigation after the 1.4 gigawatt power plant was mentioned during testimony as part of the sweeping investigation known as Carwash, which began at the state-run oil giant Petroleo Brasileiro SA. Eletrobras relied on the same group of builders that admitted to paying Petrobras executive bribes in exchange for lucrative construction work.

At least six Eletrobras executives have been placed on temporary leave as the team, led by British-American law firm Hogan Lovells and Brazilian firm WFaria Advogados, carries out the probe, said the people. The group is still reviewing nine other projects, including the 30 billion-real Belo Monte hydroelectric dam deep in Brazil’s Amazon Jungle, to determine if any losses were incurred because of graft, they said.

Eletrobras said it will only comment on the investigation through statements to Brazil’s market regulator. The company said in a filing late Friday that it is working to file the 2014 and 2015 so-called 20-F forms by the May 18 deadline.

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