Brazil’s embattled Petrobras put a $2 billion price tag on corruption related expenses Wednesday when it released its long awaited 2014 results after months of delays.
The company booked a $7.15 billion loss for 2014 primarily due to a $14.76 billion impairment charge and a $2.05 billion write down for “improperly capitalized additional spending” tied to an ongoing corruption probe.
Petrobras said it was unable to determine how large each improper payment was and said the write downs “reflect the total overvaluation” of assets stemming from corruption.
“The company has not yet recovered any sum related to the improper payments and is unable to reliably estimate any recoverable amount at this moment,” Petrobras said.
The probe, known as Operation Car Wash, was launched last year and has already landed three former executives in jail.
Brazilian prosecutors allege that Petrobras employees collaborated with engineering and construction firms to inflate the price of contracts and skim off excess funds.
In the earnings report Petrobras said it had identified a “cartel” that systematically imposed additional spending in the acquisition of fixed assets by Petrobras” from 2004 to April 2012.
However, Petrobras did not name the companies involved with the alleged cartel activities.
Last November a Brazilian judge froze $16.8 billion in assets belonging to suspected participants in the corruption schemes.
Moody’s downgraded the company’s investment rating to junk in February citing concerns over liquidity and the corruption investigation.
Petrobras booked a net income loss of $1.29 billion for 2014, a $760 million improvement over the company’s 2013 performance.
The company also reported a $1.75 billion loss in the third quarter of 2014 and a $8.8 billion loss in the fourth quarter stemming from the impairment charges and project planning issues with refining activities.
Despite its legal and financial woes, the company’s worldwide natural gas and oil production climbed 5 percent in 2014 over the previous year thanks to record breaking production at the company’s pre-salt projects.
Petrobras pumped a record 713,000 from its pre-salt projects at the end of December.