Petrobras urges US court to throw out investor suit

Petrobras asked a US court Thursday to dismiss a class-action lawsuit from investors who claim they overpaid for the Brazilian state-owned oil firm's assets due to a massive corruption scandal.

Roger Cooper, an attorney for Petrobras, told the US District Court in New York that the scandal was the result of "mismanagement" and "irregularities" taken by a handful of Petrobras officials and did not impugn the group as a whole.

Cooper urged US District Judge Jed Rakoff to dismiss the federal case, which has been brought by individual investors and US and European pension funds who argue they overpaid for Petrobras investments based on the oil giant's erroneously inflated value.

Petrobras in April took a $17 billion write-down amid the scandal.

"They inflated their earnings," said Jeremy Lieberman, an attorney for plaintiffs. "You have a system of (a) revolving door of fraud."

Rakoff said he would announce a decision within the next two weeks.

In a case that has been called the biggest corruption probe in Brazilian history, prosecutors say Petrobras executives colluded with construction companies to massively overbill the oil giant for projects and use part of the money to bribe politicians and parties, including the ruling Workers' Party.

Besides Petrobras, the scandal has marred the Brazilian construction industry, with police on June 19 arresting the chief executives of construction giants Odebrecht and Andrade Gutierrez.