Brazil prosecutors reject SBM leniency deal for Petrobras graft

By Jeb Blount

RIO DE JANEIRO (Reuters) - Federal prosecutors in Brazil rejected a $328.2 million (247.34 million pounds) deal on Thursday allowing Dutch oil-ship lesser SBM Offshore NV to avoid prosecution for corruption related to its contracts with state-led oil company Petrobras.

The decision was made by a federal prosecutor review board, which said numerous problems needed to be addressed before the deal could be approved.

SBM officials did not immediately respond to requests for comment.

The deal failed to provide authorities with enough data, documents and other information to assist in further investigations of corruption at Petrobras, the board said.

A series of widening investigations that began in 2014 have shown that Petrobras officials conspired with major contractors to fix prices or arrange bribes, in a sweeping kickback scheme that has engulfed a vast swath of Brazil's political class and business elites.

SBM, was one of the first companies to get caught up in the scandal.

SBM is the largest lesser of floating oil production, storage and offloading (FPSO) vessels. The company has been accused of paying bribes to officials of Petroleo Brasileiro SA , or Petrobras to win FPSO lease contracts.

Petrobras operates the largest fleet of FPSOs in the world. Without the deal, Petrobras might be forced to cancel contracts with SBM that could cut output by 15 percent between 2016 and 2020 and cost Petrobras $12.7 billion in revenue, Brazil's transparency, regulation and control ministry (TRCM), said in a statement on Thursday.

The deal rejected on Thursday, known as a lenience accord, was completed in negotiations between SBM and the TRCM in July. It offered SBM immunity from prosecution in exchange for an admission of guilt, the provision of information and evidence that could help further an ongoing corruption investigation at Petrobras.

It also included a $163 million fine, of which Petrobras will receive $149.2 million. Petrobras would be further compensated by SBM reducing the value of its contracts by $179 million. Another $13.6 million would be paid to prosecutors to help finance additional corruption investigations.

The review panel said prosecutors were giving up too much in exchange for the fines to be paid by SBM. It also said the company had been more forthcoming with prosecutors in the United States and Europe about crimes in Brazil than it had with authorities in the South American country.

The board sent the deal back to prosecutors in Rio de Janeiro, where Petrobras is based.

(Reporting by Jeb Blount and Marta Nogueira; Editing by Tom Brown)

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