Petrobras (PBR) Stock Slumps Today After Brazilian Court Documents Tie Bribery Case to Swiss Bank

NEW YORK (TheStreet) -- Shares of Petrobras (PBR) - Get Report are down 2.85% to $5.79 in morning trading today after documents released by a Brazilian court have outlined the alleged use of Swiss bank accounts for the payment of bribes in the Petrobras scandal, the Financial Times reports.

Pedro Barusco, a former Petrobras executive and key witness said in a statement that he laundered about $100 million in bribes partly through a web of accounts in several banks in Switzerland, FT said.

These include Bank Safra, where he reportedly said he opened several accounts "with the help of" Julio Faerman, a Brazil-based oil and gas industry consultant, and Denise Kos, a former official at the bank, according to FT.

Brazilian prosecutors have been investigating the the state-owned oil and gas company in an ongoing scandal that alleges that former company executives and politicians colluded with the energy group's contractors to receive millions of dollars of bribes in exchange for business deals.

"This doesn't come at a good time for them [the Swiss banks]," Guenther Dobrauz of the accounting firm PwC,told FT. "There is not a single Swiss bank left that will consciously try to make money that way. There is nowhere left to hide," Dobrauz added.

The stock is down over 46% from a year ago, which makes one wonder if the weakness is an opportunity for an attractive entry point.

Insight from TheStreet's Research Team:

Sham Gad, a contributor for TheStreet's RealMoney.com recently wrote 'Two Tempting Stocks You Should Avoid,' in which he detailed the dangers of getting into the stock.

Here's a snippet of what he had to say:

"I've commented frequently on investing in businesses trading at 52-week lows or at historically low prices. I've discussed the merits of buying into companies at points of maximum pessimism. But I've also highlighted the caveat that one should be careful when investing in this manner so as to not confuse opportunity with value trap.

There are some opportunities today that look like incredibly attractive long-term bets -- and they indeed may be -- but the risk is just not worth it. I'm willing to lose 5% to 10% of my capital if there is a compelling case that the upside is 100% or greater. However, taking on a risk of 20% or more for the same return is not an attractive bet in my view.

One stock in this category is Brazilian energy giant Petrobras (PBR). Trading under $7, the stock is down from $21 a year ago. Years ago, the company was valued much higher. It looks awfully attractive, trading at 6x earnings as well. Over the past several months, the company has been rocked by a bribery scandal that now appears to involve international investors. Last week, the CEO and five other senior executives left the company.

As Petrobras is controlled by the state, one may be tempted to assume that in the end, Brazil will do what is necessary to save it. That's likely true, but saving the company does not mean protecting the public equity holders, who are minority shareholders in this case. So while shares may double in the year to come, the downside is fraught with so many uncertainties. The biggest of those is the fact that there are no defined laws that will protect the equity holder."

-Sham Gad, 'Two Tempting Stocks You Should Avoid' originally published 2/10/2015 on RealMoney.com.

Want more information like this from Sham Gad BEFORE your stock moves? Learn more about RealMoney.com now.

Separately, TheStreet Ratings team rates PETROBRAS-PETROLEO BRASILIER as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PETROBRAS-PETROLEO BRASILIER (PBR) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins." You can view the full analysis from the report here: PBR Ratings Report