HOUSTON—The criminal probe that left Petrobras at the center of a massive bribery and bid-rigging corruption scandal has resulted in more than 90 convictions with hundreds more charged or under investigation.

Dubbed Operation Car Wash, the case hit debt-laden Petrobras during one of the worst downturns in the oil and gas sector’s history. But it may also be an opportunity for investors to clean up, according to law firm Mayer Brown.

In an April 5 panel discussion led by Mayer Brown, attorneys and the former Brazilian attorney general waded into the investigation, risks and the money-making potential of doing business in South America.

The scandal involves 16 companies and alleged kickbacks that could total as much as $1.6 billion. Authorities have so far charged 179 people and 232 others are under investigation.

But the statistics, as presented by Mayer Brown, are subject to change considering Brazilian authorities are still issuing warrants more than two years after federal authorities made the investigation public.

The scandal may have cast a shadow on the potential of Brazil’s enormous presalt hydrocarbon resources offshore and other oil and gas reserves onshore, making investors and would-be investors skittish.

But under the ashes of wrongdoing is the potential for very fertile ground.

Petrobras wants to unload about $15.1 billion of E&P, downstream and gas/power assets. The company said it aims to reduce leverage, preserve cash and focus on priority investments, namely oil and gas in Brazil with high productivity and return.

“That opportunity comes from the fact that there are tons of distressed assets that Petrobras is selling,” said Larry Urgenson, co-leader of Mayer Brown’s global anti-corruption and Foreign Corrupt Practices Act practice.

Investors want to know about safeguards, especially when dealing with companies under federal scrutiny.

Policing Companies

Panelists agreed that new laws and regulations in Brazil—coupled with the fear of landing in jail alongside former billionaire oil executives—are transforming the country’s business atmosphere.

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Brazil strengthened its anti-corruption laws with the Clean Companies Act. Implemented in 2014, the law—which applies to all industries—targets bribery, bid rigging and fraud in public tenders and contracts. The law holds companies accountable for their employees’ actions.

Violators face fines of up to 20% of the company’s revenues, asset forfeiture, activities suspension, debarment and dissolution, according to Mayer Brown.

The law also contains a successor liability provision. In cases of a merger or acquisition, the successor entity can be held liable for damages caused by the premerger company for acts done beforehand.

Yet, as a matter of policy, Urgenson questioned applying the provision to “clean” companies wanting to purchase distressed assets. “Economically, if you create those kinds of barriers it might create a negative effect on the price,” he said.

But overall Brazil’s regulatory and legal changes will help make the county a better place for business.

“Companies have been changing the ways they have been doing business,” said Alex Chequer, co-leader of Mayer Brown’s energy group and oil and gas group leader. “They are afraid, organizing their compliance departments and appointing directors for compliance issues.”

There is still work to be done. Challenges include a lack of understanding by all enforcement agencies of the Clean Company Act among other issues. The U.S. has a stable and established process for mergers and acquisitions, but “the Brazilian government isn’t there,” Urgenson said.

In a presentation, Mayer Brown referenced practical advice on planned investments, including conducting due diligence, and determining potential liabilities.

The Prize

Brazil had 15 billion barrels of proved oil reserves in 2015, mostly offshore, according to U.S. Energy Information Administration (EIA) estimates. The number is expected to increase as presalt resources are further explored, the EIA said.

For now, panelists suggested the federal government’s spotlight is focused more on criminal activity than land deals in a sub-$40 price environment.

That seems likely to change as Petrobras works to sell assets in a tough commodity-price climate.

“The oil price is low, but the oil is there and at some point they will produce this oil,” Chequer said.

Oilfield services and drilling companies and FPSO operators that may have once found it difficult to get into the Brazilian market now have an opportunity to do so, he added, noting some are returning without naming specific companies.

“They are back because they see that the business practices have been changing and they are looking forward to future opportunities,” Chequer said.

Velda Addison can be reached at vaddison@hartenergy.com.