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The Company informs its shareholders and the market in general that received today, the letter of the Comissão de Valores Mobiliários (“CVM”) No. 561/2015/CVM/SEP/GEA-1, requesting clarification regarding the news published by the news real-time service www.estadão.com.br, under the section “news” and heading "Investigation at Eletrobras increased by five times”, as transcribed by the end of this Announcement.

 

In response to the mentioned letter, the Company hereby clarifies to its shareholders and market in general the following:

 

1.       As mencioned in the market announcements of June 10, 2015; July 9, 2015; July 13, 2015 and July 21, 2015, the investigation conducted by the the international law firm Hogan Lovells is on going;

 

2.       Likewise, as market announcements of May 14, 2015; June 10, 2015; July 9, 2015; July 31, 2015 and August 14, 2015, an Independent Commission for Management Investigation ("Committee") was created  with the following independents members: Dr. Ellen Gracie Northfleet, Dr. Durval José Soledade Santos and Dr. Manoel Jeremias Caldas Leite;

 

3.       The mentioned news does not present any new fact that are not already available to the market, through tEhe appropriate Company communication channels, as required by the applicable law.

 

 

 

 

Rio de Janeiro, December 21, 2015.

Armando Casado de Araujo

 

Chief Financial and Investor Relaton Officer

 

 

LetterTranscription - Comissão de Valores Mobiliários (“CVM”) no. 561/2015/CVM/SEP/GEA-21, December 21, 2015

“Subject:               Clarifications Request

 

Mr. Director,

1.       We refer to the article published on December 20, 2015, at www.estadao.com.br, News section, under the heading: "Investigation at Eletrobras increases by five times", including, among other matters, the following statements:

The appointment of the former Minister of the Federal Supreme Court (STF) Ellen Gracie to the Special Committee's composition follows the investigations of irregularities within the Eletrobras brought new proportions to the work that was being done by lawyers and experts in the technology area. With the status of who was already a member of the Independent Committee of Petrobras, the minister ordered the expansion of the scope of the investigations also in Eletrobras, which will result in a job five times higher than that originally planned. More than 100 professionals are investigating at this time, something in the house of thousands of people who may have information on irregularities in the electrical state. Besides increasing, the number of people involved in the work, including researchers and investigated the report of Broadcast, real-time service of the State Agency found that the activities will also include new companies, such power plants of TelesPires and São Manoel.

The investigations began in June, still collecting data and perception of meetings of Eletrobras operations, and other activities. In September, indicating Ellen Gracie, the meeting was expanded. In principle investigations should focus on the construction of Angra 3, Jirau, Belo Monte and Santo Antonio, now the list also includes plants TelesPires, São Manoel, Mauá 3, Simplicio and Tumarin. The investigation focus is on the relationship between companies controlled by Eletrobras and contractors mentioned in the investigations by the Federal Police as part of Operation ‘Lava Jato’.

"The investigation into the Petrobras has started before and, therefore, Ellen Gracie, with the experience of the ongoing activities in that company, requested a scope expansion within the Eletrobras", said a source with knowledge of the progress of investigations and who asked not to be identified. Sought for comment, Minister Ellen Gracie was not found to be interviewed.

 

 

As the deadline for the final report was held in March 2016, the companies involved in investigative activities renegotiated new contractual terms with Eletrobras. There are at the moment about 100 people involved in these investigations. These include lawyers of the anglo-americand Hogan Lovells  and Brazilian WFaria lawyers, technology experts of the companies Risk Control, Kroll and Eletrobras' own employees.

The number of people who may have some information relevant to the object of research, in turn, ran into the thousands, according to the Broadcast found. "All the necessary equipment has been collected, the data are crossed and from that stage arise various information. It is a mining work," the source said.

As the deadline is short, several activities are taking place in parallel. On one expert hand in the technological area track words that may suggest irregularities, if the words "café" (‘coffe’), "cafezinho" (expression for ‘coffe’) and "Pixuleco", besides the names of the construction companies mentioned in Lava Jato, among other topics, lawyers responsibility is to hear people from different hierarchical levels within the Eletrobras and special purpose entities (SPEs) responsible for the plants under investigation.

The task of researchers is to identify if there was any irregularity, who are the people behind such irregularities, what was the impact of such a practice to Eletrobras and what actions would be necessary to avoid that this situation happen again. The result of the searches have been weekly shared with the Special Committee, this formed by Justice Ellen Gracie, the former director of the Brazilian Securities Commission (CVM) DurvalSoledade and the representative of minority shareholders in the supervisory board of Eletrobras, Manuel Jeremias Leite Caldas.

Changes

The Executive Board of Eletrobras does not grant an interview to discuss this matter. In a statement, the state merely informed that the investigation is ongoing and at the end of the activities, "the company will inform the market, through the appropriate channels, the result."

As a result, it is still not possible to determine if the investigation progress resulted in practical action within the state's electricity sector. The investigations made by the Federal Police, however, have already caused the resignation of Eletronuclear´s CEO, Othon Luiz Ribeiro da Silva.

The admiral was remanded in custody on July 28 when it was triggered Operation ‘Radioactivity’. Director of Planning and Engineering at Eletronorte, AdhemarPalocci, the former Minister of Finance Antonio Palocci´s brother, was also removed from the company.