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Petrobras leadership quits in wake of corruption scandals

Xinhua, February 5, 2015 Adjust font size:

The CEO and five other top executives of Brazil's state oil giant Petrobras have stepped down to make way for a new leadership, the scandal-hit company announced Wednesday.

"The board of directors will meet Friday to elect the new management, following the resignation of the (company's) president and five executives," Brazil's biggest company said.

Company shares rallied more than 7 percent on the news, Brazil's G1 news website reported. On Tuesday, as rumors of the impending resignations swirled, shares closed even higher, at more than 15 percent.

On Tuesday, Petrobras' outgoing CEO, Maria das Gracas Foster, met with Brazilian President Dilma Rousseff, and according to media reports, the two agreed that the former would leave the company she had been running since Feb. 12, 2012.

The oil giant has been mired in scandals since investigators revealed late last year that construction and supply firms had been paying high-level executives kickbacks in exchange for major contracts. The scheme is believed to have cost Petrobras some 2.1 billion reais (766.5 million U.S. dollars) between 2004 and 2012.

Several Petrobras executives and directors were arrested, and the scandal can grow even more as denouncements are still being made.

Petrobras has suspended dozens of its suppliers due to supposed participation in the scheme, and is seeking new partnerships with both local and foreign companies.

As months passed, there was a significant fall in Petrobras' market value and in the price of the company's stocks, which accumulated a decrease of 37 percent last year. From February 2012 to January 2014, Petrobras lost two thirds of its market value.

Last week, the company finally issued its third quarter reports for 2014, after postponing them twice, and estimated its assets were overvalued by 88.6 billion reais (32.3 billion dollars) due to some 31 padded contracts with outside firms.

The company's current financial mess has led rating agencies Moody's and Fitch to downgrade its credit rating.

The case could also have political repercussions, as possibly dozens of legislators belonging to both the ruling and opposition parties have been implicated in the scandals. Endi