The Business Times

CEO of Brazil's Petrobras says he will not resign

Published Wed, Dec 17, 2014 · 10:44 PM
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[RIO DE JANEIRO] The chief executive of Brazil's state oil giant Petrobras said Wednesday that she will not resign despite the corruption scandal shaking the company and the ruling Workers' Party.

Saying she had President Dilma Rousseff's "trust," CEO Graca Foster said she and her board of directors would all be investigated as part of an independent audit ordered after investigators accused a corrupt network of laundering more than US$4 billion (S$5.24 billion) of company money, much of it allegedly going to politicians from Ms Rousseff's party.

Ms Foster also outlined a plan to reverse Petrobras's sinking fortunes by investing less and saving more in 2015.

Besides being engulfed in scandal, Brazil's largest company has also been hit hard by the recent slide in oil prices, sending its shares plummeting to a decade low this week.

Ms Foster, 61, said she had spoken several times with Ms Rousseff about resigning.

But ultimately she and her board of directors will remain after the leftist leader gave her vote of confidence, she said.

"I'm here today as the president of Petrobras, for as long as I have the president's trust and she believes I should stay," Ms Foster told a press conference.

"We're sitting here because we believe in this project." She said auditors would make it their priority to investigate the directors of Petrobras and its subsidiaries.

"They'll go into their closets, take a look at all their papers, take their computers, their iPhones, their iPads. And that's a very good thing. It's an independent investigation. It's apolitical," she said.

"But that investigation isn't enough. We need to give guarantees to the market, to regulators, to our shareholders, to those who invest in Petrobras." Vowing that Petrobras would emerge a "much better" company from the scandal, she announced 66 management measures she said would be taken to improve corporate governance, including creating a new directorship charged with overseeing legal compliance.

This year has been a rough one for Petrobras, which is also reeling from oil prices that have recently slid to less than US$60 a barrel - down almost 50 per cent since June - as well as a weakening real that has made it harder for the company to pay off the 80 per cent of its debt that is denominated in dollars.

Petrobras shares have lost half their value in three months.

And the company has repeatedly delayed releasing its third quarter financial results, spooking investors.

Ms Foster said the 61-year-old company was still not ready to release the results.

"We consider it prudent not to release them yet because... there may be new information and then we would have to announce further reductions in liquid assets," she said.

The company has said it will release the results by January 30.

For next year, Ms Foster said, the company's motto will be "save, save, save." "Spend less and do more," she said.

The Petrobras scandal erupted in March with the arrest of a former director who told investigators about a massive kickback scheme worth millions of dollars.

More than 35 people, mainly executives in the construction industry, have been accused of operating a cartel that inflated Petrobras contracts by up to six percent with illicit surcharges.

The extra cash would then be passed on to front companies to be laundered and paid out in bribes.

Dozens of politicians from three parties, including the Workers' Party, have been implicated, though so far none have been charged.

Police estimate more than US$4 billion was stolen in a decade.


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