Rousseff Axes Petrobras Bosses amid Corruption Probes

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Brazilian President Dilma Rousseff is to replace the CEO and senior management of state-run oil company Petrobras in an attempt to draw a line under a huge corruption scandal that has rocked the government.

A huge corruption scandal forced the resignation of Petrobras CEO María das Graças Foster.
A huge corruption scandal has forced the resignation of Petrobras CEO María das Graças Foster. (Federal Senate)

The firm’s board of directors is due to meet¬†on Friday, February 6, to elect a new management team to replace CEO Maria das Gra√ßas Foster and five other senior directors, Petrobras sources told press.

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Foster’s departure follows revelations of a corruption scheme including money-laundering, bribery, and political kickbacks that benefited Roussef’s Workers’ Party, as well as opposition parties and private companies.

Credit rating agencies Moody’s and Fitch both¬†downgraded¬†the oil firm’s rating in the past week,¬†further compromising its ability to access international investment.

Authorities initially estimated the illegal activity diverted at least US$4 billion, while investigating officials have estimated that ongoing probes could put the number over the $28 billion mark.

Federal prosecutors revealed that they have already recovered roughly US$170 million involved in the scheme, and that over 230 small and big¬†companies are¬†being investigated. So far 86 people are facing charges, including several¬†senior managers from Brazil’s top construction firms, congressmen and other senior officials.

Fabio Fuzetti, a Sao Paulo-based oil analyst with Antares Capital Management, described Wednesday’s decision as “inevitable” although “a little¬†too late.”

“Petrobras is in an unsustainable position,” he told Associated Press. “They have to start to turn things around in a very significant way. It’s performing in a very worrisome way. Petrobras is in dangerous levels of debt,” he added.

On¬†Tuesday, February 3, Petrobras shares jumped more than 15 percent after Brazilian daily¬†Folha de S. Paulo reported Rousseff’s intention to force a board reshuffle. Shares jumped another 5 percent on Wednesday after the news was confirmed.

Sources: ABC News, BBC, CNBC.

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