Petrobras Vows Overhaul amid Scandal

Brazil’s state-owned oil giant Petrobras has vowed to do a better job policing itself, as it struggles to cope with the fallout of a huge corruption scandal.

Petrobras CEO Graca Foster said the company would create a compliance division tasked with tracking “internal processes” at the oil giant.

“We are working intensely to shore up our internal processes,” Foster told a news conference on Monday.

Brazil’s President Dilma Rousseff claims she had no knowledge of the massive kickback scheme, even though members of her ruling Workers Party have been linked to it.

Federal police over the weekend interviewed 23 people arrested on suspicion of corruption and money-laundering, including senior executives from some of Brazil’s biggest construction firms.

Former director Paulo Roberto Costa has told investigators that Petrobras paid millions of dollars to politicians and members of the ruling Workers Party between 2004 and 2012 to buy influence with cash creamed off from inflated contracts.

Accepting the potential need to accept asset write-downs if the graft allegations are ultimately proven, Foster said the board had given her unanimous backing to take all necessary steps, including the creation of the compliance directorate, to improve corporate governance in the wake of the scandal.

Last week, the ongoing investigation forced the company, which has brought in external financial consultants to probe the allegations, to postpone release of third-quarter earnings as it fights allegations of conspiracy, embezzlement and corruption.

On Monday, Foster and director of finance Almir Barbassa said that if graft accusations are confirmed they will have an impact on the results, which now are not expected before December 12.

“We are working as hard as we can to ready the earnings report,” said Barbassa, who stressed Petrobras would cooperate fully with investigators “to ensure the matter is resolved quickly.”

Petrobras shares were down 2.8 per cent in midday trading Monday and have lost about a fifth of their value to far this year, wiping out billions of dollars.

Also Monday, Petrobras cut its production growth target for this year from 7.5 per cent to 5.5 to 6.0 per cent owing to platform delivery delays and licensing processes despite nine straight monthly increases.


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