Petrobras vows overhaul amid graft allegations

GMT 20:57 2014 Monday ,17 November

Arab Today, arab today Petrobras vows overhaul amid graft allegations

Petrobras' Abreu e Lima oil
Rio de Janeiro - AFP

Brazil's state-owned oil giant Petrobras vowed Monday 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.
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 percent in midday trading Monday and have lost about a fifth of their value to far this year, wiping out billions of dollars.
Unable to unveil complete figures from independent auditors PricewaterhouseCoopers, Petrobras released merely operational results.
Also Monday, Petrobras cut its production growth target for this year from 7.5 percent to 5.5 to 6.0 percent owing to platform delivery delays and licensing processes despite nine straight monthly increases.
Rousseff, a former Petrobras board chair, said after the G20 summit in Brisbane that the investigation could "change Brazil forever" by ending a culture of impunity.
"It is a symbolic case for Brazil," Rousseff said.
"It is the first time we have had a concrete investigation into corruption in Brazil, in either the public or private sectors."
Rousseff added that all contracts signed between Petrobras and large construction companies suspected of corruption in an affair dubbed "Operation Car Wash" would be reviewed.


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