The chief executive and other senior management at Brazil's Petrobras resigned on Wednesday amid a festering corruption scandal, setting off a scramble to find replacements capable of restoring investor confidence in the state-run oil company. The firm's board of directors will meet on Friday to elect a new management team to replace CEO Maria das Gra?as Foster and five other senior executives, Petrobras said in a securities filing.
Petrobras shares jumped as much as 7.8 percent in early trading in Sao Paulo on the news before paring gains to trade about 1 percent higher in mid-afternoon. The stock rose more than 15 percent on Tuesday - its biggest one-day gain in 16 years - helped by reports that President Dilma Rousseff had decided to replace Foster by the end of the month. The timing of the resignations came as a surprise to some in the Rousseff administration, which was hoping for more time to find potential replacements, a government source told Reuters on condition of anonymity.
The pressure on Foster to step aside has been mounting since Petrobras released unaudited quarterly results two weeks ago that did not include any corruption-related writedowns. On Tuesday night, protesters were banging pots and pans outside her home in Rio de Janeiro when she returned home from a meeting with Rousseff in Brasilia. Prior to Wednesday's resignations, Rousseff had already asked Finance Minister Joaquim Levy, a University of Chicago-trained economist and former banker, to help sound out potential candidates for a new Petrobras leadership team, another government source told Reuters on Tuesday.
The names rumoured to be under consideration for CEO include former banker and central bank governor Henrique Meirelles, the former chief executive of iron-ore miner Vale, Roger Agnelli, Vale's current CEO Murilo Ferreira and former Petrobras and OGX executive Rodolfo Landim. Given the daunting task of turning around Petrobras and Rousseff's reputation as a micro-manager of the company's affairs, it remains unclear if the government will find any takers for the job quickly.
Chief Financial Officer Almir Barbassa and the heads of the gas and energy, exploration, refining and engineering divisions also resigned on Wednesday. Recently appointed corporate governance manager Jo?o Elek and corporate affairs chief Jose Dutra did not, a source with direct knowledge of matter said. Investors have been betting that a more market-friendly leadership team at Petrobras will help the scandal-tainted firm regain credibility and ramp up production and boost profit. "Gra?a (Foster) was not the biggest problem at the company, but it's a message," said Jo?o Pedro Brugger, equities analyst at Leme Investimentos in Florian?polis, Brazil.
The Petrobras scandal has snowballed into a major headache for Rousseff, who served as chairwoman of the company's board between 2003 and 2010. During that tenure, Foster rapidly climbed the company ranks, eventually becoming CEO in 2012, just over a year after Rousseff became president.
Police say they uncovered a price-fixing, bribery and political kickback scheme that benefited Rousseff's Workers' Party and other parties from the ruling coalition. Three former Petrobras directors and three dozen others, including executives from major engineering firms, have already been arrested. Both Rousseff and Foster have denied any knowledge of the scam, and neither has been charged with any wrongdoing. Rousseff's political opponents, who saw Foster as the president's last line of defence, have sped up efforts to launch congressional investigations into the Petrobras kickback scheme, seeking to hold her government responsible for the corruption.