The CEO of Brazil's state oil giant is out and the stock is soaring
ReutersPresident of Brazil's Oil Company Petrobras Maria das Gracas Silva Foster attends a meeting of the supervision and control committee, discussing corruption allegations involving the purchase of a refinery in Pasadena, Texas, at the Lower House of Congress in Brasilia April 30, 2014.Brazilian President Dilma Rousseff will replace the chief executive and other senior managers at state-run oil company Petrobras this month in an effort to turn the page on a widening corruption scandal, Bloomberg reports.
Petrobras shares jumped more than 15%, their biggest one-day gain in 16 years, after a newspaper first reported that Rousseff intended to replace Petrobras CEO Maria das Graças Foster.
Shares jumped another 5% on Wednesday after the news. Brazil's stock market is up about 1.2%.
A government source with knowledge of the matter said Rousseff had accepted Foster's offer to resign and would seek a replacement with experience in the oil industry. New senior management will come from within the company and elsewhere in the private sector, the source told Reuters on condition of anonymity.
Petroleo Brasileiro SA, as Petrobras is formally known, declined to comment.
Investors bet on Tuesday that new leadership will help restore credibility to the scandal-tainted firm and ramp up production and boost profits, traders said.
Petrobras preferred shares, its most-traded class, jumped 15.5% in Sao Paulo to close at 10 reais.
It was the largest one-day jump since Jan. 15, 1999, also helped by a sharp rise in oil prices.
KICKBACK SCHEME
Police say they have uncovered a price-fixing, bribery and political kickback scheme that allegedly benefited Rousseff's ruling Workers' Party as well as others.
The illegal activity, authorities allege, diverted at least $3.7 billion and perhaps more than $28 billion from Petrobras coffers.
Petrobras said last week that the corruption was one of several factors that helped wipe out a net 61.4 billion reais ($22.7 billion) from the value of its assets, such as refineries and oil platforms, but it refused to take a charge against earnings.
Rousseff has asked Finance Minister Joaquim Levy, a University of Chicago economist, to help Petrobras sort out the best accounting methods for handling its thorny balance sheet, two government sources told Reuters on condition of anonymity.
Levy, who stepped down as head of asset management at Banco Bradesco to join the government last month, is also helping to find new names for Petrobras' board of directors, according to the first government source.
Re-elected in October, Rousseff had stood firmly behind Foster, a longtime associate and close friend.
A Petrobras employee since the 1970s, Foster moved up company ranks rapidly during Rousseff's 2003-2010 tenure as chairwoman of Petrobras' board of directors.
Foster has said publicly that she offered to resign when the corruption scandal broke, but she maintains she did nothing wrong.
Rousseff has also denied any knowledge of graft when she was chairwoman of the board of directors, a period in which much of the alleged corruption took place.
Opposition politicians say they believe her and that she is unlikely to face impeachment.
($1 = 2.70 realis)
(Additional reporting by Jeb Blount in Rio de Janeiro, Anthony Boadle and Jeferson Ribeiro in Brasilia; Editing by Kieran Murray)