Petrobras (PBR) Embattled CEO Resigns

According to a filing made Wednesday with Brazil’s financial regulatory authority, the CEO and five other members of senior management of Brazil’s state-owned oil form Petroleo Brasileiro have resigned. Today’s news comes during a difficult period for a company deeply in debt, embroiled in a vast corruption scandal and dealing with a 50% drop in oil prices..

Petrobras CEO Maria das Graças Silva Foster will step down effective immediately, the firm noted in its filing, and the BoD will convene on Friday to discuss replacements for Ms. Foster and the other execs.

The filing, reported first by the Wall Street Journal, did not specify who the other five execs were, and Petrobras representatives were not immediately available for comment.

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More details on the Petrobras executive resignations

Foster was appointed CEO of Petrobras in 2012. She is a Petrobras “lifer” as she began her career at the firm as a college intern some 30 years earlier. Unfortunately, Foster’s tenure as chief executive has been overshadowed by a multibillion-dollar corruption scandal that has badly damaged the firm’s reputation.

it has been common knowledge since late last year that Foster had offered her resignation to Brazilian President Rousseff several times, but that the president would not accept it. Ms. Rousseff and Ms. Foster have been friends for many years. Foster met with Rousseff on Tuesday in Brasília, but neither would comment to the media following the meeting.

Petrobras corruption scandal

Petrobras stock has fallen to multi-year lows, but skyrocketed over 14% on Tuesday when media reports suggested Foster would resign. As of Wednesday morning, shares were up over 3% in trading in São Paulo.

Brazilian authorities claim that several former Petrobras executives colluded with construction companies for several years to overcharge Petrobras for contracts and then collect millions of dollars in kickbacks. Prosecutors also claim that at least some of the money ended up with politicians in Rousseff’s Worker’s Party. Spokespersons for the Worker’s Party have vehemently denied this. According to Brazilian authorities, 86 people are suspected of criminal activity relating to the case so far. Of note, the U.S. Department of Justice and U.S. Securities and Exchange Commission also have an ongoing investigation Petrobras, whose shares trade as ADRs on the NYSE.