Brazil’s Rousseff Stands by Petrobras CEO, Says Pessimism Overblown


Brazil’s President Dilma Rousseff said on Monday she has no plans to replace the chief executive officer of state-run oil firm Petrobras, saying there was no evidence that senior management was involved in a graft scandal at the company.

Speaking at a year-end breakfast with reporters in Brasilia, Rousseff also said she will take “drastic” measures next year to get Brazil’s economy back on track and voiced confidence in a rebound, regardless of how the global economy performs.

She was coy about what the measures might entail, though she played down speculation she would raise taxes to shore up government finances.

The Petrobras scandal has overshadowed the debate about what economic steps Rousseff will take when she is sworn in for a second term on New Year’s Day and has dominated the president’s agenda in recent weeks.

On Monday, she said the pessimism surrounding Petroleo Brasileiro SA , as the company is formally known, was overblown and that the recent plunge in its shares was exaggerated.

The stock has fallen about 24 percent since police last month arrested a second former Petrobras director and scores of executives from engineering and construction companies accused of paying bribes skimmed from overpriced contracts.

Rousseff has come under pressure to replace CEO Maria das Gra├žas Foster, who has offered to resign. But the president said she stands by Foster, despite recent allegation by a former company manager that the CEO knew about the overpricing of contracts.

“I see no signs of any wrongdoing by the current Petrobras executive board,” Rousseff said. She rejected the suggestion that keeping Foster on would undermine Petrobras’ credibility.

Rousseff, who was chairwoman of the Petrobras board of directors for seven years through 2010, when much of the alleged corruption took place, said it was “simplistic” to assert that the company’s top management knew about the graft scheme.

Rousseff also said Petrobras remained well-positioned to weather a drop in oil prices and has enough cash to get through 2015 without tapping international capital markets.

Last week, Petrobras said it will scale back spending to avoid having to issue debt next year. The company cannot issue new debt until it releases third-quarter earnings, which were delayed after auditor PriceWaterhouseCoopers refused to certify the results due to the corruption scandal.

The incoming finance minister, Joaquim Levy, is preparing tough measures to restore investor confidence in Brazil’s fiscal accounts and revive a stagnant economy.

Rousseff acknowledged that harsh measures are in the pipeline, but she declined to discuss the size of expected budget cuts next year. Asked about reports that the government was planning to freeze 100 billion reais ($37.7 billion) in spending next year, Rousseff said: “That number wasn’t discussed with the president.”

($1 = 2.65 reais)



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