New Petrobras CEO must walk political, accounting mine field

Mon Feb 9, 2015 3:42pm EST
 
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By Jeb Blount

RIO DE JANEIRO (Reuters) - By picking a banker instead of an oil executive to run Petrobras, Brazilian President Dilma Rousseff appears to have recognized that the state-run company's biggest priority is to clean up its books and acknowledge how many billions of dollars it lost to a corruption scheme in recent years.

Yet her choice on Friday of confidant Aldemir Bendine also signals that Rousseff wants to maintain tight control over the company, which investors fear could prevent it from releasing a fully realistic estimate of graft-related losses.

With the economy sputtering, inflation above 7 percent and Brazilians preparing for increasingly likely electricity and water rationing this year, Rousseff's approval rating is already the lowest of her presidency.

Having Petrobras (PETR4.SA: Quote) recognize as much as $22 billion in losses stemming from the price-fixing, bribery and political kickback scandal, the extent of which prosecutors began to reveal last year, is likely to increase Brazilian anger at government mismanagement, analysts say.

While some voice respect for Bendine, who was previously chief executive for state-run bank Banco do Brasil SA BBAS3.SA, they expect he will lack the independence to break free of the politics surrounding the company's accounting.

"A big loss would please the market but hurt Rousseff," said Reginaldo Gonçalves, a professor of accounting at Faculdade Santa Ursula, a Sao Paulo university. "I don't see getting a reliable (estimate of the loss) anytime soon."

JUNE DEADLINE   Continued...

 
The Petrobras logo is reflected in the window of the company's headquarters in Sao Paulo February 6, 2015. REUTERS/Paulo Whitaker