Petrobras ex-director arrested, shares sink amid graft scandal

Fri Nov 14, 2014 12:47pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Stephen Eisenhammer

RIO DE JANEIRO (Reuters) - Brazilian police arrested a former Petrobras executive on Friday and the state-run oil giant's shares (PETR4.SA: Quote) sank 5 percent after it was forced by a widening corruption scandal to delay the release of its financial results.

Former engineering director Renato Duque was the second senior Petrobras executive arrested in the investigation into a money laundering and bribery scheme that allegedly skimmed billions of dollars off contracts and into the pockets of politicians.

Police also raided the offices of leading construction and engineering firms, including Odebrecht and Mendes Junior. There, they seized potentially incriminating documents and arrested 18 people suspected of involvement in the graft scheme.

Petrobras said late Thursday it would delay the release of its third-quarter earnings due to the investigation.

Analysts warned that the corruption probe and postponed earnings statement could result in the company being stripped of its investment grade by ratings agencies and prompt it to write down fixed assets.

The move to delay the results announcement raised investors concerns that the world's most indebted oil company would be at risk of a technical default on tens of billions of dollars in bonds.

Ratings agency Moody's said it was monitoring the situation at Petrobras closely, but that the earnings delay would have no near-term impact on its credit rating.

Trading in shares of Petrobras opened more than an hour and a half after the rest of companies on the Bovespa index .BVSP on Friday.   Continued...

The headquarters of Brazilian oil company Petrobras (R) is seen in Rio de Janeiro November 14, 2014. REUTERS/Sergio Moraes