Petrobras New Board Member Confident on Audited Results

Petrobras New Board Member Confident on Audited Results

By Sabrina Valle

12:41 PM BRT
March 5, 2015

(Bloomberg) — Petroleo Brasileiro SA is on track to quantify a graft-related writedown needed to release audited financial results and restore investor confidence, according to the most recent appointee to the offshore producer’s board.

Luiz Navarro, a lawyer who helped draft Brazilian anti-corruption legislation during a 10-year career at the Comptroller General’s Office, said the state-controlled company needs compliance programs designed like those at government agencies to identify executives who take bribes to award work.

“In a private company, you need to prevent bribe-giving; in a state-controlled company you need to prevent bribe-taking – – the signals are inverted,” Navarro said in a telephone interview from Brasilia. “The board’s mission, my mission, is preventing things like this from happening again and restoring the company’s image.”

The scandal engulfing Petrobras — a story of alleged kickbacks, bribes and inflated construction contracts that stretch back more than a decade — has transfixed Brazil and contributed to a credit rating downgrade to junk by Moody’s Investors Service. Prosecutors and police accuse construction companies of forming cartels to win inflated contracts at Petrobras, giving kickbacks to executives at the state-controlled oil producer as well as politicians.

May Deadline

Petrobras named Navarro to its board on Feb. 27. Shareholders still need to approve the appointment. The government controls Petrobras with a majority of voting shares.

A lack of consensus over writedowns has delayed the release of earnings and temporally shut the company out of international debt markets at a time of slumping oil prices and local currency, threatening the its spending plans. A grace period on some of Petrobras’s debt gives it until the end of May to release audited results before triggering a potential acceleration in payments, it said a statement Jan. 30.

“Petrobras will meet the deadline and get to a number” on writedowns, Navarro said. “Petrobras will, indeed, approve audited results.”

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