Petrobras Names Vale CEO Ferreira to Take Over Board on April 29
by Juan Pablo Spinetto Paula Sambo
10:11 AM BRT
March 27, 2015
(Bloomberg) — Petroleo Brasileiro SA is appointing the top executive at iron-ore miner Vale SA to lead its board from the end of next month as Brazil’s state-run oil producer attempts to regain credibility with investors after being engulfed in the country’s biggest corruption scandal.
Petrobras, based in Rio de Janeiro, said in a regulatory filing Friday that Vale Chief Executive Officer Murilo Ferreira is its candidate for chairman at an April 29 shareholders meeting. Luciano Coutinho, who heads development bank BNDES, replaced former Finance Minister Guido Mantega as chairman on Thursday until the meeting is held.
Choosing the 61-year-old Vale executive breaks from a tradition of political appointees. Investors want the government to improve transparency in a company that lost about $200 billion in market value in the past four years amid production shortfalls and allegations of political interference and corruption. In naming Coutinho late Thursday, Petrobras said the appointment was valid until the next shareholders meeting, without mentioning a permanent solution.
“It’s definitely a great choice,” Bernardo Rodarte, who oversees 1 billion reais ($311 million) at Sita Corretora, said by telephone. “The confusion surrounding the announcement might indicate it was hard to find someone willing to do the job. There’s a lot of work to do to regain the faith.”
Ferreira, who has spent most of his career in the mining industry, earlier this year was appointed to President Dilma Rousseff’s industrial development council. He started at Vale, the world’s largest iron-ore producer, as an analyst in 1977.
Friday’s appointment comes less than two months after the overhaul of Petrobras’s management. Aldemir Bendine, a 51-year-old state banker backed by Rousseff’s party, replaced Maria das Gracas Foster as CEO on Feb. 6. Ferreira’s most urgent task in his new role will be to release Petrobras’s long overdue audited third-quarter results after quantifying losses from a decades-long kickback scheme.
The oil producer founded in 1953 by dictator Getulio Vargas is at the center of Brazil’s biggest graft and money laundering scandal in which contractors allegedly colluded to inflate bids, Petrobras executives took bribes and politicians shared in the proceeds. The scandal has transfixed Brazil and left Rousseff struggling to contain the damage.
Petrobras needs a “radical change” in its management after the corruption scandal, minority shareholder association Amec said in a statement March 11. Amec called for “a prudent, responsible and professional administration.”
Ferreira’s name had been mentioned by local press as a possible replacement for Mantega as finance minister after Rousseff won re-election in October, and again as a candidate to replace Gracas Foster as Petrobras CEO. Both times Ferreira said the positions weren’t offered to him. Vale didn’t immediately respond to an e-mail requesting comment.
“This is a great opportunity to change the board members for more market-friendly people,” Mariana Bertone, an equity analyst at GBM Grupo Bursatil Mexicano SA, said in e-mailed comments before the announcement. “It’s fundamental for investors’ confidence that Petrobras behaves like a company and gets rid of political appointees.”