New Petrobras head bans political posts

epa05318101 New Petrobras President Pedro Parente speaks during a press conference at the Planalto Palace in Brasilia, Brazil, 19 May 2016. The state oil company has been forced to admit a hole in its numbers of nearly 2 billion US dollar due to a corruption network disclosed in 2014. Parente announced that not will be more political appointees in the state-owned energy company Petrobras. EPA/CADU GOMES©EPA

The new head of Petrobras, the Brazilian oil company at the centre of the country’s largest corruption scandal, has pledged to end political appointments to managerial positions in the group.

Pedro Parente, the former Brazilian head of agribusiness group Bunge, was confirmed by the government on Thursday night to lead Petrobras in what is being greeted as another market-friendly move by Brazil’s interim president Michel Temer.


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“Michel Temer gave a very clear orientation . . . There will be no political appointments in Petrobras,” Mr Parente told reporters after his appointment as chief executive. “This greatly facilitated my decision [to accept the job offer].”

The appointment of the experienced businessman, who has also served in numerous bureaucratic and ministerial roles in other governments, follows the placement of other market-tested figures to senior roles in Mr Temer’s economic team.

The interim president, who came to power following the suspension of leftist president Dilma Rousseff in an impeachment process last week, has pledged to implement a more investor-friendly government to revive Brazil’s flagging economy.

Many blame the scandal at Petrobras, in which former executives conspired with politicians and contractors to extract billions of dollars of bribes and kickbacks from the company, on the former ruling coalition’s practice of placing political appointees in the group.

These appointees were given the task of siphoning funds out of the company to benefit their political masters.

Members of Mr Temer’s Brazilian Democratic Movement Party, the PMDB, were intimately involved in that practice as former coalition allies of Ms Rousseff’s ruling Workers party, according to the Petrobras investigation.

Mr Parente will replace at Petrobras a handpicked appointment of Ms Rousseff, Aldemir Bendine, the former head of Banco do Brasil, Brazil’s largest state bank.

He was brought in to stabilise the company, which nearly suffered technical bankruptcy after the scandal forced it to delay the release of its 2014 accounts.

Mr Parente’s challenge will be to reduce the company’s gross debt, which at R$450bn ($126.3bn) at the end of March is estimated to be the largest of any oil company in the world.

The accumulation of the huge debt pile followed Petrobras’s attempt to pursue a vast capital expenditure programme even as the corruption scheme was undermining the quality of this investment and the government was suppressing fuel prices to control inflation.

Government requirements for Petrobras to use expensive local equipment in its investments and to be the sole operator of giant offshore oilfields further undermined its balance sheet. The drastic fall in oil prices was the final straw, analysts said.

Michel Temer gave a very clear orientation . . . There will be no political appointments in Petrobras

– Pedro Parente

Moody’s Investors Service said the company had enough cash to see it through this year. But if planned asset sales fell through, it could need government recapitalisation equivalent to 2 per cent of Brazil’s gross domestic product.

“A need for sovereign support could arise starting in 2017 if the company is not able to sell assets for $14.1bn in 2016 and $21bn in 2017, as it plans,” Moody’s said.

Aside from Bunge, Mr Parente is chairman of the Brazilian stock exchange, BM&F Bovespa. He sat on Petrobras’s board in the 1990s under former president Fernando Henrique Cardoso, who was credited with opening up Brazil’s oil sector.

Mr Parente, 63, also served as a chief of staff to Mr Cardoso.

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