By Will Connors
RIO DE JANEIRO--Brazilian state-run oil firm Petroleo Brasileiro
SA said Friday that it has nominated the chief executive of mining
giant Vale SA, Murilo Ferreira, as its next board chairman, as the
company scrambles to deal with the fallout from a vast corruption
scandal.
Mr. Ferreira's nomination will be voted on at Petrobras' next
shareholders meeting April 29.
On Thursday, Petrobras said it had appointed Luciano Coutinho,
head of the country's development bank, as its new chairman, but
didn't make clear that the appointment would be on an interim
basis. Petrobras' previous chairman was Guido Mantega, Brazil's
former finance minister and a close ally of President Dilma
Rousseff.
Mr. Ferreira has been the chief executive at Vale, the world's
biggest iron-ore producer, since 2011, and has spent his entire
career at the company. A Vale spokesperson declined to comment.
While widely respected as a chief executive, Mr. Ferreira is
also known to be an ally of Ms. Rousseff and the ruling Worker's
Party in Brazil. Many investors and analysts had been hoping
Petrobras would name an independent chairman who could push back
against what are oft-considered onerous government controls.
"As much as he is understood to be a competent person, his
connection with [Ms. Rousseff] will prevent Petrobras from having a
quality that everyone is looking for at this point: transparency,"
said Guilherme Figueiredo, a fund manager at M. Safra & Co,
with $1.2 billion under management. He isn't currently investing in
Petrobras. "For the minority shareholder, this is not positive, and
governance remains questionable."
Mr. Ferreira steps into the role of Petrobras chairman at a
crucial time for the company. It is in the midst of a widespread
corruption scandal in which four former executives are accused of
participating in a yearslong bribery scheme. The scandal has
pummeled the company's market value, caused a shake-up of its
executive ranks, and forced it to scale back an ambitious spending
program.
Dozens of politicians and construction company executives have
also been implicated in the scheme. Some have denied wrongdoing and
others have said they are cooperating with authorities, while some
have declined to comment.
The fallout from the Petrobras scandal has also contributed to a
dismal overall economic picture for Brazil. Thousands of workers in
the oil industry have been laid off in recent months, adding to a
bleak unemployment picture here.
Mr. Ferreira's main accomplishment at Vale was slashing costs
and cutting projects in the twilight of the commodity boom.
When Mr. Ferreira took over in 2011, Vale's investment budget
towered at $24 billion for the year. The company had 27 "main"
projects in iron ore, fertilizers, coal and base metals.
Billion-dollar projects - some of which Vale later scrapped - were
under way from the steppes of Argentina to the Simandou hills of
West Africa.
The company also spent billions building its own super-ships to
carry iron ore to China, only to have the Chinese government deny
them entry. Vale has since been selling the ships off to
third-party companies, though China has gradually started letting
them into its ports in recent months.
Now, Vale has roughly a dozen major projects, focused mostly
around its "core" business of iron ore. Its 2015
capital-expenditure budget was reduced for a fourth consecutive
year to $10.2 billion.
Luciana Magalhaes and Paul Kiernan contributed
Write to Will Connors at william.connors@wsj.com
Access Investor Kit for Petróleo Brasileiro SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=BRPETRACNOR9
Access Investor Kit for Petróleo Brasileiro SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=BRPETRACNPR6
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=BRVALEACNOR0
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=BRVALEACNPA3
Access Investor Kit for Petróleo Brasileiro SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US71654V4086
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US91912E1055
Access Investor Kit for Vale SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US91912E2046
Subscribe to WSJ: http://online.wsj.com?mod=djnwires