By Rogerio Jelmayer And Will Connors
SÃO PAULO--The board of Brazilian state-run energy giant
Petroleo Brasileiro SA, under scrutiny for its role in a widespread
corruption scandal, has created a special committee to oversee the
company's own internal investigation of the affair.
The committee, which consists of three people and includes the
former president of Brazil's Supreme Court, is meant to serve as a
sort of independent review board for an internal probe Petrobras
set up earlier this year after federal investigators implicated
former company executives in an alleged bribery scheme.
Petrobras late Tuesday named two members of the newly formed
special committee: former Supreme Court President Ellen Gracie
Northfleet and the former chief compliance officer of Siemens AG,
Andreas Pohlmann. The third post will be assumed by Petrobras'
chief of compliance, risk and governance, a recently created and
as-yet unfilled post, the company said.
The special committee will be responsible for analyzing a report
by two law firms Petrobras hired to conduct an internal
investigation after the corruption allegations surfaced in March,
the company said.
Authorities in Brazil allege that Petrobras was at the heart of
a vast money-laundering and kickback scheme in which a group of
construction companies overcharged the oil firm for contracts and
paid bribes to certain Petrobras executives and local politicians.
More than 35 people, including two former Petrobras executives and
more than 20 construction industry executives, have been arrested
on charges including money laundering and fraud.
Petrobras, whose shares are traded in New York, is also under
investigation by the U.S. Securities and Exchange Commission and
the U.S. Department of Justice.
The corruption scandal has generated near-daily headlines in
Brazil, ratcheted up pressure on Petrobras' management, and has
started to crimp the company's financial results.
Petrobras has twice delayed reporting its third-quarter earnings
as it works to assess the potential cost of the alleged scheme.
Investors are spooked and have sent Petrobras shares down 52% over
the past three months.
On Monday, Moody's Investors Service warned that it had put
Petrobras' ratings on review for a downgrade on concern about the
company's liquidity. Moody's already downgraded Petrobras, to two
levels above junk rating, in October.
Earlier this month, Brazil's attorney general called for the
entire leadership team at Petrobras to be replaced. Several
opposition politicians have made similar calls.
Chief Executive Maria das Graças Silva Foster said last week
that she offered to step down three times to President Dilma
Rousseff but that Ms. Rousseff asked her to stay on.
Despite Ms. Rousseff's support, "the fact remains that markets
no longer have confidence in [Ms. Foster's] leadership, making her
exit a necessary precondition for Petrobras to recover from the
crisis," according to Eurasia Group analyst Joao Augusto de Castro
Neves.
Petrobras representatives didn't immediately respond to requests
for comment on the pressure on Ms. Foster.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and Will
Connors at william.connors@wsj.com
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