Mon, Feb 09, 2015 - Page 15 News List

Police in Petrobras probe find US$1m in Arxo safe

AP, SAO PAULO, Brazil

Police officials in Brazil say they have found more than US$1 million in cash in a safe of a company suspected of involvement in the kickback corruption scandal engulfing state-owned Petroleo Brasileiro SA, or Petrobras.

A federal police statement on Saturday said that 3.2 million reals (US$1.2 million) were found at Arxo, a company that manufactures fuel storage tanks in the southern state of Santa Catarina. The money was in reals, US dollars and euros, and was seized.

The police said that last year the company signed an 85 million real contract with Petrobras distributing subsidiary BR Distribuidora.

Arxo said in a statement the money was all legally accounted for and was to be used to make payments.

The news came after Petrobras’ board of directors named a new chief executive on Friday last week, choosing Brazil’s central bank chief executive officer Aldemir Bendine to take charge of the state-run oil company following a shakeup over a massive kickback scheme.

However, the selection of Bendine failed to impress some analysts, who described the banker as “underwhelming.” Petrobras shares dropped 6.9 percent in Friday trading last week.

Bendine, who has headed Brazil’s central bank since 2009, replaces Maria das Gracas Foster, who resigned under pressure as investigators continue unearthing a long-running kickback scheme at Petrobras.

Investigators found the oil company awarded inflated contracts to construction and engineering firms, which in turn paid back at least US$800 million. Prosecutors said some of that money was funneled into the campaign coffers of the ruling Workers’ Party and its allies.

Bendine is seen as being close to Brazilian President Dilma Rousseff, but is not well-regarded in business circles.

US-based Eurasia Group Latin America director Joao Neves said Rousseff’s choice of the veteran banker is not impressive.

“The new leader at Petrobras needs to be somebody with market credentials, but also someone who is politically savvy and has the trust of the president,” Neves said. “Bendine has much more of the latter.”

He said that ultimately “the market will give him the benefit of the doubt, but the fact [Rousseff] chose an underwhelming name without market credentials will make the process of Petrobras regaining market credibility longer.”

Due to the daunting challenges facing the debt-plagued oil firm, Neves said that “it’s quite possible that Rousseff had other names she wanted to choose, but that they wouldn’t take the job.”

Carlos Lopes, a Brasilia-based analyst at the Instituto Analise consulting firm, said that the “recovery of the company’s credibility is the key challenge Petrobras’ new president will have to tackle.”

“The government will have to give him the conditions to manage the company transparently and in an autonomous way,” he said. “The government has to stop being so interventionist.”

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