Petrobras shares fall as new president is named

Brazil's government has appointed the controversial head of a state bank to be the new president of the crisis-stricken oil giant Petrobras.

The board of the state-controlled driller confirmed Aldemir Bendine, president of Banco do Brasil, as the replacement of Maria das Graças Foster who resigned on Wednesday after both government and markets lost faith in her ability to rescue Petrobras from the effects of the worst corruption scandal in its 61 year history.

Several former Petrobras directors, along with executives from leading contractors, have been arrested as part of an investigation by federal prosecutors into a multibillion euro corruption scheme inside the firm.

Shares in Brazil's biggest company fell by as much as 7 per cent on the news of Mr Bendine's imminent arrival as markets reacted negatively to news that a loyal lieutenant of Brazilian president Dilma Rousseff was being handed the job. Her interference in the country's energy sector is blamed by many investors for Petrobras's poor performance.

Mr Bendine’s appointment to Petrobras also surprised some as he was known to be on the way out of Banco do Brasil after becoming embroiled in in several controversies there last year. Among the accusations he faced was that of using his influence to help a prominent socialite obtain loans from the bank.

Tax fine

Last year, Mr Bendine also had to pay a €40,000 fine to tax authorities after he was unable to explain the origin of €88,000 in his tax declaration. Auditors questioned Mr Bendine’s increasing wealth following reports he paid in cash for an apartment. Federal prosecutors are also investigating him for money-laundering after his driver revealed he had made various cash deliveries to businessmen on his behalf.

Last week, Petrobras said it had identified a potential €20 billion hole in its books but has not yet booked the charge.