Chief executive of Petrobras resigns

The head of Brazil's state-controlled oil giant Petrobras has resigned along with five other senior managers becoming the latest high-profile casualties of a multi-billion euro corruption scandal at Latin America's biggest company.

In a statement to the São Paulo stock exchange on Wednesday confirming the exits Petrobras said new management will be appointed on Friday. The announcement follows local media claims on Tuesday that president Dilma Rousseff had decided to remove CEO Maria das Graças Foster and other directors.

Those reports caused the company’s shares to jump over 15 per cent, the largest daily gain in 16 years, despite no clear indication of who will be given the task of rescuing the company. Shares spiked again Wednesday morning on confirmation of Graça Foster’s exit. Among the names being touted to replace her is former central bank president Henrique Meirelles.

President Rousseff had tried to stand behind Graça Foster, a close friend whom she appointed to the job, even as the scandal deepened in recent months. But the company’s inability to account for losses due to corruption when it published its delayed third quarter results last week saw the stock beaten down to its lowest levels in a decade and increased pressure for a change of management.

In reporting its unaudited results Petrobras said it identified a potential €20 billion hole in its books but has not yet booked the charge. The company is now in a race to publish audited full year results for 2014 by June or face paying out tens of billions to creditors.

Federal police have already arrested several dozen people among them former Petrobras executives and executives from leading Petrobras contractors whom they accuse of siphoning billions out of the company.

By the end of this month federal prosecutors are expected to file charges against dozens of leading politicians allied to President Rousseff who supposedly recycled bribes paid by Petrobras contractors into illegal campaign funds.

Last week Graça Foster admitted the scandal along with the collapse in the oil price would force Petrobras, already the world’s most indebted firm, into “resizing”. She said it would cut oil exploration back to the “minimum necessary”, slash investments and sell off assets in a bid to restore itself to financial health.