HomeBusinessNew Petrobras chief sworn in amid market fears of increased govt control

New Petrobras chief sworn in amid market fears of increased govt control

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Magda Chambriard, the head of Brazil’s state-run oil giant Petrobras, was sworn in on Wednesday amid market concerns about increased government intervention in the company.  

Along with Finance Minister Fernando Haddad and Mines and Energy Minister Alexandre Silveira, President Luiz Inácio Lula da Silva, who nominated Chambriard also attended the ceremony at a Petrobras research center in Rio de Janeiro.  

Following months of tensions with the federal government, Jean Paul Prates, Chambriard’s predecessor, stepped down last month. The market viewed Prates as putting the interests of shareholders above those of the nation and is skeptical that Chambriard will have the same approach, who headed the oil and gas regulator ANP between 2012 and 2016.  

Petrobras Chambriard’s statement during the ceremony

“Our management, as expected, is fully aligned with President Lula’s and the federal government’s vision for the country,” Chambriard said during the ceremony. “After all, they are our majority shareholders.” Fears of government interventionism in Petrobras date to the sprawling “Car Wash” investigation that began a decade ago. The yearslong investigation discovered billions of dollars in kickbacks related to construction contracts that Petrobras awarded. Investigators found illicit funds filled party coffers and lined politicians’ pockets, at a time when Lula’s Workers’ Party was in power.  

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Lula himself was jailed for almost 600 days as a result, although his conviction was later annulled. During the ceremony on Wednesday, Lula slammed the investigation’s legacy.  

“With the false argument of fighting corruption, Operation Car Wash was actually aimed at dismantling and privatizing Petrobras,” he said. “If the objective was to combat corruption, the corrupt should be punished and our people’s assets left intact. But that’s not what was done; what was done was an attempt to destroy the company’s image.” The Intercept Brasil revealed collusion between prosecutors and Car Wash’s crusading judge, Sergio Moro, who later joined former far-right President Jair Bolsonaro’s Cabinet. That tainted the investigation’s credibility and fueled Lula’s allies’ accusations that it was politically motivated.  

Lula returned to power for a third, non-consecutive term, after beating Bolsonaro in the 2022 presidential election. Car Wash’s prosecutions of scores of politicians and executives celebrated at the time as great achievements in attacking longstanding impunity and have been further dismantled since last year. The Supreme Court has suspended fines stemming from leniency agreements, annulled convictions, and closed investigations.  

Such developments have contributed to worry that the scope or tolerance for graft may return. But Rafael Schiozer, a finance professor at the Getulio Vargas Foundation, a university and think tank, said such concern about Petrobras is unwarranted.  

“The company’s governance has improved a lot. Managers today are aware of the responsibilities they have, and corruption is obviously punished,” he said.  

Brazil’s government has a controlling stake in Petrobras and some Brazilian politicians see the company as a means to leverage national development. That represents a clash of interests with minority shareholders who want the company to focus on maximizing profits. 

For more updates, click here.

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