Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), A Hot Potato For Rousseff

Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is a hot potato for the government of Dilma Rousseff of Brazil. Corruption in the state-run oil company has got to the point where people think President Rousseff must now do something serious to restore investor confidence, according to a Reuters report. However, the cleanup at the company appears to demand more action from the president than she has shown at any time. Nonetheless, she also has to be tactful in her actions to avoid the economic damage that such onslaught against corruption can bring in the country.

Read why analyst may see a swing in the momentum for PBR.

Several executives at Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) have been implicated in corruption dealings in the company. Some major construction companies have also been caught up in the corruption net. Even officials of Rousseff’s political party have been mentioned in the corrupt stories about Petrobras. The public and the investing community are now watching closely to see how Rousseff deals with corruption in the company.

Firing head of Petrobras

A number of arrests, including the arrest of some former high-ranking officials at Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), have been made in the recent times. Such reflect the renewed efforts by Rousseff to tackle corruption in the company, in fact, in the country. In apparent efforts to appease the public and investors, Rousseff in several occasions during the campaigns and after her re-election stated her resolve to wipe corruption out of state corporations. However, doubts have been cast on such assertions given that Rousseff is unlikely to fire the current head of Petrobras - Maria das Gracas Foster.

Media reports have described Foster as a close public friend of Rousseff. However, many in the opposition have been calling for the firing of Foster. They claim that Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has not done much, in fact, it has deteriorated more under the watch of Foster.

Hiking fuel prices

There have been expectations that Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) would hike fuel prices, according to an article by The Wall Street Journal. The company usually sells its products at lower prices to beat inflation. However, the practice has eroded value in the company. Hiking of prices would be in the best interest of the investors. However, ending corruption in the company would even be a greater thing for the investing community.

About the Author

Erica is a graduate of New York University's school of Journalism. She joined US Markets Daily as a general assignment reporter in January of 2008.

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