(Adds Rousseff comment on board changes, share price rise)
By Jeferson Ribeiro
BRASILIA, Dec 22 (Reuters) - Brazil’s President Dilma Rousseff said on Monday she has no plans to replace the chief executive officer of state-run oil firm Petrobras, saying there was no evidence that senior management was involved in a graft scandal at the company.
Speaking at a year-end breakfast with reporters in Brasilia, Rousseff also said she will take “drastic” measures next year to get Brazil’s economy back on track and voiced confidence in a rebound, regardless of how the global economy performs.
She was coy about what the measures might entail, though she played down speculation she would raise taxes to shore up government finances.
The widening Petrobras scandal has overshadowed the debate about what economic steps Rousseff will take when she is sworn in for a second term on New Year’s Day and has dominated the president’s agenda in recent weeks. It has forced her to vet cabinet appointments to avoid picking anyone implicated.
On Monday, she said the pessimism surrounding Petroleo Brasileiro SA , as Petrobras is formally known, was overblown and that the recent plunge in its shares was exaggerated.
The stock has fallen about 24 percent since police last month arrested a second former Petrobras director as well as scores of executives from engineering and construction companies accused of paying bribes skimmed from overpriced contracts.
Petrobras preferred shares, the company’s most-traded class of stock, pared gains after Rousseff’s remarks, but was still up 5 percent at 10.32 reais at the end of the day in Sao Paulo. Volume was the lowest in six days.
Rousseff has come under pressure to replace CEO Maria das Graças Foster, who has offered to resign. But the president said she stands by Foster, despite a recent allegation by a former manager that the CEO had been informed about overpriced contracts and did nothing.
“I see no signs of any wrongdoing by the current Petrobras executive board,” Rousseff said. She rejected the suggestion that keeping Foster on would undermine Petrobras’ credibility.
Rousseff, who was chairwoman of the Petrobras board of directors for seven years through 2010, when much of the alleged corruption took place, said it was “simplistic” to assert that the company’s top management knew about the graft scheme.
She did, however, say she will name new members to the board of directors of Petrobras next year, and that the chairman will not necessarily be the finance minister, as is the case now.
Rousseff also said Petrobras remained well-positioned to weather a drop in oil prices and has enough cash to get through 2015 without tapping international capital markets.
Last week, Petrobras said it will scale back spending to avoid having to issue debt next year. The company cannot issue new debt until it releases third-quarter earnings, which were delayed after auditor PriceWaterhouseCoopers refused to certify the results due to the corruption scandal.
The incoming finance minister, Joaquim Levy, is preparing tough measures to restore investor confidence in Brazil’s fiscal accounts and revive a stagnant economy.
Rousseff acknowledged that harsh economic measures are in the pipeline, but she declined to discuss the size of expected budget cuts next year. Asked about reports that the government was planning to freeze 100 billion reais ($37.7 billion) in spending next year, Rousseff said: “That number wasn’t discussed with the president.”
Rousseff plans to announce most of her new cabinet by year-end, but the process of picking ministers has been complicated by the corruption scandal.
So far 39 people have been indicted on charges that include corruption, money laundering and racketeering in the Petrobras graft scheme that allegedly funneled money to political parties, including Rousseff’s Worker’s Party and its allies in Congress. Prosecutors are expected to name politicians involved next year.
Rousseff said she will check cabinet appointments with Brazil’s top prosecutor to make sure they are not implicated. ($1=2.65 Brazilian reais) (Writing by Anthony Boadle; Editing by Todd Benson, Jeffrey Benkoe, W Simon and Peter Galloway)