Chief Executive Roberto Castello Branco is pushing the possibility of exiting the Distinction in Governance Program for State-Run Firms, established by exchange operator B3 SA, said the people familiar with deliberations, who requested anonymity to discuss confidential matters.
They said Castello Branco believed the measures demanded by the program add little tangible value to the firm's compliance efforts and divert resources that could be better used.
In a statement to Reuters, Petrobras did not confirm the deliberations, although it said its continued participation in the program would depend on "the best interests of the company and its shareholders, always seeking more efficiency without, however, reducing internal controls."
Petrobras added that improvements to its compliance protocols have "stood out" in recent years and that many requirements of the B3 program are already part of Brazilian law, so leaving the program would not necessarily weaken the company's corporate governance. B3 declined to comment.
Petroleo Brasileiro SA, as the firm is formally known, has spent years trying to recover from one of the world's biggest ever corporate graft scandals.
A five-year-old corruption investigation, known as Operation Car Wash, has uncovered billions of dollars of bribes and overpriced contracts between Petrobras and engineering firms – a key reason the stock exchange created the governance program in 2015.
"Naturally such a move could raise some concerns among shareholders and other interested parties," said Andriei Beber, a professor of corporate governance at the Getulio Vargas Foundation. "I don't think it would have so much impact, but it could represent backsliding – and on something very dear to markets and especially minority investors."
According to the sources, Castello Branco has said Petrobras should compare itself to other oil majors, rather than the other constituents of the program, which significantly differ from Petrobras in scale and industry.
One of the sources said the most important aspects of the program are already written into Petrobras bylaws.
In 2017, Petrobras celebrated its certification under the program as a sign of its commitment to improved governance. The program lays out higher standards of transparency, internal audits and apolitical leadership, including a requirement that at least 30 percent of board members be independent.
The Car Wash probe revealed a longstanding pattern of politically appointed managers at Petrobras offering inflated contracts to suppliers in exchange for political bribes – a practice eventually exposed at a range of Brazilian state firms.
Petrobras says it has cleaned up its act, thanks in part to a robust compliance program.
But the firm is still the target of active investigations, including a far-reaching probe of its commodities trading division, which has drawn the attention of the U.S. Federal Bureau of Investigation and federal prosecutors in New York.
This month, the head of compliance at Petrobras, Rafael Gomes, resigned from his post, citing personal reasons. It was the second exit of a Petrobras compliance chief in just over a year.
In addition to Petrobras, its fuel distribution unit Petrobras Distribuidora SA, state lender Banco do Brasil and its insurance unit BB Seguridade Participacoes and power companies Centrais Eletricas Brasileiras and Cia Paranaense de Energia SA have been certified by the Distinction in Governance Program for State-Run Firms.
(Reporting by Marta Nogueira and Rodrigo Viga Gaier; Writing by Gram Slattery; Editing by Brad Haynes and Rosalba O'Brien)
By Marta Nogueira and Rodrigo Viga Gaier