The bribery scandal surrounding Petróleo Brasileiro S.A. (NYSE: PBR), or Petrobras, has plagued the company since last year. Now it looks like there is a new twist in this Brazilian soap opera. China has come to the rescue, perhaps at Petrobras’s most dire low. As a result, Petrobras American depositary shares (ADSs) are surging.

To kick this off, Brazilian President, Dilma Rousseff noted, in an interview with Bloomberg, that during her tenure as a chairperson at Petrobras (2003 to 2010) she had no knowledge of the bribery scandals that were happening in the company at that time.

For anyone just tuning in, the bribery and corruption charges leveled against Petrobras first surfaced last year and eventually resulted in a court ruling last month. A total of 54 Brazilian politicians will be added to the corruption investigation. Included in the ruling are the leader of the Brazilian Senate and the head of the nation’s Chamber of Deputies. Both are members of President Rousseff’s ruling PMDB party. The scandal started when Petrobras executives revealed that they had conspired with politicians to take payments from private-sector contractors in exchange for awarding the contractors with new business.

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Apart from the bribery scandal, Petrobras has to get its books right too. Ultimately, the company will have to publish its audited financial statements for the whole of 2014. According to Bloomberg, Rousseff said that this will be completed before the end of April.

At the same time, Petrobras entered into a financing deal with China Development Bank for a total of $3.5 billion. This is part of a cooperation agreement spanning 2015 and 2016.

What is important to note here is that Petrobras stock has made a handy recovery since its 52-week low in mid-March. In fact the stock has gained roughly 30% from that low to current prices. Considering this injection of Chinese money at such a crucial time, this could signal a bottom and really influence a turnaround for the Brazilian oil giant.

Petrobras saw its short interest rise to 109.9 million shares, with 2.7 days to cover, by the March 13 settlement date. The previous level was 99.9 million, with 2.6 days to cover. The current short interest level is roughly four to five times larger than it was a year ago. This recent surge in share prices is likely to be short covering.

24/7 Wall St. made one reminder earlier in March about this type of situation. The news flow has been so negative and the situation has become so bad around Petrobras that any news at all that looks even remotely good might cause one enormous rally like the one we have seen since mid-March.

Shares of Petrobras were up 8% at $6.50 Wednesday afternoon, in a 52-week trading range of $4.90 to $20.94. The stock has a consensus analyst price target of $10.35, and the company has a market cap of $42 billion.

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