Gut it and put a plug in it. It could be leaking from under the pedestal too.

 

If you leave the valve in the exhaust and just fasten it open you can always turn it into a exhaust brake later. I didn't realize it worked as a exhaust break unless you modified it somehow. I thought it was just for warm up only, stock from the factory.

 

It was intended for warm up purposes but is easily modified. Someone had a thread about it on hear or maybe on diesel bombers.
and I can see the oil running out around the shaft.