Brazilian regulator probes former Petrobras board members

Guido Mantega, Brazil's former finance minister, is being investigated by the country's market regulators for misleading investors over Petrobras's fuel pricing policy while he was chairman of the state-controlled oil company.

CVM, Brazil's Securities and Exchange Commission, said on Tuesday it was also investigating Luciano Coutinho, head of the country's state development bank BNDES who remains on Petrobras's board, and ex-member Jorge Gerdau Johannpeter, the steel industry magnate.

The former board members are accused of misleading investors by approving debt targets as part of Petrobras's 2014-2018 business plan but then forcing the company to pursue a fuel pricing policy that made it unlikely they would meet those goals, CVM said.

Between 2011 and 2014, Petrobras lost about R$60bn ($19bn) by importing diesel and petrol and selling it at a loss in Brazil - a practice that enraged investors and cost Petrobras even more than the vast corruption scandal engulfing the producer, analysts say.

Petrobras, which has never disclosed details of its pricing policy, has stated that the practice was designed to shield the local market from the volatility of international oil prices. However, analysts argue it was an underhand way for Petrobras's state controllers to cap inflation in Brazil by keeping down fuel prices at the expense of investors.

The practice ended recently because of the sharp drop in international oil prices, finally bringing global prices down to a par with those in Brazil, where Petrobras holds a near-monopoly.

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"The [investigation] should have happened a long time ago but, even so, the fact that this is happening at all shows a certain maturity in the country . . . and should help investors have more confidence in Brazil," Mr Pires said.

Other ex-board members of Petrobras cited in the investigation include Miriam Belchior, a former minister and head of Brazil's state bank Caixa Economica Federal.

If found guilty, they could face bans from the market and fines relative to the company's losses as a result of any illicit practices, according to Brazilian market rules. Mr Coutinho and the ex-board members cited in CVM's investigation could not be reached for comment.

The investigation comes as Brazil's public prosecutors crack down on politicians and former executives at Petrobras and construction firms over their involvement in a bribery and kickback scheme that cost Petrobras at least $2bn, according to the company's estimates in its annual results.

Those costs, alongside writedowns as a result of falling oil prices, forced the company to report a net loss of more than $7bn last year - the biggest nominal loss by any publicly traded Brazilian company since 1986, according to the Economatica consultancy.

As part of efforts to improve the company's image, Murilo Ferreira, the present head of iron ore miner Vale, has been named as Petrobras's new chairman and much of the board has been replaced.

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