MercoPress. South Atlantic News Agency

Dilma Rousseff questioned on “flawed” report that cost Petrobras 1.2bn

At the time of the operation in 2006, the Brazilian president was chairwoman of Petrobras

A scandal surrounding the costly acquisition of a Texas oil refinery by Brazilian state-run energy company Petrobras years ago resurfaced Wednesday after new questions arose about President Dilma Rousseff’s handling of the deal, which involved a sum of 1.2bn dollars.

 Ms. Rousseff, who was Petrobras chairwoman at the time and cabinet chief, on Wednesday blamed a former company executive for producing a “flawed” summary of the pending deal that led her to sign off on it in 2006. The Pasadena, Texas, refinery ended up costing the firm three times more than expected and has become the subject of federal investigations in Brazil.

“It became known that the report was technically and legally flawed,” according to a statement from the president’s communications office. As a result, Petrobras paid nearly 1.2 billion dollars for a facility that the previous owner, Belgian commodities trader Transcor Astra Group SA, had purchased for 42.5 million, according to prosecutors who have been investigating the deal since last year.

On Wednesday, it became publicly known, in an article in the O. Estado de S. Paulo newspaper, that Ms. Rousseff had personally backed the deal while on the company’s board. She responded to the article with a statement saying that the board’s decision to authorize Petrobras’s initial purchase of a 50% stake in the refinery was based on a report from the company’s international director at the time, Nestor Cerveró.

The refinery scandal is the latest trouble for Petrobras, which is struggling to manage a massive project to develop deep-water oil fields discovered off Brazil’s coast in the last decade.

The company has borrowed heavily to finance those plans, becoming the world’s most indebted oil major with 94.6 billion in net debt at the end of 2013. Moody’s Investors Services downgraded Petrobras corporate debt last year, and its shares are trading at their lowest since 2005.

Brazil’s Federal Police said last week they are looking into the Texas deal, in addition to recent allegations that Petrobras officials accepted bribes from SBM Offshore NV, a Netherlands-based supplier of offshore oil vessels, several years ago.

Brazilian federal prosecutors are investigating the deal for possible irregularities, such as overpayment by Petrobras. Opposition politicians have also seized on the recent Petrobras cases. Brazil’s Congress last week voted to create a commission to investigate the SBM Offshore bribery allegations in what was seen as a legislative defeat for Ms. Rousseff.