Scandal involving refinery hits Brazil’s Petrobras

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SAO PAULO (AP) - The directors of Brazil’s state-run oil company Petrobras gathered Friday for a special board meeting amid a scandal over the company’s 2006 purchase of a Texas oil refinery that threatens to involve President Dilma Rousseff.

A Petrobras official confirmed the meeting, but did not provide further details. She declined to be identified because she was not authorized to speak to the press.

In 2006, Petrobras paid Belgium’s Astra Oil $360 million for a 50 percent stake of the Pasadena Refining System. One year later, Astra Oil exercised a so-called “put option” to get Petrobras to buy the remaining 50 percent stake. The Brazilian company refused, but in 2012 it lost an arbitration case in the United States. Interest payments and legal fees brought the price tag for the remaining stake in the refinery to $820.5 million

In the end, Petrobras paid $1.18 billion for a refinery that had cost Astra $42.5 million in 2005.

Rousseff was the chairwoman of the Petrobras board of directors at the time of the initial purchase and the O Estado de S. Paulo newspaper reported this week that she authorized it.

Rousseff’s office said in a statement that her decision was based on a “technically and legally flawed summary” of the document drawn up for the purchase by Nestor Cervero, currently the financial director Petrobras‘ fuel distribution subsidiary.

The statement said the summary made no mention of the put option and that if she had known, she and the board would never have approved the purchase. A put option is the opportunity to sell a certain number of shares at a certain price and date in exchange for an upfront fee.

Congressman Rubens Bueno of the opposition Popular Socialist Party told reporters that the ruling Workers Party is “using Petrobras for shady deals that now involve the president.”

“You cannot preside over the board of directors of a company like Petrobras and say you have been duped,” he said.

The Federal Police and prosecutors are investigating whether illegal remittances and overbilling were involved in the acquisition of the refinery.

On Friday, neither the presidency nor Petrobras would comment on the matter

Authorities are also investigating recently surfaced allegations that, several years ago, Petrobras officials accepted bribes from SBM Offshore, a Netherlands-based supplier of offshore oil vessels.

And on Thursday federal police arrested Paulo Roberto Costa, a former director of downstream operations at Petrobras suspected of involvement in a money-laundering scheme.

Police said his arrest was not related to the oil refinery investigation.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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