Brazil Fines Ex-Petrobras Executives $792 Million on Refinery

Jul 23, 2014 6:16 pm ET

July 23 (Bloomberg) -- Brazil’s audit court fined four former top officials of Petroleo Brasileiro SA, including ex- Chief Executive Officer Jose Sergio Gabrielli, a combined $792 million for mismanagement in the purchase of a U.S. refinery.

The National Accounts Tribunal, which oversees public spending, fined Gabrielli and former heads of refining, production and international business units, Augusto Nardes, the president of the court known as TCU, said today in Brasilia after a ruling. The executives of the state-run company allegedly mismanaged public funds in the purchase of a 100,000- barrels-a-day refinery in Pasadena, Texas, according to the ruling, which orders the executives to pay the money back to Petrobras, as the state-controlled oil producer is known.

The $1.2 billion acquisition, which Petrobras completed in two stages between 2006 and 2012, is being investigated by the federal police, prosecutors and lawmakers for alleged overpayment of the assets. The seller, Astra Trading, had previously acquired the refinery in 2005 for $42.5 million.

The executives, including Gabrielli and former refining chief Paulo Roberto Costa, former international business head Nestor Cervero and then production chief Guilherme Estrella, have 15 days to appeal the ruling, according to the decision.

Petrobras didn’t immediately respond to an e-mail requesting comment on the case. The former executives couldn’t immediately be reached to comment on the fines.

TCU cleared Brazilian President Dilma Rousseff, who was the chairwoman of the company’s board of directors in 2006, and all other board members of any responsibility for the purchase price.

--With assistance from Juan Pablo Spinetto in Rio de Janeiro.