Brazil's attorney general said Wednesday his office has cleared the board of Petroleo Brasileiro SA of any wrongdoing in the controversial 2006 purchase of a Texas refinery, handing a significant legal victory to President Dilma Rousseff, who was chairwoman of the state-run oil company at the time.
Petrobras, as the company is known, bought the Pasadena, Texas, refinery in 2006 for $1.2 billion from Belgian commodities trader Transcor Astra Group SA, which had purchased the refinery a year earlier for $42.5 million, according to Brazilian prosecutors.
Earlier this year, Ms. Rousseff blamed a former company executive for producing a "technically and legally flawed" summary of the deal.
The attorney general's office said that Petrobras's board of directors only received an executive summary of the deal, and is free from blame.
Separately Wednesday, Brazil's federal auditing body said that former members of Petrobras' executive board—which doesn't include Ms. Rousseff—will have to repay $792 million or give a valid explanation for the purchase price of the Pasadena refinery.
A spokeswoman for the auditing body, known as TCU, said the executive board members' assets will be frozen immediately, and the members will have 15 days to present an explanation for the Pasadena deal. A Petrobras spokeswoman declined to comment.
The Pasadena deal had become a political lightning rod for opponents of Ms. Rousseff, who is running for re-election in October.
At the time of the Pasadena deal, Petrobras intended to operate the refinery as a joint venture with Transcor Astra, which said it had acquired the facility in 2005 from Crown Central Petroleum. Petrobras paid Transcor Astra $360 million for a 50% stake in 2006.
But two years later, Transcor Astra exercised a put option that required Petrobras to buy its remaining stake in the refinery. Petrobras refused to pay but lost an arbitration case in the U.S., adding considerable legal fees and interest payments to the final price tag. Petrobras ended up paying $820.5 million for the remaining 50%.
Ms. Rousseff said in March that the 2006 summary made no mention of the put option.
"If known, [the deal] wouldn't have been approved by the board," the president said in March. Ms. Rousseff was chairwoman of the company from Jan. 1, 2003, until March 19, 2010, when she stepped down to run for president
Petrobras shares closed at $17.15 Wednesday in New York, down 2.7%.
(Published by The Wall Street Journal – July 23, 2014)