(Adds that Brazilian President Dilma Rousseff is former chairwoman of Petrobras board of directors, adds comment from Brazil presidency and story background)
RIO DE JANEIRO, Dec 31 (Reuters) - Brazil’s securities-market regulator CVM said on Tuesday it is investigating whether Petrobras executives failed in their legal duties to protect the state-run oil company and its investors from losses related to a giant corruption scandal.
The regulator said in a statement it was seeking to “ascertain any irregularities related to the possible breach of fiduciary duties of company administrators.” The CVM did not name the executives of Petroleo Brasileiro SA, as Petrobras is formally known, that were being investigated.
Company administrators with fiduciary duties in Brazil normally refer to top executives, such as the chief executive officer, chief financial officer and other heads of the Rio de Janeiro-based company’s principal operating units.
In the case of Petrobras, those officials would include the heads of exploration and production, services and engineering and refining and supply. Administrators with fiduciary duties also include members of the board of directors.
Brazilian President Dilma Rousseff, who is scheduled to begin a second four-year term on Jan. 1, was chairwoman of Petrobras’ board of directors from 2003 to 2010, a period when much of the alleged corruption took place. During her term as Petrobras’ most senior official, Rousseff was first Brazil’s Energy Minister and then Chief of Staff to former President Luiz Inacio Lula da Silva.
Rousseff says she had no involvement in the scandal, was shocked by its size and has promised a full investigation.
Brazilian police and prosecutors allege that Petrobras officials conspired with a cartel of Brazilian construction and engineering firms for years to inflate the price of contracts. Part of the excess payment was then kicked back to executives, politicians and political parties as bribes and campaign contributions.
Brazil’s presidency and Petrobras did not immediately respond to requests for comment. Earlier this month, Rousseff said Brazil’s government, which controls a majority of voting stock in Petrobras, plans to make changes in some top officials, but not in the most senior executives.
There is no evidence that those top officials, including Petrobras Chief Executive Maria das Graças Foster, were involved in any irregularities, Rousseff said.
The CVM case is the seventh launched by the Brazilian securities regulator against Petrobras and its contractors since late 2013, the CVM said.
On Monday, Petrobras said it has suspended business with 23 construction and engineering firms that have been implicated in the Brazilian criminal probe known as Operation Car Wash. (Reporting by Stephen Eisenhammer; Additional reporting by Alberto Alerigi Jr.; Writing by Jeb Blount and Stephen Eisenhammer; Editing by Alan Crosby)