* Fuel subsidies made investment plans un-workable -CVM
* Ex-executive says subsidies hurt company more than corruption (Adds ex-Petrobras refining director comments from congressional corruption hearings, investment plan details)
RIO DE JANEIRO, May 5 (Reuters) - Brazil's securities industry regulator accused the former board of state-run oil producer Petrobras of setting a fuel pricing policy that misguided investors and hurt the company.
The former board, chaired for years by then-Finance Minister Guido Mantega, approved a $221 billion, 2014-2018 investment program with specific debt targets but "chose to run a pricing policy that made it unlikely for those goals to be met," the watchdog, known as CVM, said in a report posted on Tuesday on its website.
Citations by the CVM can result in fines and restrictions on participating in financial market activities or serving as an officer of a public company.
The decision comes as Petrobras faces a number of class action lawsuits in U.S. courts by investors who accuse the company of misleading statements and failing to disclose corruption practices. Petrobras, worth nearly $300 billion in 2008, is now worth $63 billion despite finding large offshore oil resources.
As part of a government strategy to curb inflation, Petrobras for years kept domestic fuel prices below international levels. The subsidies caused about 60 billion reais ($19 billion) in refining losses for Petrobras, which was forced to buy oil at market prices but sell fuels at a loss.
That helped inflate the company's debt to $106 billion, making Petrobras the world's most-indebted and least-profitable major oil company.
According to Paulo Roberto Costa, whose testimony helped uncover the contract fixing, bribery and political kick-back scandal at Petrobras, the refining losses have hurt the company's finances more than the corruption.
"I presented proposals to adjust fuel prices gradually to the board in 2011, 2012 and 2013," Costa told a congressional hearing on the corruption scandal at Petrobras on Tuesday. "It was Mantega who rejected them."
"If you consider that (the graft scheme) cost Petrobras 6 billion reais, the fuel subsidies cost 10 times that," said Costa, who pleaded guilty to bribery and other charges in the scandal.
The CVM said the ex-board members failed to be "loyal" to the company that employed them.
Other board members accused by the CVM included former Planning Minister Miriam Belchior, former Deputy Energy Minister Marcio Zimmermann, steel tycoon Jorge Gerdau Johannpeter, and Luciano Coutinho, head of state development bank BNDES.
Coutinho remains on Petrobras' board. Efforts to contact him and other former board members were unsuccessful.
The CVM said it is waiting for them to present their defense.
$1 = 3.06 Brazilian reais Reporting by Walter Brandimarte and Aluisio Alves; Editing by Chizu Nomiyama and Dan Grebler