UPDATE 1-Brazil regulator says former Petrobras board misled investors
* 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. Continuación...