Former Petrobras Director Denies Monday Laundering Charge

A former head of refining and transport at Petroleo Brasileiro SA (PETR4) denied allegations he was part of a criminal network inside the state-controlled company that laundered money from construction contractors.

Paulo Roberto Costa, who was dismissed from Petrobras in 2012 after Maria das Gracas Foster became Chief Executive Officer, said management didn’t inflate prices at the Abreu e Lima refinery. The project, originally budgeted at $2.5 billion, has cost $18.5 billion to date.

“I refute anyone who says there has been money laundering and criminals inside Petrobras,” Costa told lawmakers in Brasilia today. “Petrobras has enormous internal controls.”

Costa was arrested March 20 for allegedly taking part in a money-laundering scheme and accepting kickbacks related to the refinery project between 2011 and 2013.

Two commissions formed by Petrobras to review contracts for work at the Abreu e Lima and Comperj refineries should complete their work by the end of June, according to an April 30 regulatory filing that doesn’t mention a reason for the probe.

Foster met with police on Apr. 11 and delivered documents relating to the case. Costa’s lawyer, Fernando Fernandes, didn’t immediately respond to an e-mailed request for comment.

Petrobras has spent $22.4 billion on the two refineries, according to the filing. Abreu e Lima, in the northeastern state of Pernambuco, will process 230,000 barrels a day when it opens in the fourth quarter, almost three years behind schedule. The 150,000-barrel-a-day Comperj refinery in Rio de Janeiro is projected to cost $13.5 billion when it opens in 2016, four years later than originally planned and 61 percent over budget.

To contact the reporters on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net; Sabrina Valle in Rio at svalle@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Jim Efstathiou Jr.

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