RIO DE JANEIRO (Reuters) - The former head of Petrobras (PETR4.SA) said on Thursday there was no way the state-run oil company could have discovered the massive corruption scheme that is adding to Brazil's economic and political troubles.
Petroleo Brasileiro SA, as Petrobras is formally known, followed all internal procedure in approving more than $30 billion a year in spending, making it impossible to overcharge on projects, ex-Chief Executive Officer Jose Sergio Gabrielli told a congressional committee in Brasilia investigating the corruption.
Gabrielli has not been charged but the government has frozen his assets.
"This is not about Petrobras. This is the result of actions by criminal individuals. It is a police matter," said Gabrielli, who lead the company from 2005 to 2012 when the bulk of the bribery, price-fixing and political kickback scheme took place.
"All procedures were followed. There is no way we could possibly have found these problems," he said.
Some commission members expressed skepticism that he could have missed the signs that government investigators found.
Two ex-Petrobras executives and former Gabrielli lieutenants have admitted to paying bribes to political parties and taking kickbacks.
Gabrielli said these payments were made by corrupt individuals and Petrobras was not involved nor was corruption systemic at the company.
Gabrielli warned that the case is weak and it threatens to shut down construction companies and shipyards across the county, putting thousands out of work.
A federal court has indicted about 40 including several dozen construction company executives. Fourteen people are in custody while police investigate.
Another 34 sitting politicians and 13 former politicians are part of investigations that have been opened by Brazil's Supreme Court.
Brazil's Federal Accounting Court, or TCU, warned Petrobras and the government of cost overruns and improper contracting policies at the company's Abreu e Lima refinery in 2008 and regularly cited Petrobras and Gabrielli for failing to provide documents needed to audit the project.
Congress voted to cut off funds to the refinery in 2009, but Brazil's president at the time, Luiz Inacio Lula da Silva, vetoed the cutoff. Silva based his decision on the advice of current President Dilma Rousseff, then Petrobras' chairwoman of the board.
Gabrielli is a long-time member of Lula and Rousseff's Workers' Party.
The refinery was first budgeted at $4.8 billion and is expected to cost $20 billion when complete later this year. It is the most expensive refinery ever built.
Reporting by Jeb Blount; Editing by Lisa Shumaker