Brazilian authorities have launched an investigation on eight board members of the state-run oil giant Petróleo Brasileiro SA (Petrobras) including the country's ex-finance minister Guido Mantega.
The probe led by the country's securities regulator CVM focuses on the 'pricing policy' of the company and allegations on misleading investors by requiring the oil firm to subsidize domestic gasoline and diesel prices.
''The accusation is based on the false expectation that was created in the market as a function of the discrepancy between the company's disclosures about its pricing policy and the way it was carried out by the board in practice,'' the CVM said in a statement.
Mantega was the chairman of the company's board at that time. He and all other members excluding one left the board during February-March with only Luciano Coutinho, president of the Brazilian National Development Bank, remaining.
The subsidies to the tune of $20 billion between 2011 and 2014 were provided at a time when the company was struggling for cash for its massive investment programme. Investors viewed it as a measure to help government to control mounting inflation, amid heavy spending.
According to The Wall Street Journal, both Coutinho and Petrobras declined to comment and Mantega could not be reached.
The CVM's probe is not of a criminal nature as the regulator has the authority to pursue civil and administrative breaches of the country's securities law.
The latest investigation is separate from the multi-billion dollar bribery scandal involving the country's biggest company, which surfaced last year. The police investigation on the scandal code-named 'Operation Car Wash' has so far unearthed 8.9 billion reais ($2.9 billion) of suspected payments, bribes and kickbacks to Petrobras executives and politicians.
The disgrace has become a huge problem for president Dilma Rousseff's government, with several politicians of her coalition implicated in the corruption allegations as Latin America's largest economy struggles with mounting inflation and dismal economic growth.
Although in March the country's supreme court ordered investigations on 54 politicians and officials, Rousseff has been completely cleared of any involvement in the scandal.
According to forecasts, the Brazilian economy is poised to fall into a recession in 2015, after managing to avoid a downturn in 2014 with a meager 0.1-per cent growth, its worst performance since 2009.
The International Monetary Fund (IMF) last month predicted a 1-per cent contraction for the Brazilian economy this year, its deepest in 25 years, followed by a 1-per cent expansion next year.
Inflation is the highest in more than a decade registering 7.7 per cent in February and 8.1 per cent in March, well above the central bank's 6.5 per cent limit. According to analysts, inflation is likely to reach 8.26 per cent in December.
Last week, the country's central bank raised interest rates for a fifth time to 13.25 per cent, signalling tightening of monetary policy.