Second Petrobras Director Arrested in Graft Case

Second Petrobras Director Arrested in Graft Case

Brazilian police make 27 arrests, including the detention of a former official for state-owned oil giant Petrobras, as a multibillion-dollar kickback scandal deepens.

RIO DE JANEIRO -- Brazilian police said Friday they made 27 arrests, including the detention of a former official for state-owned oil giant Petrobras (IW 1000/23), as a multibillion-dollar kickback scandal deepened.

Renato Duque, Petrobras' former director of engineering and services, was arrested during a sweep by 30 police teams across the country.

Authorities also froze of assets worth $277 million belonging to 36 suspects and three unnamed companies.

A police statement said 300 federal police and 50 tax fraud experts issued 85 warrants, making 27 arrests after searches in five states and the capital Brasilia, as they widened their investigation into the scandal, dubbed "Operation Car Wash."

The statement added that there have been 11 searches of companies, including some top construction firms.

Among those arrested on suspicion of money laundering and fraud were top executives from at least nine construction firms that entered into suspect contracts with Petrobras.

Those listed as being under suspicion will not be allowed to leave the country, and their names will go on an Interpol wanted list.

After an early delay in trading on news of the arrests, Petrobras stock was off 3.4% shortly before the Sao Paulo market close.

3Q Financial Report Delayed

Thursday, the scandal-tainted firm -- which is also the subject of an investigation by US authorities -- announced it was delaying release of its third-quarter results because of ongoing "investigations regarding allegations of conspiracy, embezzlement and corruption," among other charges.

According to former Petrobras official Paulo Roberto Costa, the company paid millions of dollars to politicians and members of the ruling Workers Party between 2004 and 2012.

Costa, currently under house arrest, has been acting as whistleblower as part of a plea bargain deal with prosecutors investigating the scandal.

Police estimate more than $3.8 billion in kickbacks were made in all.

Money dealer Alberto Youssef, detained along with Costa in March, claimed last month in testimony to investigators published by news magazine Veja that President Dilma Rousseff and predecessor Luiz Inacio Lula da Silva knew about the kickback scheme.

Both angrily denied knowing anything about the scheme, which allegedly started shortly after the ruling Workers Party took power in 2003.

Rousseff, a former board chair of Petrobras who served as energy minister under Lula, threatened to sue Veja for publishing the allegations, which now are the subject of an investigation by the courts as well as Congress.

Copyright Agence France-Presse, 2014

TAGS: The Economy
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