Friday, February 6, 2015

Petrobras Scandal Deepens with Questioning of Ruling-Party Treasurer


RIO DE JANEIRO – A massive corruption scandal battering Brazilian state-controlled oil company Petrobras deepened Thursday with the summoning of the treasurer of the ruling Workers Party, or PT, for questioning.

João Vaccari Neto, the highest-level political operator to be summoned in the case, was quizzed by the Federal Police in Sao Paulo for nearly three hours and later released without charges.

He was called to testify over “donations that he solicited, legal or illegal,” from several Petrobras contractors, prosecutor Carlos Fernando Lima said at a press conference in the southern city of Curitiba.

In the latest phase of the investigation, 22 people were ordered arrested or called in for questioning on Thursday, including Vaccari Neto and 10 executives suspected of money laundering and serving as go-betweens for the payment of kickbacks.

Warrants were also issued for the search of those suspects’ residences and the offices of 26 firms, mostly front companies, in four Brazilian states.

The investigation, which had until now focused on alleged corruption at three Petrobras divisions, has been extended to the company’s BR Distribuidora subsidiary, which operates a network of 7,500 service stations nationwide.

The payment of kickbacks to BR Distribuidora executives by contractors occurred until “very recently,” through the end of 2014, the prosecutor said.

The massive scope of the scandal, meanwhile, prompted the lower house of Brazil’s Congress on Thursday to create a new legislative panel to investigate Petrobras. The committee’s powers will include the ability to sidestep bank secrecy rules.

It will be controlled by parties allied with the PT, just like two other congressional committees that conducted inquiries last year and whose conclusions, which did not include recommending the indictments of any politicians, were harshly criticized by the opposition.

The crisis at Petrobras has led to the resignations of CEO Maria das Graças Foster and five top company directors. Their replacements are to be announced on Friday.

The scandal erupted last March and has led so far to the detention of three former Petrobras directors along with executives of leading Brazilian construction and engineering firms.

Prosecutors allege that those latter firms formed a cartel to artificially drive up the price of contracts awarded by Petrobras.

As part of that scheme, the companies paid kickbacks to some Petrobras executives and funneled a portion of the money from the inflated contracts to Brazilian political parties.


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