Brazilian federal police arrested 18 people suspected of involvement in a far-reaching corruption and money-laundering scandal connected to the state-run oil company, Petróleo Brasileiro SA on Friday (November 14).
A former executive of the state-run company, Renato Duque, was among those arrested as part of the investigation which sent the oil company’s shares and bonds tumbling after the widening scandal forced it to delay the release of its financial results.
Duque, the former engineering director, was the second senior executive arrested at Petrobras, as the company is commonly known, in the investigation into the money laundering and bribery scheme that allegedly skimmed billions of dollars off contracts and into political parties’ coffers.
Some 300 police officers and 60 tax fraud agents were deployed in five states and the capital Brasilia to carry out the investigation.
Police raided the offices of leading construction and engineering firms, seized potentially incriminating documents and arrested 18 people suspected of involvement in the scheme.
Local media reported two chief executives were among them.
Odebrecht, a major construction firm, said its offices in Rio de Janeirohad been searched and documents seized.
It said it was complying fully with the police investigation.
Another construction firm, Mendes Junior, said police officials had been at its offices in Sao Paulo.
Builder OAS said it had provided access to all requested documents and information at its headquarters in Sao Paulo.
The investigation, dubbed “Operation Car Wash,” was first launched in March as police investigated the alleged money laundering scheme.
The scandal has put pressure on leftist President Dilma Rousseff, who narrowly won re-election last month.
Rousseff, who has pledged a thorough investigation, was chairwoman of the Petrobras board between 2003 and 2010.
Paulo Roberto Costa, a former Petrobras executive previously jailed in the case, has said in a plea-bargain deal that kickbacks of three percent from contracts were funnelled to Rousseff’s Worker’s Party and its allies in Congress during his time as head of refining between 2004 and 2012.
Costa and a black-market money dealer called Alberto Youssef were arrested in March in the initial stages of the investigation.
Police say some 10 billion reais (2.45 billion pounds) was skimmed off contracts.
On Friday (November 14), the offices of seven companies that had contracts worth billions of dollars with Petrobras were searched by police.
“A good part of these contracts that are being investigated, have been obtained from prior agreements with a group with all the characteristics of a cartel, and moreover with,” delegate from the Federal Police, Igor de Paula, said.
“A systematic facilitation, also, to divert funds to pay politicians and public officials,” Paula added.
Recently one of the world’s six most valuable companies, Petrobras has experienced one of the most spectacular corporate reversals in emerging market history.
Its net worth has slumped 77 percent since 2008.
On Thursday (November 13), the company delayed the release of its third-quarter earnings and said it had hired to private law firms to investigate the allegations of money laundering.
Analysts and traders warned that Petrobras could be stripped of its investment grade rating and prompted to write down the value of reported capital expenditure in prior quarters.
Investors are concerned that the world’s most indebted oil company is at risk of a technical default on tens of billions of dollars in bonds if it doesn’t report audited earnings by the end of the year.
About $12 billion dollars worth of outstanding global bonds could be affected, according to Thomson Reuters calculations.
Reuters wires
