Former finance minister Antonio Palocci held in Brazil Petrobras graft probe

Palocci was arrested on suspicion of being linked to bribes paid by the construction company Odebrecht, one of the main firms involved in the huge Petrobras pay-to-play scandal

PUBLISHED : Monday, 26 September, 2016, 11:25pm
UPDATED : Monday, 26 September, 2016, 11:26pm

Brazilian police on Monday arrested Antonio Palocci, a former finance minister and senior figure in the last two governments, as part of the Petrobras corruption probe, prosecutors said.

Palocci, 55, served as finance minister under former president Luiz Inacio Lula da Silva and as chief of staff for his successor Dilma Rousseff, who was impeached this month.

Palocci was also a key figure in the leftist Workers’ Party.

Like Lula, he has joined the long list of top officials accused of taking part in a huge corruption scheme linked to state oil company Petrobras.

“He was detained in Sao Paulo on a temporary detention order for five days and must leave today for Curitiba,” the southern city where a judge is leading the probe, an official in the state prosecution service said.

Brazil police urge graft charges against ex-leader Lula as part of probe into Petrobras

Palocci was arrested on suspicion of being linked to bribes paid by the construction company Odebrecht, one of the main firms involved in the huge Petrobras pay-to-play scandal.

Evidence from emails and mobile telephones shows “that the ex-minister Antonio Palocci ... acted in favour of the Oderbrecht group between 2006 and late 2013”, a statement from the prosecution service said.

Police said in a statement they were investigating “negotiations between the Oderbrecht group and the ex-minister to try to pass a law” that would bring “immense fiscal benefits” to the firm.

They said they were probing suspected irregularities linked to Petrobras deep-sea oil exploration contracts.

Last week the police briefly detained Palocci’s successor as finance minister, Guido Mantega, also in connection with the Petrobras scandal.

Last week a judge also ruled that Lula himself must stand trial for corruption in the Petrobras case.

Lula thus became the highest-profile figure to face trial in a case that has taken down some of the country’s most powerful business executives and politicians.

The charges allege that Lula, 70, masterminded the corruption racket and received the equivalent of 3.7 million reais (US$1.1 million) in bribes.

Among the accusations are charges that the former union leader and his wife received a beachside apartment and upgrades to the property from a major construction company, OAS, which was one of the players in the Petrobras scheme.

The arrests are the latest phase of “Operation Car Wash”, the federal probe into the Petrobras scheme, which has upended Brazilian politics since it was launched in 2014.

Dozens of politicians and some of Brazil’s richest businessmen have been charged or convicted.

Under the corruption scheme, Petrobras allegedly gave inflated contracts to big construction firms in exchange for hefty bribes.

Brazil’s new president, Michel Temer, and the PMDB were allied with the Workers’ Party before splitting in March, a prelude to Rousseff’s impeachment.

The latest developments came just two days after a federal judge accepted charges against Lula, Rousseff’s popular predecessor and mentor, for allegedly accepting bribes from a construction company linked to the Petrobras case.

The decision by Sergio Moro, the crusading judge overseeing the investigation, means Lula will stand trial for corruption.