Brazil Graft Case Grows as Prosecutors See More Charges

Brazil’s biggest-ever laundering and corruption case is expanding further as authorities step up investigations into company executives.

Prosecutors recommended criminal charges against 36 people yesterday, including officials at the country’s biggest construction companies in a case linked to state-run Petroleo Brasileiro SA. At the same time, police and prosecutors are collecting new evidence as more people collaborate.

The scandal is distracting Petrobras as it struggles to meet production targets and adjust to a bear market for crude and threatens to derail President Dilma Rousseff’s efforts to revive the economy by delaying infrastructure projects. The prosecutors office, known as MPF, is looking to recover 1 billion reais ($377 million) from crimes identified to date.

“This is only one block of charges, new ones will come,” Prosecutor Deltan Dallagnol said yesterday at a televised press briefing in Curitiba, Brazil.

Twenty two of the suspects are current or former employees at contractors including OAS SA and Camargo Correa SA, Dallagnol said. OAS hasn’t been officially notified of the MPF’s accusations, it said in an e-mailed response. Camargo Correa said in an e-mailed response that its executives will present a defense and expect a fair trial.

Fitch Ratings Ltd. put all Brazilian heavy construction companies on negative watch on Nov. 19 until there’s more clarity on the results of the investigation. Prosecutors also recommended action against executives from UTC Engenharia SA, Mendes Junior Engenharia SA, Galvao Engenharia and Grupo Engevix, Dallagnol said.

Former Director

The alleged crimes presented yesterday are linked to former Petrobras refining director Paulo Roberto Costa, who spent six months in jail and is now under house arrest and collaborating with the police. The recommendation will be sent to a judge, who will decide whether or not to press charges.

Black-market money changer Alberto Youssef is under arrest in the same jail as the executives since March and was the second to collaborate with investigators. Youssef allegedly was the banker in a criminal organization that included Petrobras, construction companies and politicians.

“There are more people collaborating with the police and more evidence being collected,” Antonio Figueiredo Basto, a lawyer defending Youssef, said in an interview from Curitiba. “A new police operation is likely.”

Dallagnol declined to comment on specific companies that could be targeted as the investigation advances.

“The case is far from over,” Prosecutor General Rodrigo Janot said at the same briefing. “These people stole the pride of Brazilians.”

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