Brazil Company Illegally Funded 2010 Rousseff Campaign - Folha

A group of executives at Andrade Gutierrez said in a plea bargain deal that the country’s No. 2 construction firm gave illegal contributions to President Dilma Rousseff’s election campaign in 2010, Folha de Sao Paulo newspaper reported.

Andrade Gutierrez allegedly paid more than 5 million reais in expenses of her 2010 campaign through a fictitious service contract with a public relations firm, Folha reported, without saying how it obtained the information. Andrade Gutierrez and Rousseff’s press office declined to comment.

Rousseff’s lawyer Flavio Caetano didn’t comment on issues related to the 2010 campaign but added that her current mandate is safe. “There’s no legal chance of annulling a mandate in the case of proving irregularities in previous campaigns,” he told Bloomberg in a phone interview.

Yet the revelations could be damaging for Rousseff as a corruption probe extends into its second year, rattling Brazil’s political and corporate establishment. Investigations in recent weeks have encroached on her ruling Workers’ Party and former President Luiz Inacio Lula da Silva at the same time that she is dealing with the worst recession in over 100 years.

“The pressure on Dilma and Lula will increase a lot,” Thiago de Aragao, partner and director of Arko Advice, said. “It doesn’t mean that it will accelerate or not her fall.”

In response to questions about the Folha article, the head of the Workers’ Party, Rui Falcao, reiterated in a phone interview that campaign contributions "were legal, registered and declared with the electoral court.”

The corruption scandal at state-run oil company Petrobras has fanned political tensions as members of the ruling Workers’ Party accuse Rousseff’s administration of failing to shield them from the investigations, dubbed Carwash. Her administration announced on Monday it was replacing Justice Minister Jose Eduardo Cardozo, who was criticized for allowing federal police to investigate Workers’ Party members and their allies.

A letter from the prosecutor-general’s office made public on Monday confirms that the federal task force in charge of Carwash has been investigating Lula since late last year.

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