Rousseff Allies Snagged by Brazil Police in Corruption Probe

  • Former Budget and Planning Minister Paulo Bernardo arrested
  • Prosecutor cites evidence of criminal organization in ministry

Allies of suspended Brazilian President Dilma Rousseff were targeted in a police raid on Thursday in the latest phase of a corruption probe that continues to rock Latin America’s largest nation.

Paulo Bernardo, a former communications as well as planning minister under Rousseff and her mentor and predecessor Luiz Inacio Lula da Silva, was arrested in the apartment of his wife, Senator Gleisi Hoffmann, according to Bernardo’s lawyer and media reports. The federal police are carrying out 25 arrest and detention warrants and 40 search orders in five states, they said in a statement.

Paulo Bernardo

Photographer: Evaristo Sa/AFP via Getty Images

“There is evidence that a criminal organization acted in the Planning Ministry during five years, diverting about 100 million reais,” federal prosecutor Andrey Borges told reporters in Sao Paulo, alleging that Bernardo was the head of that organization. That comes to about $30 million.

Veronica Sterman, Bernardo’s attorney, said the arrest seemed unwarranted. Hoffmann’s press officer declined to comment.

Alleged Bribes

The probe into alleged bribes that technology contractors paid public servants at the Planning Ministry from 2010 to 2015 puts the public spotlight back on Rousseff and her Workers’ Party after Acting President Michel Temer lost three of his cabinet members over allegations of corruption. They denied wrongdoing. Rousseff faces a Senate impeachment trial in August on unrelated charges of covering up budget deficits with illegal funding. She denies the allegations.

Hoffmann has been one of the most outspoken defendants of Rousseff in the Senate impeachment hearings. The corruption probe’s renewed focus on Rousseff’s allies could make it tougher for her to win the impeachment vote and return to power. The Brazilian real gained 0.9 percent to 3.35 reais in mid-afternoon trading.

Hoffmann also heads the Senate Economic Affairs Committee, which is due to conduct confirmation hearings on July 5 for four new central bank directors nominated by Temer.

The front page of newspaper Folha de S. Paulo’s online edition showed heavily armed policemen guarding the Workers’ Party’s Sao Paulo headquarters, which was searched for evidence. Police also searched the Brasilia home of former Pension Minister Carlos Gabas, who also served under Rousseff. His lawyer didn’t return a message from Bloomberg left at his office. The Workers’ Party in a statement said it had nothing to hide and condemned the police decision to search its headquarters, adding it had always been willing to cooperate with authorities.

The police raid on Thursday is related to the so-called Car Wash probe into corruption at state-run companies, though it was led by prosecutors in Sao Paulo rather than Curitiba where the probe is being directed. The phase of the investigation was dubbed Brazil Cost, a common reference to the high cost of doing business in the country due to taxes, poor infrastructure and red tape.

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