Senator and banker arrested in Brazil corruption scandal

An investigation into corruption at Petrobras, Brazil's state-owned oil company, has resulted in the arrests of a sitting senator and a billionaire investment banker who is one of the country's top financial executives.

The federal prosecutor's office said in a statement that Senator Delcídio do Amaral, a member of the governing Workers' Party and an important ally of president Dilma Rousseff, had been arrested in Brasília on Wednesday morning.

Ms Rousseff’s popularity has already eroded since her re-election in October of last year because of a prolonged recession and the Petrobras scandal. There have been calls for her to resign, and the Amaral arrest is likely to complicate her efforts to govern and move economic proposals, including unpopular austerity measures, through Congress.

It is also likely to deepen Brazil’s political crisis with many wondering if she will be forced to resign.

Also arrested was André Santos Esteves, the chief executive of the Brazilian investment bank BTG Pactual. In recent years, the bank has not only expanded in Latin America but has also acquired a bank in Switzerland. It has significant investments in the oil and gas sector, and acquired Petrobras assets in Africa in 2013.

According to trial testimony, top executives at Petrobras accepted huge bribes from a cartel of companies, enriching themselves while also channeling funds to political figures and to the leftist Workers’ Party. Although no testimony has emerged suggesting that Rousseff personally profited from the scheme, she was chairwoman of the oil giant from 2003 to 2010, roughly corresponding when the system of collusion, kickbacks and payoffs took shape.

Wide immunity

While the investigation has broadened during the past year and a half to include executives of construction companies and even the head of the military’s secret nuclear program in the 1970s and 1980s, Wednesday’s arrests were of particular note, as members of Congress here have long enjoyed wide immunity from prosecution.

Amaral was the first sitting senator to be arrested since at least the establishment of the 1988 constitution, according to David Fleischer, a political analyst and professor emeritus at the University of Brasília.

“The accusations are pretty grave,” he noted, pointing to the unusual unanimous decision by Brazil’s Supreme Court to issue the arrest orders.

On Wednesday night, the Senate voted to approve the arrest order. The arrest will probably further complicate the tense relationship Ms Rousseff has with Congress, and the difficulty she has had getting legislation approved.

Mr Esteves is the most high-profile financial executive to be accused of being involved in the money-laundering scheme. He and Mr Amaral are accused of trying to obstruct the investigation, specifically by pressuring Nestor Cerveró, a former Petrobras executive, not to cooperate. Documents from the prosecutor’s office accuse both of “undertaking efforts to dissuade Nestor Cerveró from signing a plea agreement with the attorney general’s office.” That pressure included a payment of 4 million reais (about €1 million) as well as monthly payments of at least 40,000 reais to his family members, the documents say.

Mr Cerveró was sentenced in August to 12 years in jail for corruption and money laundering in the Petrobras case. Mr Amaral is also accused of plotting to help Mr Cerveró escape to Spain, where he also holds citizenship.

In the last few months, Mr Amaral and Mr Esteves met with Cerveró’s son Bernardo Cerveró, who recorded many of the conversations, prosecutors say. Edson Ribeiro Filho, a lawyer for Mr Cerveró, and Diogo Ferreira Rodrigues, chief of staff to Mr Amaral, were also arrested.

Mr Amaral did not comment on the charges on Wednesday. BTG Pactual said in a statement that it would cooperate with the investigation.

New York Times