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Former Finance Minister Mantega Arrested in Brazil's Petrobras Probe

  • Reuters

Brazil's former Finance Minister Guido Mantega, right, is escorted by officers as he arrives at the Federal Police headquarters in Sao Paulo, Brazil, Sept. 22, 2016.

Brazil's former Finance Minister Guido Mantega, right, is escorted by officers as he arrives at the Federal Police headquarters in Sao Paulo, Brazil, Sept. 22, 2016.

Brazilian police arrested former Finance Minister Guido Mantega on Thursday as a sweeping corruption investigation further struck at the heart of the Workers' Party (PT) that ran the country for 13 years.

Police investigators told reporters they took Mantega, long a confidant of recently impeached former President Dilma Rousseff and an early member of the PT, into custody at the Albert Einstein Hospital in Sao Paulo. He was there accompanying his wife as she prepared for surgery.

Quoting witness testimony, they said Mantega in 2012 had requested a payment of 5 million reais, or about $2.5 million at the time, to benefit the PT.

Brazil's longest-serving finance minister of the past 70 years, Mantega in 2012 also served as chairman of Petroleo Brasiliero, or Petrobras, the state-run oil company at the center of a sprawling political kickback scheme. A few hours after his arrest, federal Judge Sergio Moro ordered that Mantega be released from custody. He ruled that Mantega's cooperation with authorities, the fact that they had already searched his home, and the fact that he was supporting his wife as she fights cancer all indicated the former minister was unlikely to be a threat to interfere with the investigation.

His arrest came just two days after Moro decided to put former President Luiz Inacio Lula da Silva on trial for allegedly accepting more than $1 million in bribes from an engineering firm in the Petrobras scandal.

Mantega, 67, served as finance minister for almost nine years under Rousseff and Lula, a close friend whom he helped to get elected president in 2002.

He helped steer Latin America's largest economy through a commodities boom at the height of Workers' Party rule, but came under withering criticism since 2011 as the economy began sliding into its worst recession since the 1930s.

Policies drew criticism

Mantega left office in 2015 at the start of Rousseff's second term after years of criticism from Wall Street for his faulty economic forecasts and ineffective industrial policies.

Attorneys for Mantega did not immediately respond to requests for comment, but his political allies excoriated the decision to arrest him.

Workers' Party President Rui Falcao called the arrest "arbitrary, inhuman and unnecessary" and questioned the timing of the operation just over a week before municipal elections throughout the country.

Police executed warrants for eight arrests and 32 search-and-seizure operations in five states and the capital, Brasilia, on Thursday, according to prosecutors. They said the operation targeted Mantega and engineering firms Mendes Junior and OSX Construção Naval SA, part of a commodities empire built by former billionaire Eike Batista.

Police named the latest phase of the two-year-old Petrobras probe "Operation X Files" in a reference to the letter X that Batista included in the name of his oil drilling, mining, shipbuilding and logistics companies.

Prosecutors said Batista came to them spontaneously to offer testimony, in which he said Mantega in a November 2012 conversation requested the payment of 5 million reais to benefit the PT.

Prosecutors said that Batista eventually made an overseas payment of $2.35 million, or close to 5 million reais, to Rousseff's and Lula's campaign architect, Joao Santana, along with his wife, Monica Moura. Both have previously been arrested for alleged money laundering in the Petrobras scheme.

Batista is under investigation but was not targeted in Thursday's operation. A lawyer for Batista and press representatives for OSX and Mendes Junior could not immediately be reached for comment.