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Former Petrobras Director: Graft Scheme Widespread in Brazil

  • Reuters

Former director of Brazil's state-run Petrobras oil company, Paulo Roberto Costa, reacts during a congressional committee that is investigating allegations of corruption at Brazilian state-run oil company Petroleo Brasileiro SA, in Brasilia, Dec. 2, 2014.

Former director of Brazil's state-run Petrobras oil company, Paulo Roberto Costa, reacts during a congressional committee that is investigating allegations of corruption at Brazilian state-run oil company Petroleo Brasileiro SA, in Brasilia, Dec. 2, 2014.

A former Petrobras executive at the center of an alleged multibillion-dollar graft scheme involving the state-run oil company said on Tuesday that similar bribery and kickback schemes are prevalent in many Brazilian public-infrastructure projects.

The March arrest of the executive, Paulo Roberto Costa, helped uncover a scheme that allegedly used inflated Petrobras contracts for refineries and other projects to funnel money to politicians through leading construction companies.

At a Congressional hearing on Tuesday, Costa said the practice extends beyond Petroleo Brasileiro SA, as Petrobras is formally known.

“What has been reported occurring at Petrobras happens all over Brazil in contracts for roads, railways, ports, airports, hydroelectric dams,” Costa said.

The case is sharpening Brazilian political divisions only weeks after President Dilma Rousseff won re-election in the country's closest vote in decades. Rousseff, chairwoman of Petrobras' board of directors from 2003 to 2010 when many of the alleged bribes and kickbacks happened, has denied involvement in the corruption scheme.

Political parties have dominated all high-level appointments at Petrobras, including his own, for decades, Costa said.

Last month, prosecutors began probing other state-run companies after dozens of construction and engineering firm executives were arrested Nov. 14 in relation to the Petrobras case.

“This scheme is not restricted to Petrobras,” said Carlos Fernando dos Santos Lima, a lead prosecutor in the case, told Reuters.

Lima declined to name companies, but state-run Centrais Eletricas Brasileiras SA, Latin America's largest utility, is expected to be the next company to come under scrutiny.

Prosecutors say as much as 10 billion reais ($3.9 billion) was skimmed from overpriced contracts with Petrobras and distributed to Rousseff's Workers' Party and its allies in Congress.

Costa declined to answer questions about the Petrobras case at Tuesday's hearing saying it would break a plea bargain that let him swap jail for house arrest in Rio de Janeiro.

Costa did say he gave authorities the names of “dozens” of politicians who received payments in the Petrobras case.

Also on Tuesday, Brazil's comptroller general's office said it is investigating five Petrobras managers and two former managers for their alleged role in a separate bribery case involving Dutch firm SBM Offshore NV.

SBM, the world's largest oil-platform leaser, is cooperating with Brazil to avoid a ban on future contracts with Petrobras.

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