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Ruling Party's Treasurer Arrested in Brazil's Petrobras Scandal

  • Reuters

Joao Vaccari, treasurer of Brazil's ruling Workers' Party, is escorted by police after his arrival in Curitiba, April 15, 2015.

Joao Vaccari, treasurer of Brazil's ruling Workers' Party, is escorted by police after his arrival in Curitiba, April 15, 2015.

Brazilian police on Wednesday arrested the treasurer of the ruling Workers' Party, moving an investigation of rampant corruption at state-run oil company Petrobras closer to President Dilma Rousseff's inner circle.

Federal police said they arrested Joao Vaccari in his home in Sao Paulo and were driving him to the southern city of Curitiba. There he will stand trial for alleged graft, political kickbacks and money laundering, the latest prominent Brazilian caught up in a multibillion-dollar probe.

Vaccari's arrest could bring the investigation closer to the president if the money allegedly siphoned from the oil firm, Petroleo Brasileiro SA, is found to have helped finance her 2010 or 2014 election campaigns.

Federal Judge Sergio Moro ordered Vaccari's arrest after five defendants testified in plea bargain agreements that engineering firms hired by Petrobras had overcharged the oil firm and passed on profits to the Workers' Party via Vaccari.

"Anyone responsible for such severe crimes, including using the position of treasurer of a political party to raise criminal funds and corrupt the political system, is a risk to public order,'' Moro wrote in a court order.

Vaccari, indicted March 16, is the closest political figure to Rousseff to be jailed in the year-old Petrobras scandal. The investigation threw her government into a crisis at the start of her second term this year when it widened to include 47 politicians, all but one from her governing coalition.

Former Petrobras executives have said Vaccari moved over $200 million in graft money skimmed off overpriced construction and engineering contracts.

Vaccari denied the accusations last week before a congressional inquiry commission. He and the Workers' Party say all campaign donations from the construction and engineering companies were legal and registered with electoral authorities.

Federal Prosecutor Carlos Fernando dos Santos Lima said investigators had since found incriminating evidence. One of the firms paid 1.5 million reais ($487,000) to a graphics company that never provided any services, and the money ended up as a donation to the party, he said at a news conference.

Police also took a statement from Vaccari's wife as they investigated the family's bank accounts, looking at suspicious deposits, and they have a warrant for his sister-in-law's arrest.

Some leading members of the Workers' Party have called for Vaccari's resignation, but he and the party have insisted on his innocence.

Rousseff has denied knowledge of the graft scheme at Petrobras, which mainly operated while she was chairwoman of the oil company, but the scandal has set off nationwide protests against her government and calls for her impeachment.

Opposition leaders have become more open to impeaching Rousseff following recurring protests against her, as well as opinion polls showing most Brazilians believe she is responsible for corruption at Petrobras.

Aecio Neves, who narrowly lost to her in the October elections, said Monday that there was a "very strong'' case for impeachment, and that his centrist PSDB party was studying that option.

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