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New Plea Deals as Brazil's Petrobras Corruption Probe Advances

Jose Dirceu, former presidential chief of staff, center, is accompanied by federal police agents to a car at a police station in Brasilia, Aug. 4, 2015.

More defendants are negotiating and signing plea bargain deals in a massive bribery case focused on Brazil's state-run oil firm Petrobras as federal
prosecutors prepare charges against higher-profile suspects,
including politicians.

Petrobras' former head of corporate services Renato Duque and Fernando Soares, a lobbyist who helped firms win drillship contracts with Petrobras and is accused of funneling bribes to the Brazil Democratic Movement Party (PMDB), are among those negotiating deals, lawyers for both defendants said.

More than 100 people have been indicted, the country's most powerful engineering executives detained and dozens of lawmakers implicated in the case with prosecutors relying heavily on plea-bargain deals, a relatively new legal tool in Brazil, to expand their investigation.

The push to keep building a stronger list of potential witnesses signals that prosecutors have their eye on even higher-level suspects in the price fixing and political kickback scheme.

"Prosecutors are both building a case against people higher up the political food chain, and seeking to increase the likelihood that those executives already implicated will receive definitive jail sentences," said Matthew Taylor, an expert on Brazil's legal system at American University.

President Dilma Rousseff is not being investigated and has supported the probe, but it has ensnared senior members of her Workers' Party and its allies. Combined with a weak economy, it has also pushed her approval ratings down into single digits.

She served as chairwoman of the board of Petroleo Brasileiro SA, as Petrobras is formally known, from 2003 to 2010 when much of the alleged graft took place.

Prosecutors are expected to present charges against dozens of lawmakers and former ministers they have been investigating since March in coming weeks.

To be sure, some defendants say they are innocent and will not collaborate, vowing to appeal any eventual sentences.

Brazil's largest engineering firm, Odebrecht SA, denied there were any talks about a deal for CEO Marcelo Odebrecht after the Folha de S. Paulo newspaper said the company was considering cooperation.

Marcelo Odebrecht's personal ties to former President Luíz Inácio da Silva threaten to bring the scandal closer to the Workers' Party if he were to collaborate.

Prosecutors have also opened a separate inquiry into whether Lula improperly used his connections to benefit Odebrecht after leaving office.

Deals with 28 defendants had been sealed as of this week, though only 21 names are public, a spokeswoman for the federal prosecutors' office said, adding that the number is rising daily. Prosecutors do not comment on plea negotiations.

The rising number of agreements is also a sign the tide is turning against the defendants, lawyers said.

Neither Soares nor Duque managed to get a higher court to order their pre-trial release.

The Supreme Court has recently upheld other decisions from federal judge Sergio Moro, who oversees the investigation and has become a folk hero for many Brazilians fed up with near daily revelations of corruption.

In one significant ruling, the high court agreed to transfer Jose Dirceu, who was Lula's chief of staff, to the southern city of Curitiba, where Moro's court is based, on Aug. 3.

Reduced sentences

"There are a series of elements that made the outlook a little leas certain for these people," Pierpaolo Bottini, who negotiated a plea deal for the chief executive officer of builder Camargo Correa, said of the more recent deals.

Bottini's client, Dalton Avancini, told prosecutors that construction executives discussed paying bribes to executives of state-run electrical utility Eletrobras, helping them discover the scandal extended to the power sector and included fraud on contracts to build the Angra 3 power plant and the Belo Monte hydroelectric dam.

Avancini's cooperation reduced his penalty to a six-year house arrest from a potential 16-year prison sentence.

The CEO of another builder, OAS, who resisted a deal with prosecutors, was sentenced to 16 years in prison last week. The difference in sentences for executives who collaborate and those who do not is also likely encouraging more plea bargains.

A Curitiba-based lawyer not acting in the case, Ubirajara Costodio Filho, said new testimony would likely yield information about politicians since much is already known about the engineering firms that participated in what prosecutors call a cartel that fixed prices on contracts and passed on bribes to executives, political parties and politicians.

Bottini said the new plea deals show the tool is becoming more effective. They are common in the United States, but Brazil only passed a law regulating how they should be used in 2012. Some opposition remains, however.

In response to news reports that the former head of Petrobras' international division, Nestor Cervero, sought a plea deal, his lawyer Edson Ribeiro said there would be none as long as he represented Cervero.

"I do not accept the use of pre-trial detention as a method for obtaining testimony and will not lend my credibility to a judge who violates procedural and constitutional norms, violating the democratic rule of law," Ribeiro said.

Judge Moro and the prosecutors say the detentions are legal and that many of the plea deals were signed while defendants were free.