Former Petrobras Exec Snared by 20 Mln Euro Transfer

Former Petrobras Exec Snared by 20 Mln Euro Transfer


By Anna Edgerton Sabrina Valle

4:24 PM BRT
March 16, 2015

(Bloomberg) — A former director at Petroleo Brasileiro SA, the state-run oil company at the center of Brazil’s largest corruption scandal, was arrested on Monday for a second time after he allegedly attempted to transfer nearly 20 million euros to accounts in Monaco, prosecutors said Monday.

Prosecutors presented evidence that Renato Duque, Petrobras’s former head of engineering and services, allegedly emptied Swiss accounts and transfered the funds to other countries. He was part of a scheme that diverted illicit money to politicians, disguised as legal campaign donations, prosecutor Deltan Dallagnol said Monday at a press conference from Curitiba, where the case is before a judge.

On Sunday more than 1 million Brazilians demonstrated against corruption and President Dilma Rousseff, threatening to further weaken the governing coalition and deadlock Congress as Rousseff seeks approval for unpopular measures including spending cuts and tax increases. While Rousseff herself hasn’t been implicated in the criminal probe, many of Sunday’s protesters called for her impeachment.

“His arrest is bad news for the party as it comes at a moment the government needs political support, especially after the protests yesterday,” Andre Cesar, a Brasilia-based political analyst, said in a telephone interview. “Duque was the man they say had connections with the leadership of the Workers’ Party.”

Duque’s lawyer Renato de Moraes didn’t immediately reply to e-mails and phone calls seeking comments. The Workers’ Party, which Rousseff belongs to, has said that all contributions were within the law.

‘Illegal Funds’

This round of arrests, which included arrest warrants against five other people, is the 10th operation since the investigation started exactly a year ago. It has turned up evidence of systematic corruption in Brazil’s political class and at some of its largest companies, according to prosecutors.

“This is a sophisticated, complex money laundering scheme designed to make illegal funds appear legitimate,” Prosecutor Dallagnol said. “These funds are illegal not just because they came bribes, but also because they came from fraudulent bids and a criminal cartel.”

Duque is part of a group of 27 people who prosecutors accuse of money laundering and corruption. Among the suspect campaign donations, investigators identified 24 in 18 months to Rousseff’s Workers’ Party from Petrobras contractor Setal group, which is collaborating with prosecutors.

Duque was first arrested Nov. 14 for allegedly funneling as much as 3 percent from contracts worth billions of dollars to politicians, intermediaries and himself. Sergio Moro, the federal judge overseeing the case, said Duque has large amounts of illicit funds in offshore accounts and was clearly unwilling to obey the law, according to a Nov. 18 decision to extend Duque’s first detention.

Corruption Epidemic

Authorities blocked the transfers to accounts in Monaco, and have been unable to identify all the countries where he allegedly remitted cash, according to Moro’s statement explaining his decision, dated March 13 and released Monday.

Pedro Barusco, a Petrobras manager who reported to Duque, struck a plea bargain deal with prosecutors, requiring him to provide details about the corruption scheme and return about $100 million he earned from illegal activities. Barusco said in his testimony that Rousseff’s Workers’ Party received as much as $200 million in bribes in the decade through 2013.

A committee of prosecutors on Thursday will present a set of measures to reform the political and legal systems, according to Dallagnol. He said corruption is an epidemic in Brazil — an issue affecting various political parties that will require structural change to root out.

“Our work doesn’t stop here, the investigation will proceed,” Dallagnol said.

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