Corruption probe implicates Brazil’s development bank -report

Money from a public investment fund financed by payroll deductions was irregularly used to capitalize Brazil’s BNDES development bank, according to leaked plea deal testimony from a wide-reaching corruption probe published in O Globo.

According to the report published on Saturday, FI-FGTS, the investment arm of Brazil’s public severance fund, allegedly transferred 17 billion reais ($5.18 billion) to BNDES in transactions that breached the fund’s own rules following pressure from senior politicians and bank executives.

The daily newspaper said the information was provided to prosecutors in testimony by Fabio Cleto, a former vice-president at state bank Caixa Economica Federal which manages the public investment fund. O Globo did not explain how it acquired the information.

Caixa declined to comment, while BNDES did not immediately respond to requests for comment. A spokeswoman for the Prosecutor-General’s office declined to comment saying they do not give details on testimony until it is officially made public.

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