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Another ex-minister held in Brazil graft probe

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Brazilian police on Monday arrested former finance minister Antonio Palocci, the latest high-level suspect in the huge Petrobras corruption probe, prosecutors said.

[SAO PAULO] Brazilian police on Monday arrested former finance minister Antonio Palocci, the latest high-level suspect in the huge Petrobras corruption probe, prosecutors said.

He joins a long list of top officials accused of taking part in a huge bribery scheme linked to the state oil company, which has rocked the political establishment in Latin America's biggest economy.

Palocci, 55, served as finance minister under former president Luiz Inacio Lula da Silva and as chief of staff for his successor Dilma Rousseff, who was impeached this month.

Palocci was also a key figure in the leftist Workers' Party. His lawyer Roberto Batochio rejected the accusations as a "show."

The suspect "was detained in Sao Paulo on a temporary detention order for five days and must leave today for Curitiba," the southern city where a judge is leading the probe, an official in the state prosecution service told AFP.

Palocci was arrested on suspicion of accepting bribes from the construction company Odebrecht, one of the main firms involved in the huge Petrobras pay-to-play scandal.

Evidence from emails and mobile telephones shows "that the ex-minister Antonio Palocci... acted in favor of the Odebrecht group between 2006 and late 2013," a statement from the prosecution service said.

Investigating judge Sergio Moro ordered the arrests of two further suspects and the freezing of assets belonging to them worth tens of millions of dollars, it said.

Police said in a statement they were investigating "negotiations between the Odebrecht group and the ex-minister to try to pass a law" that would bring "immense fiscal benefits" to the firm.

Federal police commissioner Filipe Hille Pace told a news conference in Curitiba that authorities had evidence that "between 2008 and 2013 more than 128 million reals (S$54.4 million) were paid to the Workers' Party and its associates, including Palocci."

Last week the police briefly detained Palocci's successor as finance minister, Guido Mantega, also in connection with the Petrobras scandal.

A judge also ruled that Lula himself must stand trial for corruption in the Petrobras case.

Lula has dismissed the case as a politically motivated "farce." He is the highest-profile figure to face trial in a case that has taken down some of the country's most powerful business executives and politicians.

The charges allege that Lula, 70, masterminded the corruption racket and received the equivalent of US$1.1 million in bribes.

Among the accusations are charges that the former union leader and his wife received a beachside apartment and upgrades to the property from a major construction company, OAS, which was one of the players in the Petrobras scheme.

The arrests are the latest phase of "Operation Car Wash," the federal probe into the Petrobras scheme.

The scandal has upended Brazilian politics since it was launched in 2014.

Along with Rousseff's impeachment over a separate case, it threatens to sink the Workers' Party, a once-mighty force of leftist politics in Latin America.

Under the corruption scheme, Petrobras allegedly gave inflated contracts to big construction firms in exchange for hefty bribes.

Brazil's new conservative president, Michel Temer, and his PMDB party were allied with the Workers' Party before splitting in March, a prelude to Rousseff's impeachment.