Brazil graft probe targets two in president's inner circle

[BRASÍLIA] Brazilian President Dilma Rousseff's former campaign treasurer and her chief of staff have been placed under investigation in the Petrobras mega corruption scandal, the local press reported Sunday.

It would be the first time top members of Ms Rousseff's administration have been targeted directly in the widening investigation, which has already implicated her ruling Workers Party in massive graft at the state-owned oil giant.

Two leading newspapers - O Estado de Sao Paulo and O Globo - reported that the Supreme Court has authorised investigations into Communications Minister Edinho Silva, who was the treasurer of Ms Rousseff's 2014 re-election campaign, and Ms Rousseff's chief of staff, Aloizio Mercadante.

The reports said the head of a construction company implicated in the Petrobras scandal, Ricardo Pessoa, told prosecutors that he made hefty campaign donations to both men to get or keep Petrobras contracts for his firm, UTC Engenharia.

The scandal involves an estimated US$2.1 billion loss from inflated Petrobras contracts that went to a network of construction companies, which allegedly used the money to pay off politicians.

Ms Rousseff was chair of the Petrobras board during most of the 10 year period when the corruption is alleged to have occurred, but she has not been personally implicated.

But the two latest cases bring the scandal into her inner circle just days after charges were brought against the treasurer of her Workers Party and a former chief of staff of ex-president Luiz Inacio Lula da Silva, Ms Rousseff's predecessor and political mentor.

Pessoa told investigators that in response to pressure from Silva, he gave some two million dollars for Ms Rousseff's 2014 campaign in order to preserve his company's Petrobras contracts.

According to O Estado, he also said a 250,000 real contribution, or about US$67,500, that he made to Mercadante's 2010 campaign for governor of Sao Paulo was in reality a bribe to gain Petrobras contracts.

Mercadante, who lost the Sao Paulo race, had reported the contribution at the time.

"I support all these acts being investigated, to clear up any doubts," minister Silva said in a statement to AFP Sunday, without confirming that he was under investigation.

He said he was confident his actions as Ms Rousseff's campaign treasurer were above board.

Ms Rousseff, who was re-elected with 52 per cent of the vote in October, has watched her popularity collapse as the scandal has unfolded against the backdrop of a worsening economic situation.

AFP