Brazil's interim president Temer involved in Petrobras graft: witness

[BRASÍLIAS] Brazil's interim president Michel Temer was involved in a massive corruption scandal shaking the country's political establishment and asked for dirty cash diverted from state oil company Petrobras, a key witness said.

The explosive allegations were made by Sergio Machado, the former chief executive of Petrobras subsidiary Transpetro, in a plea deal with prosecutors that could take down yet more big-name politicians in the sweeping scandal.

Machado said Mr Temer personally asked him for money from an illegal kickbacks scheme at Petrobras to fund an ally's campaign for mayor of Sao Paulo in 2012, according to a prosecution document obtained by AFP Wednesday.

The oil executive told prosecutors Mr Temer met with him to ask for "illegal resources from companies that had contracts with Transpetro" to finance the campaign of congressman Gabriel Chalita to the tune of 1.5 million reals (S$582,000).

Mr Temer took over on May 12 from suspended president Dilma Rousseff, who is facing an impeachment trial in the Senate on unrelated charges of illegally manipulating public accounts to hide the government's budget problems.

He denies involvement in the Petrobras scheme, in which contractors colluded with the company to overbill it by some US$2 billion, bribing politicians and their parties along the way.

Machado said he arranged bribes for Mr Temer and more than 10 other politicians, including Senate speaker Renan Calheiros and Tourism Minister Henrique Eduardo Alves, both members of Mr Temer's center-right PMDB party.

Machado is still giving evidence, but "doesn't appear to have a smoking gun," said the analysts of consultancy Eurasia Group.

Mr Temer's office said Machado's testimony "absolutely lacks truth" and that the acting president never engaged in illegal campaign finance "for himself, for his party and much less for other candidates."

Another key witness recently accused Mr Temer of "sponsoring" two corrupt Petrobras executives - backing them for their jobs so they could oversee the scheme.

Investigators also uncovered phone messages apparently indicating Mr Temer received $5 million reals from one of the companies being probed, construction group OAS.

He denies all the accusations and says the OAS payment was a legal campaign donation.

But the Petrobras probe remains a major threat to his government.

Two of his ministers have already been forced to resign over corruption allegations, including his transparency minister.

AFP