Petrobras won't stop work because of scandal: Brazil minister

Rio de Janeiro

ARRESTS tied to a bribery scandal involving contracts with state-run oil producer Petroleo Brasileiro SA can't halt the company's work, Brazil Justice Minister Jose Eduardo Cardozo said.

Mr Cardozo said that the government hasn't created obstacles to the investigation and rejected attempts to politicise the probe "by those who still think we are disputing elections". He said that he will talk with Petrobras chief executive officer Maria Graca Foster to review contracts that are targets of the investigation.

About 10,000 people gathered on Saturday on Sao Paulo's main street, with protesters calling for President Dilma Rousseff's impeachment three weeks after she was re-elected. Some held signs denouncing the corruption scandal and her Worker Party's grip on power.

"Petrobras will not stop," Mr Cardozo said in televised comments from Sao Paulo. "On one hand, the investigation is going to continue; on the other hand, Petrobras cannot stop."

Police found "strong evidence" that at least seven construction companies formed a cartel to win public contracts, including a combined 59 billion reais (S$18.1 billion) in orders from Petrobras, officers including Commissioner Igor Romario de Paula said last Friday in Curitiba, where the case is before a judge. They declined to name the alleged cartel members.

An unidentified aide to Ms Rousseff, who was chairwoman of Petrobras from 2003 to 2010, said her administration is concerned that the probe may "paralyse" some company operations, the daily Folha reported.

PricewaterhouseCoopers, the company's outside auditors, said last month that it wouldn't sign off on financial results and would alert US authorities if appropriate action wasn't taken to probe the allegations, according to two people with knowledge of the matter. Petrobras said that it would delay releasing its earnings for a month.

Mr Cardozo said that police have detained 19 people in the case, without giving names. He said that he called Ms Rousseff to inform her about the investigation. The president is in Australia at the G-20 summit.

Police have carried out four of six preventive arrest orders and 15 of 19 temporary arrest orders, Mr Cardozo said without elaborating. Following Mr Cardozo's comments, two executives from Camargo Correa SA turned themselves in to police in Sao Paulo, according to Globo News.

The multibillion-dollar money laundering and corruption scandal dubbed Car Wash spread to Petrobras earlier this year after investigators uncovered ties between Paulo Roberto Costa, the company's former head of refining, and a black-market money dealer.

Mr Costa, who is under house arrest as part of a plea bargain with prosecutors, later told police he received bribes from a group of construction companies and shared the proceeds with politicians who are part of the ruling coalition. Parties in the coalition and building companies denied the allegations.

Mr Cardozo ordered the federal police to open an internal investigation into the behaviour of officers on the case who praised opposition candidate Aecio Neves on social media and criticised Ms Rousseff ahead of last month's presidential election, which she narrowly won, the daily Estado reported on Nov 13. BLOOMBERG