Brazil’s ex-finance minister arrested in graft probe

Former finance minister Guido Mantega (right) is escorted by federal police officers on Sept 22, 2016.
Former finance minister Guido Mantega (right) is escorted by federal police officers on Sept 22, 2016. PHOTO: REUTERS

SAO PAULO (AFP) – Police on Thursday (Sept 22) arrested the latest heavyweight implicated in a massive corruption scandal: Guido Mantega, an ex-finance minister under fellow suspect Luiz Inacio Lula da Silva and recently impeached Dilma Rousseff.

Mantega, an important figure in the leftist Workers’ Party, was arrested at a Sao Paulo hospital where his wife had undergone surgery.

He was escorted to the local federal police headquarters, an AFP photographer said, then transferred to the southern city of Curitiba – headquarters of the probe into a sprawling bribe and kickback scandal at state oil company Petrobras.

Mantega is accused of asking business magnate Eike Batista in 2012 to forgive five million reals (S$3.3 million at the time) in Workers’ Party campaign debts, federal prosecutor Carlos Dos Santos Lima told a press conference.

The arrest is the latest phase of “Operation Car Wash,” the federal probe into the Petrobras scheme, which has upended Brazilian politics since it was launched in 2014.

Dozens of politicians and some of Brazil’s richest businessmen have been charged or convicted.

In the latest phase – dubbed “Archive X” – police said 180 agents fanned out across five states and the capital, Brasilia, to detain eight suspects, haul in another eight for questioning, and serve 33 related court orders.

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

The scheme was allegedly orchestrated by high-ranking politicians who took a cut of the proceeds.

In a new twist in the investigation, Dos Santos Lima said police found evidence of contracts to build two major oil platforms awarded to companies “with no qualifications whatsoever.” One of the companies was shipbuilder OSX, which belonged to Batista – the businessman Mantega is accused of strong-arming in 2012, the year after Rousseff became president.

Once the richest person in Brazil, Batista has seen his business empire collapse along with the country’s commodities-fueled economic boom. He filed for bankruptcy in 2013.

His company and construction group Mendes Junior are accused of paying 7.4 million reals in bribes to an intermediary acting on behalf of the PMDB, the party of new center-right President Michel Temer.

Temer and the PMDB were allied with the Workers’ Party before splitting in March, a prelude to Rousseff’s impeachment.

The latest developments came just two days after a federal judge accepted charges against Lula, Rousseff’s popular predecessor and mentor, for allegedly accepting bribes from a construction company linked to the Petrobras case.

The decision by Sergio Moro, the crusading judge overseeing the investigation, means Lula will stand trial for corruption.

Prosecutors have singled out Lula – who was president from 2003 to 2011, during much of the time that Petrobras was being fleeced of billions of dollars – as the scheme’s “supreme commander.” Lula is the co-founder of the once-unstoppable Workers’ Party. Its 13 years in power ended last month when Rousseff was convicted of budget irregularities in an impeachment trial.

The charges against Rousseff were unconnected to the Petrobras case, but the scandal, combined with Brazil’s worst recession in decades, did much to bring her down.

Mantega, 67, was a key figure in both the Lula and Rousseff administrations.

The Italian-born economist was named planning minister in 2003, took over the national development bank in 2004 and became finance minister in 2006.

He basked in the aura of Brazil’s boom in the 2000s, when Chinese demand for the country’s raw materials turbocharged economic growth.

Mantega soaked up international plaudits for his part in the Lula government’s blend of business-friendly economic policy with progressive social programs to help tens of millions of people escape poverty.

But he was forced out in 2015 as the boom turned to bust, fueling discontent.

The Petrobras probe had already felled a string of Workers’ Party bigwigs. Those in jail include Lula’s former chief of staff Jose Dirceu and ex-party treasurer Joao Santana.