PANAMA CITY (AFP) - The founders of the law firm at the centre of the "Panama Papers" scandal were being held Friday (Feb 10) as part of a probe into a sprawling graft case involving Brazilian construction group Odebrecht.

Ramon Fonseca Mora and Juergen Mossack, named partners of the Mossack Fonseca firm, were put in preventive detention late Thursday by Panamanian authorities, one of their attorneys said.

Chief prosecutor Kenia Procell said the law firm was suspected of money-laundering and forming "a criminal organisation that sought to hide assets and money of doubtful origin."

She alleged the firm also "got rid of evidence" implicating people in Brazil's "Car Wash" corruption scandal, in which the Brazilian national oil company Petrobras allegedly gave Odebrecht and other contractors inflated contracts in return for bribes.

Mossack Fonseca's attorney, Elias Solano, said there was a "lack of evidence" supporting the allegations.

On Thursday, as he turned up at the prosecutors' office to answer questions, Fonseca told reporters that Panamanian President Juan Carlos Varela - a former friend - had confided in him that he had accepted "donations" from Odebrecht.

Varela denied the accusation, saying "there were no donations from the Odebrecht company" to his 2014 electoral campaign.

Fonseca used to be a high-ranking advisor to Varela but was dismissed when the Panama Papers scandal broke in April last year.

The vast data leak from the Mossack Fonseca law firm detailed how the world's wealthy stashed assets in offshore companies.

Several countries in Latin America, among them Panama, Mexico, Argentina, Peru and Uruguay, are carrying out investigations into bribes paid by Odebrecht.

In December, the Brazilian construction company agreed with the US Justice Department to pay a world record US$3.5-billion fine after admitting it paid US$788 million in bribes to win fat construction contracts in 12 countries.

More revelations are expected soon because current and former Odebrecht executives have signed tell-all plea deals in Brazil in exchange for lighter sentences.

In Panama, ex-president Ricardo Martinelli's son and brother are under investigation.