Former Petrobras executive held in Brazil corruption probe

AP News
Posted: Jan 14, 2015 12:42 PM
Former Petrobras executive held in Brazil corruption probe

RIO DE JANEIRO (AP) — Brazilian authorities on Wednesday arrested another former executive of the state-run oil company Petrobras as a landmark probe into the nation's biggest known corruption scandal continues to expand.

Along with former Petrobras officials, several top executives from some of Brazil's biggest construction and engineering firms are behind bars and facing corruption charges. It's widely seen as a huge step forward in authorities' efforts to battle endemic impunity for the rich and powerful who've long ruled Brazilian politics and business, both believed by most Brazilians to be heavily tainted by corruption.

The Federal Prosecutor's Office said in a statement that Nestor Cervero was arrested Wednesday morning at Rio de Janeiro's international airport after arriving from London. He is a former financial director of the company's fuel distribution subsidiary and also a former director of its international division.

Cervero, who was forced out of Petrobras last March amid questions into what prosecutors say was a hugely inflated price paid in 2006 to Belgium's Astra Oil for a refinery in Texas, was taken to the southern Brazil city of Curitiba where a federal judge and prosecutors are overseeing the investigation, charges and eventual prosecution in the case.

Executives from Brazil's powerful construction companies allegedly paid bribes on inflated Petrobras contracts worth several billion dollars, with some of the money funneled into the campaign coffers of the ruling Workers' Party and its allies. Prosecutors say they'll seek the return of nearly $400 million from those charged, though that figure is expected to grow.

Prosecutors have said they will announce charges next month against numerous politicians involved in the kickback scheme. It's widely expected that top officials in congress and the executive branch could find themselves charged, though prosecutors have released no names.

Never before have so many rich and powerful Brazilians been tossed into jail and charged with graft. That's satisfying for many, especially following massive anti-government protests in 2013 that erupted largely as a cry against corruption.

Millions in the nation's expanding middle class found their voices in those demonstrations, demanding an end to the illegal siphoning off of their tax dollars that are badly needed to improve the nation's woeful education, health, security and infrastructure. One of the most important results of the protests was that federal lawmakers killed a bill, which had been headed for easy passage, that would have stripped most of the investigative powers from federal prosecutors — widely viewed in Brazil as the front-line defense against graft.

Wednesday's arrest of Cervero makes him the third former executive of Petrobras, Brazil's biggest company, detained as part of the probe.

A statement from prosecutors said he was arrested because of his "involvement in new illicit facts related to the crimes of corruption and money laundering."

The Prosecutor's Office said Cervero has tried to shield his money from eventually being confiscated should he be found guilty, recently trying to transfer 500,000 reals ($191,000) to his daughter. He also transferred three apartments valued at 7 million reals ($2.7 million) "purchased with funds of suspicious origin" the statement said, adding that Cervero declared that the apartments were worth only 560,000 reals ($214,000).

Cervero's attorney Edson Ribeiro told the Globo TV network that his client's arrest was arbitrary and that the transfers were perfectly legal.

"He tried to transfer money to his ill daughter, who would use it to pay for the medical treatment she needs," he said. The apartments were transferred to his sons and were an "inheritance advance."

Late last year, Cervero denied any involvement in the Petrobras scheme during testimony before a congressional panel.

Separately, Petrobras announced Tuesday night the appointment of a veteran business executive, Joao Adalberto Elek Jr., to head a new Governance, Risk and Compliance Office aimed at stamping out fraud and corruption in the company.


Lehman reported from Sao Paulo.