UPDATE-1-Brazil's sports minister under pressure to quit
* Scandal could affect preparations for big sports events
* Indications grow of faulty government sports contracts (Adds Silva's testimony, details)
By Raymond Colitt
BRASILIA, Oct 18 (Reuters) - Brazil's sports minister came under growing pressure to resign on Tuesday as more evidence emerged of wrongdoing at his ministry in a corruption scandal that raises doubts about preparations for the next soccer World Cup.
Orlando Silva is accused of arranging up to 40 million reais ($23 million) in kickbacks from government contracts to benefit himself and the Communist Party, which is part of President Dilma Rousseff's government.
The influential news magazine Veja reported over the weekend that Silva headed a scheme dating back to 2004 in which 20 percent kickbacks were charged on public contracts, including sports projects for needy children.
Despite Silva's emphatic denials of wrongdoing, he looked increasingly vulnerable as the chief public prosecutor announced a formal inquiry and details emerged of sloppy bookkeeping and favoritism in the Sports Ministry's contracts with non-governmental organizations, or NGOs.
A congressional hearing shed little light on the matter, with Silva giving blanket denials of any wrongdoing, and legislators focusing on procedural elements of the investigation rather than the accusations.
Silva supporters in the lower house of Congress spoke of a media plot to discredit Rousseff's administration.
A government watchdog, known by its Portuguese acronym CGU, said 59 contracts signed by the Sports Ministry between 2006 and 2011 did not comply with regulations, according to media reports. It wants contractors to return 24.5 million reais.
"The minister must leave," the Estado de Sao Paulo newspaper said in an editorial.
The newspaper said remaining in office would undermine Silva's authority and create more turmoil for Rousseff, who has already lost five ministers to ethics scandals this year.
The scandals have exposed deep rifts in the disparate ruling coalition and delayed Rousseff's legislative agenda.
The latest furor is particularly embarrassing for Brazil as it hopes to use the 2014 football World Cup and the 2016 Olympics to showcase its emergence as an economic power.
The construction of stadiums and airport terminals for the events has been delayed and Silva's departure could throw preparations into further disarray.
Even if Silva is not directly linked to corruption, he may ultimately be held accountable for poor oversight.
"Silva's arguments will be put to the test in coming days," Folha de Sao Paulo newspaper said in an editorial. "But at the head of a portfolio full of suspect deals, his political vulnerability is evident."
Rousseff, who is on a tour of Africa, has given only half-hearted support to Silva, who was deputy sports minister under her predecessor, Luiz Inacio Lula da Silva. She said he was innocent until proven guilty but also acknowledged shortcomings in the oversight of contracts with NGOs.
"It looks increasingly difficult for him to hang on to his job," said Jose Luciano Dias, a Brasilia-based political consultant.
The main accusation against Silva comes from a disgruntled former contractor arrested last year during an investigation into the Communist Party's alleged illegal fund-raising scheme. He says Silva received cash in the ministry's garage.
Joao Dias Ferreira, a former Communist Party activist whose Kung Fu association received government funds, met with opposition leaders, who say they will reveal proof of his allegations in coming days.
During the congressional hearing, Silva said the accusations were an attempt to divert attention from investigations launched by the ministry into Ferreira's own dubious deals.
"He's a criminal, he was imprisoned. I'm the one who has proof of his wrongdoing here," Silva said to applause from a packed audience at the congressional hearing. (Editing by Stuart Grudgings; Editing by Bill Trott and Christopher Wilson)
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