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Exclusive - Brazil's Petrobras corruption investigators to probe Olympic contracts

SAO PAULO (Reuters) - Brazilian police investigating corruption around state-run oil firm Petrobras also plan to probe more than $10 billion of construction contracts for the 2016 Olympic Games in Rio de Janeiro, a lead investigator said.

The Petrobras logo is seen in front of the company's headquarters in Sao Paulo April 23, 2015. REUTERS/Paulo Whitaker/Files

Some of the big engineering firms caught up in the Petrobras probe “very probably” broke laws against price-fixing and bribery on contracts to build Olympic venues, said Igor Romario, a Federal Police chief and key figure in the investigation.

“In every situation where there has been an investigation into contracts with these companies, this model of corruption was repeated,” Romario told Reuters in a telephone interview. “It’s possible that it was repeated in the projects for the 2016 Olympics.”

So far, Romario said, there is no evidence proving any crimes around Olympic bidding and investigators are still focussed on the original probe - a deep inquiry into price-fixing on Petroleo Brasileiro SA PETR4.SA contracts and bribes for company executives and politicians in exchange for winning bids.

The probe, now nearly two years old, has already ensnared dozens of Brazil’s business elite and congressmen and could put pressure on a tight Olympic construction schedule.

Of about two dozen companies investigated by the comptroller general’s office, known as the CGU, just five are building most of the nearly 40 billion reais ($10.5 billion) worth of venues and infrastructure needed for the Olympics in Rio.

Privately held Odebrecht SA, Latin America’s largest engineering firm, is involved in over half of all Olympic projects by value, according to contracts reviewed by Reuters.

Marcelo Odebrecht, the company’s chief executive, has been jailed since June awaiting trial for corruption in the Petrobras case.

The other four companies involved in much of the rest of the Olympic work are OAS SA, Andrade Gutierrez SA, Queiroz Galvao SA, and Carioca Christiani Nielsen Engenharia SA.

OAS’s chief executive was convicted of corruption and sentenced to more than 16 years in prison in August because of the Petrobras probe. Andrade Gutierrez and Queiroz Galvao executives have been jailed to face corruption charges.

Odebrecht, Andrade Gutierrez and Queiroz Galvao declined to comment. The other companies did not respond to request for comment.

Pulling off a safe and scandal-free games is important to Brazil, which has lost global influence over the past five years as an economic boom gave way to what is now its worst recession in three decades.

Rio de Janeiro’s mayor, Eduardo Paes, a possible 2018 presidential candidate, says Brazil can boost its reputation with a successful Olympics.

His city administration is overseeing the bulk of the construction projects, though a few are financed by the federal or state government and private company Rio 2016 handles some non-permanent structures like seating.

City Hall said all the contracts are open for review and that it is available for any clarifications. Rio 2016 said City Hall is responsible for building Olympic venues.

The Petrobras investigation has slowed or halted other infrastructure projects in Brazil as engineering firms struggle to take out loans and some, including OAS, have filed for bankruptcy.

But Rio’s City Hall has committed to limiting any fallout on the Olympics, lending companies money to prevent a slowdown in construction, senior city government sources have told Reuters. All construction is slated to be finished early next year.

International Olympic Committee (IOC) officials have praised progress on the venues after some initial delays.

The IOC did not respond to request for comment on the potential investigation.

Romario, part of a team of high-profile investigators based in the southern city of Curitiba, said police intend to continue expanding their landmark probe beyond Petrobras even as the Supreme Court moves pieces of the investigation not directly involving the oil firm to other states.

The government’s state-run road construction agency DNIT and other government infrastructure departments are also potential targets for investigators, Romario said.

He said the Supreme Court may take other pieces of the case away from Curitiba in the future, but that the police would continue investigating beyond Petrobras anyway.

Additional reporting by Stephen Eisenhammer in Rio de Janeiro; Editing by Kieran Murray and Alan Crosby