Former Petrobras executive Costa convicted in corruption case

CURITIBA, Brazil, April 22 (Reuters) - A Brazilian judge convicted a former Petrobras executive on Wednesday of money laundering and racketeering for his role in the massive kickback scandal engulfing the state-run oil company, but he will only serve one year of house arrest.

Petrobras’ former director of refining and supply, Paulo Roberto Costa, who named many of those implicated in the widening corruption scandal in a plea bargain deal with prosecutors, was sentenced to 7 years and 6 months in prison.

However, Costa will only serve one year under house arrest due to time already spent in detention and his collaboration.

Judge Sergio Moro also convicted black-market money dealer Alberto Youssef for laundering bribe money and sentenced him to nine years and two months in prison. Youssef got a reduced three-year sentence after confessing in a plea bargain that he helped launder the graft money.

It was initially the arrest of Youssef and then of Costa in March last year that set off the multibillion-dollar political kickback scandal, Brazil’s biggest ever.

Police had begun to probe the graft scheme after Costa received a luxury Land Rover car as a gift from Youssef.

Moro, a specialist in white-collar crime, also convicted six other people on Wednesday for racketeering or laundering money obtained from kickbacks on overvalued contracts for the building of Petrobras’ refinery in Pernambuco state between 2009-2014.

“The cost of the work, originally budgeted at 2.5 billion Brazilian reais ($831.34 million), has now risen to more than 20 billion reais,” Moro noted in his sentence.

Since the arrests of Youssef and Costa, 97 people have been indicted on charges of corruption, money laundering and cartel formation, including dozens of executives from Brazil’s leading construction and engineering firms who allegedly paid bribes from inflated contracts with Petrobras.

About 50 politicians are under investigation for allegedly receiving graft money to fund their campaigns, all but one from President Dilma Rousseff’s center-left governing coalition.

The corruption scandal set off a political crisis that has weakened Rousseff at the start of her second term as she strives to push through unpopular belt-tightening measures to reduce her government’s fiscal deficit and save Brazil’s investment grade credit rating.

Petroleo Brasileiro SA, as the company is formally called, has meanwhile been forced to cut back investment and paralyze ongoing projects as it holds up payments to contractor companies implicated in the graft scheme.

$1 = 3.0072 Brazilian reais Writing by Anthony Boadle; Editing by Christian Plumb