Brazilian police to probe nuclear submarine program - Folha

SAO PAULO, July 29 (Reuters) - Brazilian federal police are investigating potential irregularities in a military program that aims to build a nuclear-powered submarine in partnership with France by 2023, newspaper Folha de S. Paulo reported on Wednesday.

Folha said police searched for documents that could prove their suspicions of fraud in the program. The search was part of a wider probe that led to the arrests on Tuesday of two executives involved in building a nuclear power plant for state-run utility Eletrobras.

Federal police did not respond to a request for comment on whether they were investigating the submarine program. The newspaper did not say how it had obtained the information.

Former President Luiz Inacio da Silva’s government agreed in 2008 to purchase five submarines, including a nuclear-powered one, from France for 6.7 billion euros. The submarines were to be made by French shipbuilder DCNS in a joint venture with Brazil’s Odebrecht SA at a Navy base on Sepetiba Bay, south of Rio de Janeiro.

Folha said there was no competitive tender process when DCNS subcontracted part of the work on the submarines to Odebrecht. The engineering company’s chief executive and other senior executives were indicted this month on corruption charges for alleged fraud on contracts with state-run oil firm Petrobras.

The newspaper did not say that state-backed DCNS, which is 35 percent owned by French defense group Thales, was being investigated.

It added that the submarine investigation could prove difficult to carry out because it involved a matter of national security.

A DCNS spokesman had no immediate comment. Odebrecht did not immediately respond to a request for comment.

Tuesday’s police operation focused on Eletrobras’ Eletronuclear division, which is building a nuclear-power reactor near Rio de Janeiro, pulling Brazil’s energy sector into a corruption scandal previously focused on graft at Petrobras.

Police carried out raids at five engineering firms that belong to the consortium building the Angra 3 reactor, including Odebrecht.

The investigation that began in March of 2014 has jailed some of Brazil’s most senior engineering executives and caused Petroleo Brasileiro SA, as Petrobras is formally known, to write off more than $2 billion in corruption-related losses.

Dozens of lawmakers, mostly from President Dilma Rousseff’s governing coalition, have also been implicated for allegedly taking bribes in the kickback scheme, which has spiraled into Brazil’s largest-ever corruption scandal. (Reporting by Caroline Stauffer; Editing by Paul Simao)