Brazil's Rousseff benefited from Belo Monte dam graft: report

BRASILIA (Reuters) - Graft money skimmed from overpriced contracts to build the Belo Monte hydroelectric dam in the Amazon funded President Dilma Rousseff’s 2010 and 2014 election campaigns, a ruling Workers’ Party senator has testified according to newsweekly IstoE.

Brazil's President Dilma Rousseff speaks during a news conference at the Planalto Palace in Brasilia, Brazil March 11, 2016. REUTERS/Ueslei Marcelino

If confirmed and accepted as legal evidence, the testimony of Senator Delcidio do Amaral will deepen a political crisis that threatens to topple Rousseff, whose opponents are seeking to impeach her or annul her re-election due to corruption.

In plea bargain statements to prosecutors, Amaral said a graft scheme mounted during the government of Rousseff’s predecessor, Luiz Inacio Lula da Silva, funneled 45 million reais (12.5 million) from Belo Monte contracts into the campaign coffers of the ruling Workers’ Party and its ticket partner, the Brazilian Democratic Movement Party (PMDB), IstoE reported.

A spokesman for Lula declined to comment on the report. Calls to Rousseff’s office were not returned while Amaral’s spokesman said the senator would not comment of the magazine report.

Lula was charged this week with money laundering by Sao Paulo state prosecutors in connection with the massive bribery and kickback scandal surrounding state-run oil company Petrobras that has led to the jailing of executives from top engineering firms, such as Odebrecht, Andrade Gutierrez and OAS, companies that have the biggest stakes in the consortium building Belo Monte.

The controversial Belo Monte dam on the Xingu river, a pet project of Rousseff’s since she was Lula’s energy minister, will have an installed capacity of 11,233 megawatts when completed in 2019, exceeded only by China’s Three Gorges and Brazil’s Itaipú dams. Its cost has escalated to over 26 billion reais, mostly financed by the national development bank BNDES.

The project has been delayed by environmental disputes and protests by indigenous Amazon people whose habitat it threatens.

IstoE said Amaral testified that the “bribery pipeline” was set up by Lula’s former chief of staff, Erenice Guerra, his finance minister Antonio Palocci, who was also Rousseff’s chief of staff until he resigned due to corruption allegations, and Silas Rondeau, of the PMDB party who was Lula’s energy minister.

Amaral’s 400-page testimony, which must be authorized by the Supreme Court to become valid evidence, was given days before he was released from jail following his arrest in November on suspicion of obstructing the Petrobras investigation.

In testimony published last week by IstoE, Amaral reportedly testified that Rousseff used her influence to keep directors suspected of corruption in positions at Petroleo Brasileiro SA PETR4.SA, as Petrobras is formally known.

Rousseff rejected calls for her resignation.

Reporting by Anthony Boadle; Editing by Robert Birsel