Brazil police target Rousseff campaign chief in corruption probe

SAO PAULO/RIO DE JANEIRO (Reuters) - Brazilian police said on Monday they obtained an arrest warrant for the architect of President Dilma Rousseff’s electoral campaigns, complicating her fight to survive an investigation of her re-election in 2014 and stave off impeachment by Congress.

A banner of Odebrecht SA is pictured in front of buildings under construction at the Rio 2016 Olympic Games athletes village in Rio de Janeiro, Brazil July 21, 2015. REUTERS/Ricardo Moraes

The investigation of campaigner João Santana, known as “the maker of presidents” in Latin America, was part of Brazil’s corruption investigation focusing on state-run oil company Petroleo Brasileiro SA, or Petrobras.

Santana, the former ruling Workers’ Party treasurer and a top aide to former President Luiz Inacio Lula da Silva, as well as dozens of engineering executives, and a ruling party senator have been arrested for colluding to overcharge Petrobras for work in order to distribute excess funds as bribes.

The arrest of Santana could be a further blow to Rousseff, who is not being investigated in the scandal but whose popularity has plummeted as a result. She faces questions over whether her campaign was financed with bribe money skimmed off of Petrobras.

Police said they had identified $3 million in deposits for Santana in offshore accounts in 2012 and 2013 associated with Latin America’s largest engineering firm, Group Odebrecht SA.

Santana bought an apartment in Sao Paulo with the payments from Odebrecht, they said. Prosecutors said they were also investigating bribes paid from contracts with shipbuilder Sete Brasil and Keppel Fels, the Brazil unit of Singapore oil rig builder Keppel Corporation Ltd.

Federal Judge Sergio Moro said in the arrest warrant that messages seized from Marcelo Odebrecht, the former chief executive of the family-run conglomerate, suggested the payments to Santana abroad were “surreptitious political donations.”

“It is possible that the transfers were intended to compensate, with bribes from Petrobras contracts, João Santana and Monica Regina for services provided to the Workers’ Party,” Moro wrote, referring to Santana’s wife and business partner.

Santana was not arrested because he is in the Dominican Republic overseeing the president’s re-election campaign.

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In a statement provided by his press representative, Santana said he was quitting the re-election campaign in the Caribbean nation to return to Brazil and defend himself from “baseless accusations.”

Santana, 63, led Rousseff’s 2010 and 2014 campaigns. He also advised Lula and late Venezuelan President Hugo Chavez in his re-election bid in 2012. A former journalist, Santana is known for producing dramatic, big-budget campaign videos appealing to poor voters.


Brazil’s electoral court is investigating Rousseff’s 2014 re-election campaign, including the suspicion of illegal funding. Congress is also trying to impeach her for manipulating government accounts in 2014, while she campaigned for re-election.

“Targeting Santana is meaningful, and reinforces our assessment that the odds of the electoral supreme court calling new elections this year are on the rise, even if still unlikely,” analysts with consultancy Eurasia Group wrote in a research note.

Santana also appeared to have received bribes in 2013 and 2014 from Zwi Skornicki, a money mover who prosecutors said represented Keppel Fels.

According to Moro, former Petrobras executive Pedro Barusco said in plea bargain testimony Skornicki delivered bribes on behalf of Keppel to secure contracts for offshore oil platforms.

Police said they did not have arrest warrants for any Keppel executives. Keppel Corporation said in October it might face an investigation.

The company said in a statement on Monday it did not tolerate bribery and corruption and would take all necessary steps to eradicate such conduct if discovered.

Prosecutor Lima said an investigation of Sete Brasil was ongoing and related criminal charges should be expected soon. Sete Brasil said internal audits had found no irregularities in the contracts and that it was collaborating.

Odebrecht, which prosecutors say may have led a cartel of engineering firms, said its offices in Sao Paulo, Rio de Janeiro and in Salvador were searched by police and that it would cooperate with authorities.

Prosecutors said the 23rd phase of the investigation had brought more incriminating evidence against Marcelo Odebrecht, who has been jailed since June. They accuse him of trying to thwart their work and have evidence the company bribed other officials abroad, citing a former transportation secretary of Argentina.

The operation may have also brought federal police closer to Lula, who is being investigated for money laundering at the state level. Newspaper Estado de S. Paulo published documents from the same operation on Monday suggesting Odebrecht had financed the construction of the former president’s institute.

The Lula Institute said in a statement the allegations were wrong as it was founded in 2011, after the alleged financing from Odebrecht in 2010.

Additional reporting by Thais Skodowski in Curitiba, Guillermo Parra-Bernal, Reese Ewing and; Brad Haynes in Sao Paulo; Writing by Caroline Stauffer; Editing by Daniel Flynn, Steve Orlofsky and Dan Grebler