Brazil police target Dilma Rousseff campaign chief in corruption probe

Brazilian police said they issued an arrest warrant for President Dilma Rousseff's campaign manager on Monday, complicating her fight to survive an investigation into her re-election in 2014 and stave off impeachment by Congress.

The investigation of campaigner Joao Santana, known as "the maker of presidents" in Latin America, was part of Brazil's largest-ever corruption investigation focused on state-run oil firm Petroleo Brasileiro SA, or Petrobras. The arrest of Santana could be a further blow to Rousseff, who is not being investigated in the scandal but has seen her popularity plummet as a result. She is facing questions over whether her campaign was financed with bribe money skimmed off of Petrobras, as the oil company is known.

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 the excess funds as bribes. The arrest warrant for Santana said evidence suggested he received payments associated with Odebrecht SA, Latin America's largest engineering group, whose offices in three Brazilian cities were also raided by police on Monday.

Police added they were investigating contracts with shipbuilder Sete Brasil and Keppel Fels, the Brazil unit of Singapore's oil rig builder Keppel Corporation Ltd. Santana was not arrested because he is in the Dominican Republic overseeing the president's re-election campaign. A press representative for Santana's company, Polis Propaganda, said he would return to Brazil and present himself to authorities.

Santana, 63, 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.

COMPENSATION WITH BRIBES

Police said they had identified $3 million in deposits for Santana in offshore accounts associated with Odebrecht in 2012 and 2013, helped by data released by Citibank in the United States. Santana bought an apartment in Sao Paulo with the payments from Odebrecht, they added. Federal judge Sergio Moro said in the arrest warrant that messages seized from Marcelo Odebrecht, the former CEO 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, Joao Santana and Monica Regina for services provided to the Workers' Party," Moro wrote, referring to Santana's wife and business partner. Asked about the link to Rousseff's election, Police Chief Filipe Pace said in a press conference Workers' Party campaigns were not being investigated in this phase, only Santana as a beneficiary of bribes from the Petrobras scheme.

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 allegedly manipulating government accounts in 2014, while she campaigned for re-election. Santana also appeared to have received bribes in 2013 and 2014 from Zwi Skornicki, a money mover 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 may face an investigation into deals with Petrobras and Sete Brasil. A spokesperson for Keppel in Brazil strongly rejected any allegations of bribery.

Prosecutor Lima said an investigation into 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 it was collaborating with the investigation. Odebrecht, which prosecutors say may have led a cartel of engineering firms in the Petrobras scheme, said its offices in Sao Paulo, Rio de Janeiro and in Salvador were searched by police and that it would collaborate 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 now accuse him of trying to thwart their work and have evidence the company bribed other officials abroad, citing a former transportation secretary of Argentina.

More than 300 officers conducted searches and had warrants for eight arrests in the cities of Sao Paulo, Rio de Janeiro and Salvador, the federal police said.