Brazilian Police Arrested Cervero in Brazil Scandal

Source: Reuters 1/14/2015, Location: South America

Brazilian police early on Wednesday arrested another former executive at state-run oil company Petroleo Brasileiro SA after prosecutors accused him of continued involvement in corruption and money laundering.

Nestor Cervero, former international director of the company known as Petrobras, was detained at Rio de Janeiro's international airport as he returned from a trip to London, prosecutors said in a statement.

They said the arrest had been approved during a federal court recess and was based on "strong evidence" that Cervero had tried to transfer real estate and funds to family members and drastically understated the value of the transactions.

Cervero is one of 39 people whom prosecutors indicted last month for forming a cartel to funnel bribes from Petrobras construction projects to the ruling Workers' Party and its allies in a scandal that has shaken Brazil's economy.

Cervero's lawyer, Edson Ribeiro, said his client had informed investigators of his trip to London. Cervero had tried to transfer 500,000 reais ($188,679) to his daughter and had transferred ownership of three apartments, Ribeiro said.

"There is no criminal activity in these two acts," said Ribeiro, adding he would seek habeas corpus for his client.

Last month, the same prosecutors in the southern city of Curitiba indicted Paulo Roberto Costa, another former Petrobras executive, and leaders of top Brazilian engineering firms.

Cervero, along with a consultant and lobbyist, were accused of paying out $40 million in kickbacks to political parties, executives and contractors, as well as accepting $13 million in bribes from Korean shipbuilder Samsung Heavy Industries .

Samsung Heavy Industries never responded to request for comment.

Concern over the corruption scandal is driving shares and bonds of Petrobras to multiyear lows and spurring concerns of a slowdown in much-needed infrastructure projects in Brazil.

The team of prosecutors in Curitiba has vowed to expand their investigation, and the Supreme Court in Brasilia in February is expected to reveal the names of politicians who allegedly received kickbacks.

President Dilma Rousseff was Petrobras' chair from 2003 to 2010, when much of the graft took place, but has denied any knowledge of the scheme or wrongdoing.

Cervero, whom Petrobras fired in March, held various positions there. He was international director when it purchased a Pasadena, Texas, refinery that critics say it overpaid for.


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