By Luciana Magalhaes And Will Connors
RIO DE JANEIRO--Brazilian federal prosecutors Friday filed
charges against the chief executive of construction group Odebrecht
SA and several other construction-industry executives, detailing
what they said was an elaborate use of Swiss bank accounts to hide
cash as part of an alleged corruption scheme involving state-run
oil company Petróleo Brasileiro SA.
The charges include money laundering, corruption, and organized
crime. They represent a significant setback for Latin America's
biggest construction group and one of Brazil's most important
companies.
Chief Executive Marcelo Odebrecht, along with Otávio Azevedo,
chief executive of Brazilian construction conglomerate Andrade
Gutierrez, and other executives from both companies, were arrested
last month as part of an investigation into a graft ring that
allegedly siphoned billions from Petrobras.
The construction executives have been held in the southern city
of Curitiba, against the objections of both companies' lawyers.
None of the executives had been charged with a crime until
Friday.
Odebrecht SA and Andrade Gutierrez have denied the allegations
made against their executives. Odebrecht has called the arrest of
its chief executive unnecessary because it was cooperating with
authorities.
Odebrecht said again late Friday in that evidence presented by
prosecutors didn't justify keeping its chief executive in prison.
It also said its lawyers would use documents provided by
prosecutors to work on its executives defense.
A spokeswoman for Andrade Gutierrez said the company is
evaluating the evidence presented Friday by prosecutors and will
seek to prove its executives' innocence.
Messrs Odebrecht and Azevedo have in the past denied
wrongdoing.
Prosecutors allege that several of Brazil's biggest construction
companies formed a cartel to drive up prices of Petrobras contracts
and kick back some of the money to Brazilian politicians, political
parties and executives at the oil company.
Some of the defendants have admitted wrongdoing in exchange for
lesser punishment and are cooperating with investigators,
prosecutors said, while others have denied involvement and await
trial.
The charges against Mr. Odebrecht, a household name in Brazil,
who oversees a vast global operation, are a particularly striking
moment in the investigation that has upended Brazilian political
and business circles.
"Brazil will not condone the practice of crimes, however
powerful the perpetrators," said prosecutor Deltan Dallagnol. "No
one is above the law."
Federal prosecutors detailed a complex scheme in which they said
millions of dollars in bribes were sent via a number of offshore
bank accounts controlled by units of Odebrecht, then transferred to
corrupt Petrobras executives. Odebrecht businesses alone made 115
money-laundering transactions worth 1.038 billion reias ($310
million), according to prosecutors.
The charges add to growing pressure on the administration of
President Dilma Rousseff, who is struggling to contain an economy
bordering on recession and whose popularity ratings have fallen to
near-record lows. Ms. Rousseff, who hasn't been implicated in the
alleged scheme, was the chairwoman of Petrobras during much of the
time the alleged illicit activities were under way. A spokesman for
the president wasn't available for comment Friday.
Petrobras has said it was a victim and is cooperating with
authorities. A company spokesman also wasn't available for
comment.
"The new charges put more fuel on the political crisis fire,"
said Pedro Fassoni Arruda, a political scientist and professor at
the Pontifical Catholic University of São Paulo.
The investigation into alleged corruption at Petrobras has
expanded outside Brazil since the case was uncovered last year. The
U.S. Securities and Exchange Commission and the Justice Department
are both investigating Petrobras, whose shares are listed in New
York.
On Wednesday, authorities in Switzerland said they were
investigating subsidiaries of Odebrecht in connection with the
allegations and that they believe Odebrecht units paid bribes from
accounts in Switzerland to separate Swiss bank accounts held by
former Petrobras directors. Swiss authorities didn't name specific
Odebrecht operating units or the Swiss banks involved.
Mr. Dellagnol, the Brazilian prosecutor, on Friday thanked the
Swiss authorities for their help in tracking the bank accounts of
those purported to be involved in the scandal.
Write to Will Connors at william.connors@wsj.com and Luciana
Magalhaes at Luciana.Magalhaes@dowjones.com
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