SÃ O PAULO—Brazilian federal police arrested the former chief of
staff of ex-President Luiz Iná cio Lula da Silva early Monday as
part of a widening investigation into an alleged corruption scheme
at state-run oil giant Petró leo Brasileiro SA, or Petrobras.
José Dirceu, who served as Mr. da Silva's chief of staff from
2003 to 2005, was apprehended in custody and charged on suspicion
of corruption, conspiracy and money laundering. His detention is
significant because he was a high ranking member of the ruling
Workers' Party and formerly a close confidante of Mr. da Silva's,
bringing the scandal a step closer to the top leadership of the
party. Mr. Dirceu's attorney couldn't be reached for comment. Mr.
da Silva couldn't be reached for comment. The Workers' Party
declined to comment. Mr. Dirceu´ s lawyer said last month that his
client denied wrongdoing in relation to Petrobras.
Mr. Dirceu served time in prison after being convinced for his
role in a vote-buying scheme that erupted during Mr. da Silva's
administration. Convicted in 2012, Mr. Dirceu was released from
prison late last year, but remained under home detention, when he
was arrested on Monday.
In addition to Mr. Dirceu, seven other people were arrested
Monday as part of the latest phase of Operation Car Wash, the
blockbuster investigation into an alleged bid-rigging-and-bribery
ring at Petrobras.
Petrobras has said it is a victim of the alleged scheme and is
cooperating with authorities.
According to the Federal Police the arrest of former minister
Mr. Dirceu is part of a new phase of so-called Operation Car Wash,
which started last year, and got this name because some funds were
allegedly laundered through a gas station.
Federal Police said that Mr. Dirceu's arrest comes together with
two other preventive arrest orders, five temporary arrests and 26
orders of search-and-seizure requests.
The people arrested are under investigation for corruption,
conspiracy and money laundering, the Federal Police said in a
statement.
Brazilian authorities last year uncovered what they alleged to
be a decade long scheme that touched business leaders and
government. Prosecutors allege that Brazil´ s largest construction
firms inflated the prices of Petrobras contracts by billions of
dollars, kicking some of their gains to company insiders and
politicians.
In 2012, Mr. Dirceu was found guilty on charges of corruption in
a previous corruption scandal.
The chief of staff was accused of offering monthly bribes to
members of Congress in exchange for their votes. Prior to his
sentencing, Mr. Dirceu and other members of Mr. da Silva's
administration, who said they were innocent, resigned in face of
the allegations, saying they wanted to save the administration from
embarrassment.
Write to Luciana Magalhaes at Luciana.Magalhaes@dowjones.com and
Rogerio Jelmayer at rogerio.jelmayer@wsj.com
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