SÃ O PAULO—A Brazilian judge ordered the arrest of two people
and issued 23 search-and-seizure orders as the anticorruption
investigation known as Operation Car Wash spread to
state-controlled electric utility Eletrobras.
The country's federal police are investigating allegations of
wrongdoing at the nuclear-generation unit of Centrais Eletricas
Brasileiras SA, the full name of Eletrobras. The electrical energy
company, Latin America's biggest by revenue, controls power
generation, transmission and distribution companies throughout
Brazil.
The federal police said in a statement that they carried out the
arrests and seizures Tuesday morning.
Federal prosecutor Athayde Ribeiro Costa said the men arrested
were Othon Luiz Pinheiro da Silva, a former president of Eletrobras
unit Eletronuclear, and Flavio Barra, an executive with the energy
area of construction firm Andrade Gutierrez. Mr. Costa alleged that
Andrade Gutierrez paid bribes to Eletronuclear's former executive.
Both companies declined to comment on the arrests, and lawyers of
both executives weren't able to be reached for comment.
An Eletrobras spokesman said Tuesday that the company is
investigating irregularities but so far hasn't found any signs of
wrongdoing.
Authorities are investigating what they say may be a possible
illegal cartel involved in the construction of a nuclear power
plant, known as Angra III, which was overseen by Eletrobras's
Eletronuclear unit. Construction of the plant, which was expected
to generate 1,405 megawatts of power a day, began in 1984, but it
was suspended after six years because of a lack of financing.
The government restarted the project in 2010, with construction
expected to finish in 2018.
The so-called Operation Car Wash began last year to investigate
allegations of overcharging in contracts signed by state-run oil
giant Petró leo Brasileiro SA, or Petrobras, and certain
construction companies. The investigation has spread to other
state-run firms.
Authorities allege that the construction companies formed a
cartel to drive up the price of contracts with Petrobras, kicking
some of the windfall back to politicians, political parties and
former executives at the oil company.
Earlier this month, Eletrobras created an independent commission
to oversee an investigation by international law firm Hogan Lovells
about possible irregularities that may violate the U.S. Foreign
Corrupt Practices Act and the Brazilian anticorruption law, along
with the company's code of ethics.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
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