SAO PAULO--Brazil's federal police arrested three former
lawmakers Friday as part of an investigation of alleged corruption
involving contracts between state-run oil firm Petroleo Brasileiro
SA, construction firms and politicians. Petrobras officials took a
cut of the cash from inflated contracts, funneling the rest to
lawmakers and political parties, according to investigators.
Police arrested Andre Vargas, a former lawmaker of the ruling
Worker's Party; Luiz Argolo, a former lawmaker of political party
Solidariedade; and Pedro Correa, of the Progressive Party (PP)
related to corruption allegations, said federal police spokesman
Paulo Roberto da Silva. He said more details of the operation would
be disclosed later Friday at a news conference.
Mr. Vargas and Mr. Argolo are accused of involvement with
currency dealer Alberto Youssef, previously arrested by the federal
police as part of "Operation Car Wash." Messrs. Vargas and Argolo
have previously denied involvement in the alleged corruption
scheme. It is not clear what the accusations are against Mr.
Correa.
The lawyers of three former lawmakers couldn't immediately be
reached for comment.
On Thursday, João Vaccari, the treasurer of Brazil's Workers'
Party, testified before a congressional committee investigating
allegations of kickbacks and bribery at Petróleo Brasileiro, known
as Petrobras. He said that donations to his party were all legal
and approved by the country's electoral court.
The donations to the Workers' Party, or PT, were similar to
those made by the companies under investigation to many other
political parties, Mr. Vaccari told the committee. Brazilian police
and prosecutors allege Petrobras executives conspired with many of
the company's suppliers over ten years until the end of 2014 to
inflate the value of contracts.
Since the start of the Car Wash probe--so named because of one
of the businesses allegedly involved--in March of 2014--four former
Petrobras executives and at least 23 construction executives have
been charged with crimes such as corruption and money laundering.
Some have admitted wrongdoing in exchange for lesser punishment,
prosecutors say, while others have denied involvement and await
trial.
Lawyers representing the companies and their executives either
denied involvement, said they were cooperating or didn't return
requests for comments. So far, there have been no trials or
convictions. The case is now is entering its most critical, and
potentially explosive, phase. Brazil's Supreme Court in March gave
prosecutors the go-ahead to investigate 48 current or former
members of Congress.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
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