Brazil police arrest four in corruption probe of water project
SAO PAULO - Brazilian federal police arrested four people on Friday including the chief executive of engineering group OAS in a new probe of suspected price-fixing and kickbacks on a long-delayed project to divert water to the drought-prone Northeast.
Police said they had evidence that a consortium of engineering companies working to redirect water from the São Francisco River had diverted 200 million reais ($51 million) of 680 million reais in contracts under investigation.
Police said their probe of the water project included a money launderer and a lobbyist involved in a larger investigation of state-run oil company Petrobras.
Federal prosecutors have accused dozens of engineering companies of forming a cartel to overcharge the oil company, formally known as Petroleo Brasileiro SA, and funnel the excess funds to executives and politicians as bribes.
A federal police spokesman declined to name the people who had been arrested. Construction firm OAS said police had searched its offices and “unnecessarily” arrested Chief Executive Elmar Varjão. Police said the others were executives from Coesa Engenharia, Barbosa Mello and Galvão Engenharia.
OAS, whose former chief executive Jose Aldemario Pinheiro Filho was sentenced to 16 years and four months in jail in August for corruption and other charges, said it was available to answer any questions from law enforcement officials.
Representatives for Coesa Engenharia and Barbosa Mello could not be reached for comment.
A press representative for Grupo Galvão, which controls Galvão Engenharia, said the company had not been informed of the details of the investigation and was available to cooperate with authorities.
Work to divert the São Francisco, Brazil’s second-longest river, was launched by former President Luiz Inacio Lula de Silva in 2006, and the estimated cost has nearly doubled since then to 8.2 billion reais from 4.8 billion reais.
Nearly five years past its initial deadline, the project is unlikely to be finished by the end of Rousseff’s second term in 2018, even after the government accelerated construction work ahead of last year’s election.
($1 = 3.9 reais)
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