MercoPress. South Atlantic News Agency

Brazil's top two construction tycoons arrested in connection to Petrobras case

Odebrecht and Andrade Gutierrez are accused of leading a “cartel” that overcharged Petrobras for work and passed on the excess funds to politicians

Brazilian police arrested on Friday Marcelo Odebrecht, the head of Latin America's largest engineering and construction company Odebrecht SA, ensnaring the most high-profile executive to date in the corruption investigation at state-run oil firm Petrobras.

 In morning raids that netted 12 arrests in four states, police also apprehended Otavio Marques Azevedo, head of Andrade Gutierrez, the second-largest Brazilian construction firm Andrade Gutierrez.

A lead prosecutor, Carlos Fernando dos Santos Limas, said he had “no doubt” Odebrecht and Andrade Gutierrez led what he called a “cartel” that overcharged Petrobras for work and passed on the excess funds to executives and politicians.

While the arrests were somewhat expected, they nevertheless raised hopes among Brazilians that the investigation would not spare some of the most powerful people in a country where the wealthy have enjoyed relative impunity.

“The objective of the operation is to bring a clear message that the law applies to everyone, no matter the size of the company, its place in society or its economic power,” federal police agent Igor Romario de Paula said at a news conference alongside prosecutors in Curitiba, where the investigation is based.

Odebrecht, which has 200,000 workers and a presence in 21 countries and big contracts throughout the Americas and Africa, said the arrests were “unnecessary” because it was collaborating with investigators.

Andrade Gutierrez said it was also cooperating with the investigation, but had no connection to the so-called “Lava Jato” operation at Petrobras.

Neither Azevedo nor Odebrecht have been formally charged and it was not clear how long they would be detained. Arrests of other top Brazilian executives resulted in months-long pre-trial incarceration.

The “Lava Jato” probe, centered on Petrobras as the oil major is formally known, has led to the indictments of more than 100 people and implicated dozens of politicians, most of them from President Dilma Rousseff's Workers' Party.

Since March, the country's comptroller general has been investigating the alleged cartel of two dozen construction firms thought to have moved $2.1 billion in bribes.

The scandal has blocked the construction firms, including Odebrecht and Andrade Gutierrez, from doing business with Petrobras since December 2014 and economists say the subsequent paralysis in projects has contributed to Brazil's descent into recession.

Rousseff, who was chairwoman of the Petrobras board during the presidency of Luiz Inacio Lula de Silva, has denied knowledge of the corruption scandal and urged a thorough investigation. She has not been implicated.

The 46-year-old Odebrecht is the third generation leader of the privately held company and wields considerable influence with leaders throughout Latin America.

Last month federal prosecutors opened a separate investigation into whether Lula de Silva improperly used his connections to benefit Odebrecht.