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* State prosecutor alleges bribes for construction permits
* Brookfield denies accusations, opens internal review
* Group has operated in Brazil since late 19th century
By Brad Haynes
SAO PAULO, Feb 5 (Reuters) - A Brazilian prosecutor filed charges on Tuesday against a unit of Canada's Brookfield Asset Management Inc. alleging the subsidiary paid bribes to obtain permits needed to expand a Sao Paulo shopping center.
Brookfield Brasil Shopping Centers, a property-management company, allegedly paid 1.3 million reais ($656,000) to a city representative and chief inspector who approved construction at the Shopping Patio Paulista, according to civil charges filed by state prosecutor Marcelo Camargo Milani.
"There are a series of documents showing that reforms had been paralyzed for two years and then permits appeared within four days of the payments," Milani said in an interview. He said damages in the suit could start around 30 million reais and climb to more than 20 times that.
Reports of corruption in the licensing of Shopping Patio Paulista and other malls have circulated in the Brazilian press for months. Milani said his case was the first of many that could be brought against Brookfield, including criminal charges against its executives.
A spokeswoman for the property management company said Brookfield had not been informed of any charges against it.
"Brookfield vehemently denies participating in any bribery scheme and is adopting the necessary measures to defend itself," the company said in a written statement.
Brookfield is the successor company of a Canadian-based group that has operated in Brazil for more than a century.
If a judge agrees to hear the case, the suit against Brookfield could take years for a final decision. Milani said he expected a preliminary order within two weeks freezing Brookfield's assets and granting access to its banking records.
Milani has not been granted such a ruling in other high-profile cases he brought against Sao Paulo's mayor and top police officials over the past year.
A spokesman for Brookfield Asset Management, which manages about $13 billion in assets in Brazil, said the allegations against the local property management company came from an employee who was fired in 2010 and then sued by the company for embezzlement.
"Brookfield takes the allegations that have been made very seriously and is cooperating fully with Brazilian authorities," said spokesman Andrew Willis in Toronto in an email.
The company is conducting an internal review with input from an outside legal counsel, Willis said, and the investigation has not yet revealed evidence of wrongdoing.
Starting in 1899, Brookfield, formerly known as Brazilian-Canadian Traction and Brascan, built some of the Brazil's first hydroelectric dams, helped electrify Rio de Janeiro and Sao Paulo and built street-car and telephone systems.
The Brazilian word "bonde" for streetcar or cable-car comes from the bonds the company sold to finance the systems.
After public-utility nationalizations in the 1960s and 1970s, the group transferred its main Brazilian investments into property and developed some of the country's first modern suburban shopping centers.