June 27, 2015 / 1:36 AM / 3 years ago

Brazil ministers rebut new wave of campaign funding allegations

BRASILIA/SAO PAULO (Reuters) - Two Brazilian ministers denied on Friday that there was anything illegal about campaign donations made in recent years by a businessman allegedly involved in massive corruption scandal at state-run oil company Petrobras.

President Dilma Rousseff’s chief of staff, Aloizio Mercadante, denied that 500,000 reais ($159,908) in campaign donations made to him in 2010 by companies owned by Ricardo Pessoa were linked to kickbacks at Petrobras.

Social Communications Minister Edinho Silva said in a separate statement that 7.5 million reais donated by Pessoa to Rousseff’s presidential campaign last year were legal and approved by Brazil’s Supreme Electoral Court. Silva was the treasurer of Rousseff’s campaign.

The responses came after Veja magazine reported on Friday that Pessoa had said in a plea bargain deal that part of the money resulting from the overpricing of Petrobras projects was donated to the campaign of several politicians including Rousseff. The magazine did not say how it obtained the information.

The scandal has led to the arrest of dozens of lobbyists and executives of engineering companies accused of forming a cartel to fix prices and inflate the value of contracts with Petrobras to enrich themselves and politicians, mostly aligned with Rousseff’s Workers Party. Pessoa, who was sent to jail last year in connection to the scandal, is currently under house arrest.

The corruption investigation has helped drag Rousseff’s popularity to record lows and raise tensions with her allies in Congress at a time when she tries to pass legislation to avoid losing Brazil’s investment-grade rating.

Two government sources told Reuters that Mercadante and Silva met Rousseff on Friday evening at her residence in Brasilia to discuss some excerpts of Pessoa’s testimony, which Veja leaked. Efforts to reach Pessoa’s legal advisors were unsuccessful.

Brazilian police last week arrested Marcelo Odebrecht, the chief executive officer of Latin America’s engineering company, Odebrecht SA, and large campaign donator of Rousseff and other politicians. Odebrecht is a known supporter of Rousseff and her Workers’ Party.

($1 = 3.1263 Brazilian reais)

Writing by Guillermo Parra-Bernal and Alonso Soto

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