Govt prosecutes Senator, top banker over corruption

Brazilian federal prosecutors presented formal charges against billionaire financier Andre Esteves and Senator Delcídio do Amaral on Monday, accusing them of obstructing a criminal investigation into state-run oil company Petrobras, according to a source familiar with the matter.

Esteves, a founder and top shareholder of investment bank BTG Pactual SA and Amaral, who is President Dilma Rousseff's point man in the Senate, were arrested on Nov. 25 on suspicion of obstructing the largest graft probe in Brazil's history.

The case has rattled BTG Pactual, the country's sixth largest bank, whose co-founders wrested control away from Esteves after he stepped down as chairman and chief executive. Creditors and investors are watching closely to see if the bank is implicated in charges against Esteves.

Amaral's arrest has also put the capital Brasilia on edge, as the troubles of Rousseff's negotiator in Congress make it harder for the legislature to pass unpopular austerity measures the government has called crucial to reviving a nosediving economy.

The charges also bring the corruption scandal closer to Rousseff, who is not under investigation but was chairwoman of Petroleo Brasileiro SA, as Petrobras is formally known, from 2003 to 2010 when investigators suspect much of the graft took place.

Amaral is the third lawmaker to be charged in the Petrobras scandal, after House Speaker Eduardo Cunha and former President Fernando Collor de Mello, who is now a senator. Under Brazil's constitution, lawmakers can only be tried by the Supreme Court.

The Supreme Court and prosecutor-general's office did not immediately respond to requests for comment on the case.

In the southern city of Curitiba, dozens of former lawmakers and officials have been tried and convicted, along with senior engineering executives who are accused of fixing prices on contracts with Petrobras and distributing the excess as bribes.