Brazil Bribe Investigation Widens

Brazil's top prosecutor has found evidence that a bribe scheme involving local engineering firms and the state oil company extended to pension funds and a workers' fund, benefiting the ruling Workers' Party and allies, newspaper Folha de S. Paulo reported on Friday.

The paper said the potential new front in Brazil's largest-ever corruption investigation was based on a slew of text messages leaked to the local press on Thursday from Leo Pinheiro, the convicted former head of engineering firm OAS.

"According to what can be inferred from the messages, there were debentures issued by the companies acquired by banks ... or by pension funds where there is political interference," top Brazilian prosecutor Rodrigo Janot wrote in documents seen by Folha.

Janot said the messages indicated OAS might have paid bribes to politicians, including House Speaker Eduardo Cunha, or made official campaign donations to political parties in exchange for the financial transactions that raised funds, according to Folha.

The leaked texts, sharply criticized by Brazil's justice minister on Thursday, could lead prosecutors to formally investigate several members of President Dilma Rousseff's cabinet, creating more headaches for the unpopular leader as she fights unrelated impeachment charges and a recession.

Dozens of engineering firms are being investigated for price-fixing contracts and overcharging state-run oil company Petroleo Brasileiro SA to gain funds used to bribe politicians. Pinheiro has been sentenced to 16 years in jail for money laundering and corruption.

Newspaper Valor Economico also reported on Friday that plea bargain testimony from former Petrobras executive Nestor Cervero showed Rousseff's chief of staff, Jaques Wagner, received large sums of money diverted from Petrobras to run his 2006 campaign for governor of Bahia state.

Wagner, who was also allegedly mentioned in the texts from Pinheiro, condemned the leaks in a statement on Thursday and said his political activity had always been exclusively in service of Brazil and Bahia.

A spokeswoman for federal prosecutor's office did not have an immediate comment on the reports. OAS did not immediately respond to a request for comment.

Reporting by Caroline Stauffer