First Petrobras Scandal Convictions Announced

Three executives of Brazil's Camargo Correa group were convicted on Monday of money laundering, corruption and other charges, the first construction-industry executives to be sentenced in a giant price fixing and bribery scandal involving state-run oil company Petrobras.

Dalton dos Santos Avancini, chief executive officer of Camargo Correa Construções e Participações SA, João Ricardo Auler, the company's chairman, and Eduardo Hermelino Leite, a senior executive, were all convicted of corruption and membership in a criminal organization. The ruling was handed down by Judge Sergio Moro of Brazil's Federal Court in Curitiba.

Also, Avancini and Leite were each convicted of 38 counts of money laundering.

The convictions came the day Federal Police decided to formally accuse Marcelo Odebrecht, CEO of Odebrecht SA , of having a role in the scandal. The police accusations are expected to be followed by similar charges that prosecutors plan to present later this week to judge Moro asking him to indict the executive.

Odebrecht is among the major Brazilian construction and engineering companies that prosecutors accuse of fixing contracts to rob billions of dollars from Petroleo Brasileiro SA, as Petrobras is formally known. The money was then kicked back to Petrobras executives and politicians as bribes and campaign contributions, according to prosecutors.

While Avancini and Leite each received prison sentences of 16 years and four months and fines of 1.3 million reais ($406,250), their assistance in the case resulted in the judge knocking that down to about four months already served, a year of house arrest with electronic monitoring, and two to six years of modified house arrest.

If modified house arrest is approved in 2016, the pair would be free weekdays, but confined to their homes on nights and on weekends. Failure to comply could result in them being sent to prison.

The third executive, Auler, faces nine years and six months plus a fine of 627,150 reais. The first part of his sentence must be served in a penitentiary, Judge Moro said, adding that any easing of the terms will be dependent on the return of illegally obtained funds.

Three others were convicted along with the Camargo Correa executives, all for helping them launder money or by taking part in their criminal organization.

They include Paulo Roberto Costa and Alberto Yousseff whose original testimony helped kick-start the current investigations.

Camargo Correa said it has been cooperating with authorities to clean up irregularities since the investigation began. Odebrecht representatives were not immediately available for comment.

Reporting by Jeb Blount