Petrobras Graft Involves at Least 28 Politicians

At least 28 Brazilian politicians, including government ministers, governors and congressional leaders, allegedly received money from a corruption scheme that diverted funds from state-run oil company Petrobras, Estado de S. Paulo newspaper reported on Friday, citing testimony from a key witness.

The list includes eight members of the ruling Workers' Party (PT), eight from the Brazilian Democratic Movement Party (PMDB), 10 from the Progressivist Party (PP), one from the Brazilian Socialist Party (PSB) and one from the Brazilian Social Democracy Party (PSDB), the newspaper reported.

The PT, PMDB and PP are part of the ruling government coalition. The PSB left that coalition earlier this year. The PSDB is the country's main opposition party. Prosecutors have already said they plan to investigate political parties in relation to the case and that charges against politicians are expected by February.

The names were provided by Paulo Roberto Costa, Petrobras' former refining chief as part of a plea bargain deal to lessen his own potential sentence, Estado said. The paper did not say how it obtained the list of names.

Costa is one of 39 alleged participants charged in recent days with crimes such as racketeering, bribery and money-laundering. The charged include more than 20 top executives of leading Brazilian construction companies.

The scandal, which diverted an estimated 10 billion reais ($3.76 billion) from Petrobras, is expected to become the biggest corruption scandal in Brazilian history and could further slow an already stagnant Brazilian economy.

Thousands have been laid off as work slows or stops at projects that are part of the company's $221 billion five-year investment plan.

Petroleo Brasileiro SA, as the company is formally known, has been unable to release third-quarter results because auditors won't certify accounts. The list of politicians also brings the scandal closer to Brazilian President Dilma Rousseff.

While Rousseff says she had no involvement in the scheme and said on Thursday that she plans to "stamp out corruption," she was chairwoman of Petrobras' board of directors from 2003 to 2010 when much of the alleged corruption took place.

According to prosecutors, Petrobras executives conspired to inflate the price of tens of billions of dollars of contracts for refineries, ships, advertising and other goods and services. The contractors and other suppliers then allegedly kicked back a percentage of the inflated contracts to executives, politicians and political parties as bribes and campaign contributions.

($1 = 2.6625 Brazilian reais) (Reporting by Jeb Blount