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Brazilian Federal Police Operation Arrests Former Minister of Lula and Rousseff

06/24/2016 - 10h54

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FROM SÃO PAULO
FROM BRASÍLIA

Former minister Paulo Bernardo (PT-PR) was arrested on Thursday, June 23, in the São Paulo Federal Police's Custo Brasil operation.

The operation, which included 11 arrests and 40 search and seizure warrants in São Paulo (SP), Brasília (DF), Recife (PE) and Porto Alegre (RS), is an unfolding of the Lava Jato operation.

An investigation by the Federal Police, the Public Prosecutor's Office in São Paulo and the Revenue Service Office shows that Bernardo allegedly received R$ 7 million (US$ 2 million) embezzled from contracts signed between the Ministry of Planning and technology company Consist between 2010 and 2015.

The company is a manager of consigned credit for federal public employees and it was hired without a bidding process in 2010, while Bernardo was still the head of the ministry.

The PT, whose national headquarters in São Paulo also were targeted by the operation, is believed to be a beneficiary of part of the money embezzled. The investigation shows that one of the scheme's operators alone transferred R$ 12 million (US$ 3.5 million) to the political party.

The house of the former Minister of Social Security, Carlos Gabas (PT-SP), a friend of President Dilma Rousseff, who was suspended from office, also was one of the targets of the operation.

Gabas was called to testify, but refused to do so. The Federal Police and the Public Prosecutor's Office say that Gabas allegedly received bribes to guarantee that Consist would sign the contract with the Ministry of Planning.

The Federal Police also say that Consist received R$ 1 (US$ 0.29) for every installment of consigned credit paid, while the market value for the service was only R$ 0.30 (US$ 0.08).

Some R$ 100 million (US$ 29 million) allegedly were embezzled from the Ministry of Planning from 2010 to 2015. The amount corresponds to 70% of the R$ 140 million (US$ 41 million) contract that the company had with the ministry to manage and control the contracts of consigned credit in the period.

Of these 70%, then-Minister of Planning Paulo Bernardo allegedly received 9.6% of the total amount. The amount fell to 4.8% when he left the ministry in 2011, and to 2.9% in 2014. The money allegedly was used to pay for some of Bernardo's personal expenses, such as his employees' salaries, a rented parking space in a garage and the rent of an apartment.

In a decision that calls for Paulo Bernardo's provisional detention (without a pre-established date to be released), the judge in charge of the case, Paulo Bueno de Azevedo, said that the R$ 7 million (US$ 2 million) that the former minister allegedly received had not been found and that there was a risk that "new money laundering schemes could occur."

The municipal secretary of São Paulo, Valter Correia, also was arrested – he was the deputy secretary of the Ministry of Planning and became a target of the investigation as he received cash and transferred it to other participants of the scheme, such as former minister Gabas.

The defense of former minister Paulo Bernardo said that it did not have access to the decision that led to Bernardo's arrest, but said that the action was illegal and that Bernardo was not involved in any irregular activities.

The lawyer of former minister Carlos Gabas, Danyelle Galvão, says that her client will testify as soon as the defense has access to the court records.

None of the other cited in the investigation could be reached or wanted to speak to the news report team.

Translated by THOMAS MUELLO

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