Brazil prosecutor plans to investigate ministers, senators for graft: source

By Anthony Boadle and Tatiana Bautzer
File photo: Rodrigo Janot looks on during news conference after a forum titled "Measures Against Corruption" at the state attorney general office in Brasilia, Brazil November 24, 2016. REUTERS/Ueslei Marcelino

By Anthony Boadle and Tatiana Bautzer

BRASILIA/SAO PAULO (Reuters) - Brazil's top prosecutor will seek authorization from the Supreme Court as soon as this week to investigate senior ministers in President Michel Temer's Cabinet and senators from his PMDB party for corruption, a source familiar with the situation said on Sunday.

Folha de S. Paulo newspaper reported on Sunday that the request by Prosecutor General Rodrigo Janot will include Presidential Chief of Staff Eliseu Padilha and Wellington Moreira Franco, the minister in charge of a major infrastructure and privatization program.

According to the paper, Janot is also considering whether to include Temer himself in the request.

The source confirmed the thrust of the Folha report but did not name the ministers and senators involved in the request, which is based on recent plea bargain deals by 77 employees of Brazil's largest construction group Odebrecht S.A. [ODBES.UL]

The source, who asked not to be identified because he was not authorized to speak publicly, said prosecutors will also ask the Supreme Court to make public the content of the executives' depositions, which are under seal.

Odebrecht - which agreed to pay a record $3.5 billion to Brazilian, Swiss and U.S. authorities to settle bribery charges in December - is at the heart of a sprawling investigation into illegal political payments by firms in return for contracts with Brazilian state oil company Petrobras.

The statements by Odebrecht executives are expected to further tarnish the image of Temer's government, which is already struggling with rock-bottom ratings as it seeks to pass austerity measures aimed at curbing Brazil's massive budget deficit.

However, the slow pace of justice in Brazil would likely allow the government to press ahead with pension and labor reforms in Congress before any impact was felt, analysts say.

"I don't see a short-term effect on Temer's clout in Congress," said Luciano Dias, partner at consultancy firm CAC, noting the Supreme Court typically takes around 8 months to formally indict suspects and a further year before a trial begins.

A presidential aide said on Sunday that any minister would only be suspended if prosecutors decided to bring formal charges against them following an investigation, and would only be dismissed if a judge accepted the charges and placed them on trial.

The departure of Padilha, who is already absent on health leave, would deprive the government of one of its most effective political operators but Congressional leadership could take up the slack in ushering through reforms, said Christopher Garman of Eurasia Group.

TEMER IN CROSSHAIRS

The allegations against Padilha and Moreira Franco stemmed from testimony by Odebrecht's former head of government relations in Brasilia, Cláudio Melo Filho, which was leaked to the media.

The testimony alleged that Odebrecht cultivated ties with senior members of the PMDB for years and that Padilha received an illicit 10 million real ($3.21 million) payment for the party's 2014 election campaign.

A spokesman for Padilha declined to comment. A representative for Moreira Franco said he had never talked about party issues or financing with Melo Filho.

Folha said the prosecutors' list included other senior members of the PMDB, including the government's leader in Congress, Senator Romero Jucá, former Senate head Renan Calheiros, and the current Senate president Eunicio Oliveira.

Senior members of the allied PSDB party including former presidential candidate Senator Aécio Neves and Senator José Serra, who resigned as foreign minister two weeks ago, are also being targeted by prosecutors, the paper said.

Press representatives for the senators did not comment on the report.

Former presidents Dilma Rousseff and Luiz Inácio Lula da Silva of the Workers' Party are also among the politicians that Janot intends to investigate, the paper said.

Lawyers for Lula and Rousseff did not respond to requests for comment.

The Constitution forbids investigating a sitting president for crimes committed before the start of his term, but prosecutors are considering whether they should also seek to investigate Temer.

The prosecutors are discussing whether his term as a vice-president, before Rousseff's impeachment last year, counts as part of his current term, according to the paper.

The Planalto presidential palace did not comment.

The president has repeatedly denied accusations of soliciting illegal funds and insisted any donations were legal and duly registered with electoral authorities.

(Editing by Daniel Flynn and Mary Milliken)