Brazil delays leniency deals in graft probe, calls for rigor

SAO PAULO/BRASILIA, (Reuters) – Brazil’s new interim government is suspending negotiations with construction companies caught up in a massive corruption investigation in order to make leniency deals more rigorous and prove its anti-graft credentials.

Fabiano Silveira, Minister of Transparency and Oversight, said yesterday prosecutors and the federal audit court should be part of the negotiations of leniency deals, a change that would require legislative approval from Congress.

The deals, expected last year, would allow construction firms blacklisted for corruption to bid for new state contracts if they admit wrongdoing, collaborate with investigators and pay a fine.

They were previously negotiated by the CGU comptroller general’s office, which interim President Michel Temer folded into a new Transparency and Oversight ministry.

A legislative change would delay the signing of leniency agreements – which some regard as a key ingredient to kick-starting Brazil’s stalled economy – but would give companies that do sign more security against legal challenges.

“The more legitimate actors that participate in this process, the better,” Silveira told Globo News television in an interview.

Thirty-one contractors, including Brazil’s largest builders, have been banned from signing new contracts with state-run Petroleos Brasileiros (Petrobras) since late 2014 due to accusations they colluded to overcharge the oil company and used the extra funds to bribe politicians.

About half of those were known to be negotiating leniency agreements with the federal government, a measure permitted under Brazil’s 2013 anti-corruption law.

Suspended President Dilma Rousseff, whom the Senate last week voted to put on trial on charges of breaking budget laws, proposed a measure last year to speed up the leniency deals in a bid to revive the economy.

But federal prosecutors who discovered the graft scheme at Petrobras criticized Rousseff’s approach.

They argued that without their participation, the government let companies off too easily and gave them no incentive to avoid crimes.

Since taking power, Temer – who was Rousseff’s vice president – has tried to quell concerns that his government may try to sweep Brazil’s largest-ever corruption investigation under the rug.

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