Brazil's President Dilma Rousseff
Brazil's President Dilma Rousseff has said she had no knowledge of the case alleging collusion, corruption and money laundering within the government and national oil company. Reuters

A Brazilian corruption scandal that could make its way high up recently re-elected President Dilma Rousseff’s Workers Party, or PT, continues to unfold. Police have now issued 27 arrest warrants for top executives at some of the biggest building companies in Brazil.

Police say they have “strong evidence” that at least seven builders formed a cartel to win public contracts worth a combined 59 billion reais ($23 billion) in orders from the state-run oil giant Petroleo Brasileiro SA, aka Petrobras, Bloomberg News reported.

Brazilian federal police also confirmed Friday to Brazilian news outlet Agencia Brasil that they had arrested Renato Duque, former director of services for Petrobras, among other people. Local forces have started 11 searches at company offices, police said.

The investigation into money laundering and corruption known as Operacao Lava Jato, Portuguese slang for Operation Car Wash, was linked to Petrobras this year after investigators uncovered ties between the company’s former head of refining, Paulo Roberto Costa, and a black-market money dealer. Costa told police he was given bribes by a group of construction companies and shared the profits with PT politicians. Police subsequently raided Petrobras’ Rio de Janeiro headquarters.

“This is potentially the biggest corruption case in the history of Brazil,” Thiago de Aragao, partner and director of strategy at political consulting firm Arko Advice, told Bloomberg News. “When executives of the main companies that finance the political campaigns in Brazil go to jail, you can only expect a waterfall or a tsunami.”

The executives arrested Friday were directly involved in contracts signed with Petrobras, according to Agencia Brasil. Other targets of the operation had minor roles or were involved in moving illicitly obtained resources to currency dealers, who then used them to launder money.

So far, 25 arrests have been announced, and police say more arrests are to come. The arrests took place in Sao Paulo, Rio de Janeiro, Minas Gerais, Pernambuco and the Federal District encompassing the capital city of Brasilia. All the prisoners are expected to testify.

The scandal reportedly involves as much as $4 billion and dozens of politicians. Rousseff has said she had no knowledge of the scheme, and she has pledged to try to reimburse the funds, the Financial Times reported.