Brazil police arrest 19 in Eletrobras nuke-plant bribe probe

By Jeb Blount

RIO DE JANEIRO (Reuters) – Brazilian police arrested 19 people on Wednesday as part of a probe into a graft scheme at a nuclear power plant owned by state-led utility Eletrobras that has allegedly paid out more than 200 million reais ($60 million) in bribes.

The alleged bribes were paid to senior executives of Eletronuclear, the nuclear power unit of Centrais Eletricas Brasileiras SA, as Eletrobras is formally known, federal prosecutors in Rio de Janeiro said.

In return, executives allegedly let construction companies such as Andrade Guitierrez inflate the cost of the 17.7 billion real ($5.3 billion) Angra 3 nuclear reactor 100 kilometers west of Rio de Janeiro, kicking back part of their take to politicians and political parties.

The arrests expands the giant, two-year-old Operation Car Wash probe of price-fixing, bribery and political kickbacks at state-led oil company Petrobras. The resulting scandal has spread to other state-run enterprises such as Eletrobras and hobbled investment in oil and energy projects.

It has also led to dozens of convictions for bribery and money laundering, the investigation of dozens of top politicians, and probes and civil lawsuits in the United States and Europe.

Eletrobras had its shares suspended from trading on the New York stock exchange because of the scandal and wrote off 4.97 billion reais for Angra 3 in its 2015 accounts.

In statements, Eletrobras said it is aware of the probe and Andrade Guitierrez said it is cooperating with authorities. Both companies have aided the Car Wash probe in the past.

Construction of the 1,405 megawatt Angra 3 reactor, the third at the site, has dragged on for three decades. Completion, scheduled for 2017 is unlikely until 2023 said Rio energy consultancy PSR on Wednesday.

Work stopped again late last year after Andrade Guitierrez, Odebrecht, Queiroz Galvao and other contractors pulled out of the project.

People arrested on Tuesday include former Eletronuclear chief executive Othon Luiz Pinheiro da Silva, a retired admiral who was already under house arrest and facing related bribery charges.

Police and prosecutors declined to name others arrested but said they are targeting senior executives of Eletronuclear companies involved the alleged bribery scheme.

In addition to Pinheiro, six of the 19 arrested were put in preventative custody, prosecutors said. Three more were jailed on temporary warrants and nine were picked for questioning.

Eletronuclear CEO, Pedro Jose Diniz Figueireido was removed from office by court order on Wednesday for allegedly interfering in an internal investigation to help Pinheiro, prosecutors said.

($1 = 3.3315 Brazilian reais)

(Reporting by Jeb Blount and Silvio Cascione)