By Anthony Boadle

BRASILIA (Reuters) - Odebrecht executives have testified the Brazilian engineering firm illegally funded the 2014 campaign of the country's impeached leftist president, a top newspaper reported on Monday, a development that could lead to the removal of her successor.

The testimony by the state witnesses as part of a leniency deal with the firm could, if accepted by the Supreme Court, bolster a request to annul the election two years ago of Dilma Rousseff and her running mate Michel Temer for abuse of power.

If that were to happen next year, Brazil's Congress would pick a caretaker to lead the country until a new president is elected at the end of 2018. Temer formally took over the presidency from Rousseff after her ouster in late August.


The Estado de S.Paulo newspaper, citing the testimony of Odebrecht executives, said at least one of them told prosecutors an illegal donation of about 30 million reais ($8.9 million) was made to the Rousseff re-election campaign, roughly 10 percent of its officially registered funding.

Temer has denied accepting illegal donations. His office had no immediate comment on the newspaper report.

The current Brazilian president has lost four ministers due to corruption allegations. That and a prolonged economic recession have threatened his political survival and given rise to calls for him to step down and allow new elections.

Last week, one of Temer's closest aides resigned following allegations he received bribes from Odebrecht, and two other members of his inner circle are under pressure to quit the besieged government.

The TSE electoral court will decide next year whether to annul the 2014 election result, though it can also separate Rousseff's campaign accounts from Temer's and rule that he can continue in office.


Odebrecht, the family-owned company that prosecutors said gained most from the sprawling graft scheme uncovered nearly three years ago at state-run oil company Petrobras, signed a 6.7 billion-real agreement with prosecutors on Dec. 1, admitting guilt and offering information on bribes paid.

More than 70 of its executives, including family patriarch and Chairman Emilio Odebrecht and his jailed son and former CEO Marcelo Odebrecht, agreed to make plea statements that have been received by the Supreme Court to validate them as evidence. A court official said the lengthy pleas will be examined in January.

Odebrecht declined to comment but said in a statement that it is cooperating with the judiciary and adopting ethical and transparent compliance practices.

A judge on Monday indicted the country's former president, Luiz Inacio Lula da Silva, as well as his wife Marisa and seven others on corruption charges in the Petrobras kickback scheme. Lula already was facing four other graft cases before the new charges.

A leftist who was Rousseff's mentor, Lula is still one of Brazil's most popular politicians and seen as a front-runner to win the 2018 presidential election, though a conviction would rule him out of the running.

Prosecutors allege that Odebrecht, Latin America's biggest construction firm, paid 12.9 million reais for the land to be used for Lula's think tank and an apartment in a Sao Paulo suburb.

(Reporting by Anthony Boadle; Editing by Paul Simao)

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