Police Probe Overseas Financing by Brazil Development Bank

(Bloomberg) -- Brazilian police are deepening an investigation into overseas financing provided by state development bank BNDES, further linking the lender to the country’s sweeping corruption probe.

The investigation focuses on illegal payments made in exchange for BNDES loans in the Dominican Republic, Angola, Cuba, Panama, Gana and Mexico, according to a police statement released on Thursday. The loans benefited a “large construction company in Brazil,” police said without naming the company. Local newspaper O Estado de S. Paulo said builder Odebrecht paid $7.6 million to a consulting firm owned by a former BNDES employee to obtain $3 billion in loans.

The BNDES said in an e-mailed statement that the employee was an adviser to the bank’s president between November, 2005 and May, 2006. “The bank’s operational rules require that lending operations go through several instances through their final approval, with procedures defined and executed in different levels,” the bank said. A spokeswoman for Odebrecht said the company wouldn’t comment.

As part of the probe, police carried out nine search warrants and detained 11 people for questioning in the states of Sao Paulo, Rio de Janeiro and Minas Gerais, as well as in the capital city of Brasilia. They were also investigating kickback payments in bidding processes at the Health Ministry.

Dozens of business leaders and public servants have been jailed as Brazil investigates an intricate net of corruption involving its state-owned companies, contractors, and politicians. Prosecutors on Wednesday accused former president Luiz Inacio Lula da Silva of being the mastermind of the corruption scandal.