Second Former Petrobras Executive Indicted

Brazilian prosecutors said on Monday they had filed criminal charges against another former executive at Petrobras and three other people for alleged involvement in a massive kickback scheme at the state-run oil company.

Nestor Cervero, former international director of Petrobras, is the second former executive at the company indicted since last week in a scandal that has become a major crisis for the government of recently re-elected President Dilma Rousseff.

Julio Camargo, a consultant for contractor Toyo Setal, and lobbyist Fernando Soares were charged along with Cervero with allegedly paying out $40 million in kickbacks to political parties, executives and contractors and accepting $13 million in bribes from Korean shipbuilder Samsung Heavy Industries, the prosecutors said in a statement.

The bribes helped secure a contract on a $586 million drillship off the coast of Africa and the scheme was repeated in the Gulf of Mexico, where Petrobras has oil exploration rights, the prosecutors said. Toyo Setal declined to comment and Samsung Heavy Industries did not immediately respond to a request for comment.

The companies themselves are not charged with any crimes.

Edson Ribeiro, a lawyer representing Cervero, said his client "vehemently denies the alleged criminal acts." Lawyers for Camargo and Soares could not be reached for immediate comment.

Concern over the corruption scandal is driving shares and bonds of Petrobras to multi-year lows. Preferred shares of the Rio de Janeiro-based company fell 9.1 percent on Monday, touching their lowest level since 2005.

The team of prosecutors in Parana state vowed to expand their investigation last week after accusing 36 people, including executives from six of Brazil's largest engineering firms, with forming a cartel to funnel kickbacks to the ruling Workers' Party and its allies.

Sources involved in the widening investigation have said it could include the role of foreign companies in the scandal that has caused Petrobras to delay the publication of its earnings until next year.

More charges are possible this week.

Rousseff was Petrobras' chair from 2003 to 2010, when more than 10 billion reais ($3.9 billion) were allegedly transferred from the company to her Workers' Party and allies. She has denied any knowledge of the scheme or wrongdoing.

Cervero, who Petrobras fired in March, was indicted on charges of corruption and money laundering for alleged crimes committed between 2006 and 2012. The same prosecutors indicted Paulo Roberto Costa, another former executive at Petroleo Brasileiro SA, as the company is formally known, last Thursday.

Cervero held various positions at Petrobras and was its international director when it purchased a Pasadena, Texas, refinery which critics say it overpaid for.

Prosecutors charged Alberto Youssef, a Parana-based money changer who led investigators to the kickback scheme, with money laundering and said on Monday they are seeking to recover an additional 296 million reais for public coffers.

Sergio Moro, the federal judge in Curitiba, Parana, has accepted cases involving Costa as well as engineering executives from Engevix, OAS and Galvão Engenharia and will likely open additional cases presented by prosecutors in coming days.

($1 = 2.69 Brazilian reais)