Brazils federal police made a series of raids on Tuesday morning and arrested 24 people, including a well-known investor and banker and a former mayor of São Paulo.Police say they have proof the first two were involved in siphoning off public funds, corruption, money laundering and tax evasion and are connected to the giant mensalão vote-buying scandal.
That scandal rocked the current government in 2005 when it was revealed that the ruling Workers party (PT) had bought votes from congressmen. The scandal dented President Luiz Inácio Lula da Silvas image and popularity. News of Tuesdays arrests will remind voters of the PTs poor record on corruption. However, Brazils healthy economy is likely to prevent the police action from affecting local elections due in October.
At the centre of the storm are well-known figures including Daniel Dantas, head of the Opportunity financial group; Naji Nahas, an investor; and the former mayor, Celso Pitta.
Police said Mr Dantas, dubbed the head of the operation, set up a fund in the Cayman Islands that carried out tax evasion as well as falsifying balance sheets. During a search, police say they found $1m at his home, cash that they allege was destined to bribe officers to get Mr Dantas and his wifes name removed from the investigation. The level of intimidation and attempts to corrupt were truly frightening, said Protógenes Queiroz, who is co-ordinating the investigation. Mr Dantass Opportunity, working on behalf of Citigroup and Telecom Italia, in effect controlled Brasil Telecom.
Mr Nahas is accused of illicit foreign exchange transactions and tax evasion at his company, which acted as an unofficial investment bank. Police say Mr Pitta was a regular client of Mr Nahas and withdrew money almost weekly from his company but released no further details on why he was arrested.
The mayor of São Paulo for four years, Mr Pitta was forced to resign after his ex-wife divulged a series of bribery scandals. Under his leadership, the citys debts more than doubled to exceed R$18bn (US$11.2bn).