Brazil's elite in crosshairs as Petrobras scandal widens
By Anthony Boadle and Brian Winter
BRASILIA/SAO PAULO, March 5 (Reuters) - A corruption scandal at state-run oil company Petrobras has entered a volatile new phase that could lead to jail for some of Brazil's best-known politicians and business leaders while making a likely recession even worse.
A prosecutor's motion on Tuesday to open investigations against 54 individuals, reportedly including the leaders of both chambers of Congress, means a swathe of Brazil's political elite now feels threatened.
The real-world consequences were made clear right away, as the head of the Senate lashed out by cancelling a presidential decree critical to President Dilma Rousseff's plans to close a gaping hole in her government's budget.
Financial markets plunged, with the real dipping below 3 per dollar for the first time in a decade, as investors feared political volatility could cause Brazil to lose its investment grade credit rating and worsen an economy already expected to post its biggest contraction in a quarter century in 2015.
The more serious threat to Brazil's stability may come not from the politicians, but from people who are already in jail due to the case.
About a dozen executives from some of Brazil's biggest construction and engineering firms have been under "preventive arrest" since late last year.
Their companies, which prosecutors suspect helped corrupt Petrobras executives and politicians misappropriate billions of dollars, have seen revenues plunge as a direct result of the scandal.
The executives believe that, for all the unrest in Brasilia this week, the politicians are still likely to get off easy in comparison, a political source who has had contact with some of the firms told Reuters. Continuación...