SAO PAULO, Oct 20 (Reuters) - The initial report of a Brazilian congressional investigation into corruption at state-run Petrobras concluded late Monday that the company and politicians did no wrong, and that suppliers and rogue employees were responsible for graft.
The report by the committee's official rapporteur Luiz Sergio, a member of Brazil's ruling Workers' Party, also criticized police and prosecutors handling of the Lava Jato or "Car Wash" probe into contract fixing, bribery and political kickbacks at Petroleo Brasileiro SA, as Petrobras is formally known, according to Agência Câmara, a congressional news service.
A parade of witnesses, as well as court testimony by former Petrobras officials and contractors convicted for their role in the scandal, have told the committee under oath that money was diverted to political parties, including the Workers' Party.
The rapporteur criticized the use of "an excess" of plea-bargains in exchange for reduced sentences to win confessions from key players in the case. He also said there was no proof that money was diverted from Petrobras projects to politicians.
"It's impossible to believe that there was money directly earmarked (for political bribes) in the companies' treasuries," he said. "That is an exaggerated affirmation by the investigators."
Brazil's plea-bargain law requires that cooperating witnesses provide evidence as well as testimony in order to receive reduced sentences.
Luiz Sergio made no recommendations regarding politicians under investigation in Lava Jato, saying such issues were for prosecutors or the Congressional Ethics Committee, not his Petrobras investigation.
The report made 14 legislative proposals to improve governance of state companies and changes to the country's anti-corruption law.
Several members of the committee have asked to formally review Luiz Sergio's report and may attempt to make amendments before a final vote is taken on it, possibly this week.
Last week, Brazilian prosecutors said Swiss authorities had frozen $2.4 million in accounts held by Eduardo Cunha, speaker of Brazil's lower house of Congress, the Chamber of Deputies. Cunha is a member of Brazil's Democratic Movement Party, part of the Workers' Party-led coalition.
Federal prosecutors are investigating Cunha over allegations made during plea bargains that he had received a $5 million bribe as part of the Petrobras corruption scheme.
Brazil's President Dilma Rousseff was chairwoman of the board of Petrobras during much of the time when the corruption scheme was operating.
Rousseff has not been charged or accused of any criminal wrongdoing, nor has any evidence been made public to that effect. She was not asked to testify before the committee. (Reporting by Tatiana Ramil in Sao Paulo; Additional reporting and writing by Jeb Blount in Rio de Janeiro; Editing by Bernadette Baum)