(Recasts, adds Bertin family)
By Caroline Stauffer
SAO PAULO, Nov 24 (Reuters) - The arrest of a powerful rancher and friend of former president Luíz Inácio Lula da Silva on Tuesday brought Brazil's largest-ever corruption investigation to the country's farm sector, one of the few bright spots in its stalling economy.
Federal police arrested José Carlos Bumlai for suspected fraud in a drillship contract with state-run oil firm Petrobras and his role as an intermediary in a series of unpaid loans that benefited business associates and the ruling Workers' Party.
The nearly 2-year-long investigation into kickbacks on Petrobras contracts has resulted in the arrest of several people close to Lula - notably his former chief of staff Jose Dirceu - though prosecutors and police say the former president himself is not being investigated.
The arrest warrant issued by Judge Sergio Moro cited evidence that Bumlai had used his connections to Lula to land the Petrobras contract for Brazil's Schahin industrial group in return for forgiving a 60 million real ($16.2 million) loan to the Workers' Party to help fund his 2006 re-election campaign.
Prosecutors said Bumlai was one of the largest ranchers in Mato Grosso do Sul state and had nearly unfettered access to the presidential palace when Lula was in office.
The judge also instructed police to collect documents from Brazil's state-run lender BNDES related to loans the bank made to Grupo Sao Fernando, which includes sugar and ethanol mill Usina Sao Fernando and is controlled by Bumlai.
BNDES denied any irregularities in the loans to the mill, which is now bankrupt. A spokeswoman for the mill, which has annual crushing capacity of 4.5 million tonnes in Mato Grosso do Sul, said they had not been informed of the operation.
Two executives from another powerful ranching group, Bertin, were brought in by police for questioning about suspect transfers to the family's meatpacker, which was acquired by JBS in 2009. Bertin was also a partner with Bumlai in Usina Sao Fernando until 2012. JBS did not respond to request for comment.
Bumlai's lawyer was not immediately available for comment.
Dozens of executives from Brazil's top construction and engineering firms have been charged with bribery and money laundering in the massive corruption scandal and about 50 politicians are being investigated for receiving kickbacks, mostly members of President Dilma Rousseff's ruling coalition.
Investigators say the corruption scheme in which bribes and kickbacks were paid from overpriced construction contracts cost Petroleo Brasileiro SA, as Petrobras is formerly known, more than $2 billion. ($1 = 3.70 Brazilian reais) (Additional reporting by Pedro Fonseca, Anthony Boadle and Reese Ewing; Editing by W Simon and Christian Plumb)