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BRASILIA, Feb 26 (Reuters) - Brazilian political strategist Joao Santana earned his nickname 'the maker of presidents' by guiding leftist leaders to power in Latin America and Africa, but his arrest this week could unmake his most important client, President Dilma Rousseff.
A member of Rousseff's inner circle who masterminded her two successful election campaigns, Santana is accused by prosecutors of receiving payment for his services in money illegally siphoned from state oil company Petrobras.
A prize-winning journalist before he became Latin America's most successful campaign strategist, the 63-year-old Santana says the allegations are unfounded and politically motivated.
Rousseff's opponents welcomed the sight of Santana and his wife being taken into police custody on Tuesday. The opposition hopes his arrest will reignite flagging support for their bid to unseat Rousseff by impeachment in Congress, on charges that she deliberately broke budget rules in 2014 to get re-elected.
But a bigger threat to Rousseff could come from the Supreme Electoral Court (TSE) which is investigating charges that her 2014 campaign was funded with dirty money.
If proof emerges that Santana received payments with funds skimmed from Petrobras, the court could invalidate her narrow victory over opposition leader Aecio Neves.
"The risk of the TSE invalidating her elections is more serious now because the case against Santana could become the link between the corruption at Petrobras and the financing of her campaign," said Rafael Cortez, a political analyst at Tendencias, a consulting firm in Sao Paulo.
He gave Rousseff a 55 percent chance of serving out her term through 2018.
The mood in Rousseff's camp had brightened last week after she succeeded in placing an ally to lead the largest party in Congress' lower house, allowing her to have sympathetic lawmakers named to the committee that will hear impeachment proceedings.
But Santana's arrest, and fears that he could plea bargain with prosecutors, has again plunged the presidential palace into anxiety.
"Nobody expected this. This is not good for us. It involves someone so close to the president," said a presidential aide, who requested anonymity because he was not authorized to speak about the matter.
Santana is not just Rousseff's campaign strategist, he is also one of her closest consultants. He advised her on her speech to open the 2016 session of Congress on Feb. 2 and her national address the next day on the threat of the Zika virus, presidential aides said.
"A rich country is a country without poverty," was the slogan Santana devised for Rousseff in 2011 to build her reputation as a champion of the poor and heir to her popular predecessor Luiz Inacio Lula da Silva, Brazil's first working-class president.
Santana has been a key advisor to ruling Workers' Party since he steered Lula to re-election in 2006 despite a corruption scandal. The probe into secret monthly payments to lawmakers almost toppled the leftist leader and led to the jailing of his top aides for buying support in Congress for his minority government. But Lula survived and won a second term.
A millionaire today, Santana's friends call him "Patinhas," after Donald Duck's uncle Scrooge, a nickname he earned in his native Bahia state for being tight-fisted as a schoolboy.
The Workers' Party said Santana was paid 70 million reais ($17.7 million) for Rousseff's 2014 campaign, all of it above board and officially registered with electoral authorities.
Rousseff's chief of staff Jaques Wagner said on Wednesday the allegations against Santana had no bearing on the president.
"That has no relation at all to the presidential campaign. It was all legal," Wagner told Reuters said in an interview.
Government officials say the TSE could struggle to differentiate legal from possibly illegal contributions in a case expected to drag on for years.
They worry, however, the TSE will adopt a more aggressive stance in May when Supreme Court justice Gilmar Mendes, an open critic of the Workers' Party, becomes its president. Mendes has vowed to rule speedily.
Police said they arrested Santana after they found evidence of $3 million in deposits paid to him in an offshore account in 2012 and 2013 by engineering conglomerate Odebrecht, from funds siphoned from overpriced Petrobras contracts.
On Thursday, Santana acknowledged to police he has an undeclared account abroad while maintaining the funds come from work on election campaigns in other countries, ranging from Argentina to Angola, his lawyer said.
Santana earned his reputation with successful campaigns in a dozen countries. He helped Mauricio Funes win office in El Salvador in 2009 and in 2012 scored a hat-trick of presidential wins: Jose Eduardo dos Santos in Angola, Hugo Chavez in Venezuela and Danilo Medina in the Dominican Republic.
Santana quit his post on Medina's re-election campaign on Monday after warrants were issued for his arrest and that of his wife. He returned to Brazil to turn himself in. (Reporting by Anthony Boadle; Additional reporting by Lisandra Paraguassu; Editing by Kieran Murray)