UPDATE 1-Brazil police arrest former Workers' Party leaders in graft probe
(Adds information and quotes from press conference, background)
SAO PAULO, April 1 (Reuters) - Brazilian police detained former leaders of the ruling Workers' Party over an allegedly fraudulent loan on Friday, the latest stage of a sweeping corruption investigation centered on state-run oil company with Petroleo Brasileiro SA.
The 27th phase of the so-called "Operation Car Wash" focused on a decade-old loan from local bank Banco Schahin that resulted in losses for Petrobras, as the company is known. Prosecutors say the the loan of 12 million reais ($3.3 million) was never paid back.
In a further blow to embattled President Dilma Rousseff's party, a former party treasurer was detained for questioning, while a former general secretary and a local newspaper owner were arrested, investigators said at a press conference.
The two-year old investigation has uncovered systemic corruption across multiple companies and the highest level of government since the Workers' Party took power in 2003. The findings have given powerful momentum to impeachment proceedings against Rousseff even though she herself is not being investigated.
Friday's raids built on the November arrest of Jose Carlos Bumlai, a powerful rancher and friend of former president Luiz Inacio Lula da Silva.
Bumlai is accused of seeking Lula's help to obtain a $1.6 billion Petrobras contract on the Vitoria 10,000 drillship for a unit of Schahin Group. In return for that, Bumlai arranged for the Schahin Group's bank to forgive the loan.
The proceeds from the forgiven loan were laundered through various businessmen tied to the Workers' Party and ultimately used to pay bribes, prosecutors said.
Prosecutors said many of the businessmen investigated in the scheme were also involved in the "mensalao" or "big monthly payment" scandal, a landmark case that led to the arrest of former politicians in 2013 after a decade of trials. Continuación...