UPDATE 3-Brazil police arrest ex-finance minister Palocci in graft probe
(Updates with quotes, details from press conference)
By Pedro Fonseca
RIO DE JANEIRO, Sept 26 (Reuters) - Brazilian police on Monday arrested Antonio Palocci, a powerful former finance minister and presidential chief of staff in recent Workers Party (PT) governments, as a sweeping anti-corruption probe hit even harder at the left-leaning party.
Prosecutors said at a news conference that Palocci acted as a liaison between the PT and Brazil's largest engineering and construction conglomerate, Odebrecht SA, from 2006 to 2013 in a kickback scheme centered on contracts at state-led oil company Petroleo Brasileiro SA, or Petrobras.
"Evidence has surfaced ... that he was responsible for coordinating his political party's receipt of surreptitious payments from the Odebrecht Group," read Monday's search and arrest warrant signed by anti-corruption judge Sergio Moro.
Investigators allege Palocci improperly approved loans from state development bank BNDES to Odebrecht in Africa and for oil platforms. They also allege that he pushed legislation through Congress to help the company win tax advantages.
Prosecutors said they had found evidence that Odebrecht paid 128 million reais ($39.5 million) to the Workers Party and its representatives between 2008 and 2013, including Palocci.
Construction magnate Marcelo Odebrecht, whose family owns the namesake company, received a 19-year sentence in March for bribery, money laundering and organized crime in relation to the scandal at Petrobras.
Two former aides of Palocci were arrested in Monday's police sweep. Continuación...