(Adds Banco do Brasil comment)
SAO PAULO, May 9 (Reuters) - Brazilian police launched an operation on Thursday to arrest 17 people suspected of involvement in a scheme to launder money and siphon off funds at state-controlled Banco do Brasil SA, authorities said.
The investigation targeted employees of Banco do Brasil and businessmen linked to firms set up to collect debt in arrears on behalf of the bank, according to a statement describing the actions carried out by civil police in Brasília.
The group may have siphoned off 26 million reais ($6.5 million), authorities said.
Banco do Brasil said in a statement to Reuters that it detected evidence of possible fraud through internal controls. The bank informed the police and it has been cooperating with the investigation, the statement said.
Authorities also said 28 search warrants were executed in the states of Goiás, São Paulo, Minas Gerais, Pernambuco, Paraná, Santa Catarina, Mato Grosso and Rio de Janeiro as well as in the federal capital Brasília.
Police said they found evidence that employees and former employees of the bank were fraudulently sending money to the debt collection firms as part of the scheme.
Subsequently, the companies involved returned part of the money to the bank as compensation for participating in the fraud, police said. ($1 = 3.9594 reais) (Reporting by Pedro Fonseca in Rio; Writing by Ana Mano; Editing by Jeffrey Benkoe and Susan Thomas)