Brazil prosecutor calls talk about Odebrecht plea deal 'bewildering'

By Brad Brooks

CURITIBA, Brazil (Reuters) - For weeks, his possible earth-shattering testimony in Brazil's biggest corruption scandal has been the talk of the nation, filling endless pages in newspapers and magazines.

Breathless reports stated that Marcelo Odebrecht, the former chief executive of Latin America's largest construction firm, was on the cusp of turning state's witness, and he would deliver the biggest catch of all - a confession of funnelling millions in illegal campaign donations to suspended President Dilma Rousseff.

There is just one problem, said Carlos Lima, a lead prosecutor in the sprawling kickback probe at state-run oil company Petrobras : None of the above is true.

"Marcelo Odebrecht has never said a word to us, he has not spoken with a single prosecutor," Lima told Reuters from his office in the southern city of Curitiba. "It's bewildering, these stories I'm reading, saying that Marcelo has reached some deal with prosecutors. He's not even close."

Rousseff, who has denied any wrongdoing, faces impeachment in a separate Senate trial for allegedly breaking budget rules to help win re-election. She has not been accused of personal corruption, but Brazil's chief prosecutor has asked the Supreme Court for permission to investigate her for trying to obstruct the Petrobras probe.

The two-year graft investigation into Petrobras is the driving force behind Brazil's political turbulence. It has seen scores of top executives and politicians jailed amid allegations that billions were paid in bribes and stoked popular anger at Brazil's ruling class.

At the centre of it all lies Odebrecht, a firm that spans 15 divisions spread across two dozen countries and has 130,000 employees. It is responsible for most of the building behind the Olympics that will start this August in Rio de Janeiro.

If the firm's executives decide to tell all, few doubt that little of the political establishment will be left standing. Many senior politicians were named in documents seized at the company's offices as apparently receiving bribes.

Lima said he does not know who is responsible for all the false reports about Marcelo Odebrecht. "I think it is from people who are trying to both help and hurt him, those who may be exposed by any testimony he might actually give."

That significantly ratchets up the intrigue surrounding the once all-powerful head of the Odebrecht firm, now serving over 19 years in jail on corruption convictions.

"Either someone is trying to force an accord on us, which simply will not work," Lima said. "Or, even more duplicitous, somebody is releasing false information in the hope that it would destroy any accord, in the hope that Marcelo stays silent."

A spokeswoman for the Odebrecht firm, who refused to say who is legally representing Marcelo Odebrecht, said in an email the company had no comment on Lima's remarks.

Since his June 2015 arrest, the bespectacled, wiry Odebrecht, who turned his family's company into Brazil's largest employer and one of the top-five private sector groups, has maintained a defiant stance.

Before his conviction, he told a congressional panel that as a parent, he would be more upset with one of his children who tattled on the other, than the one who may have been up to mischief - indicating he would never be a rat.

But last August, his father, Emilio, former head of the conglomerate, reportedly told his son to testify so the company could minimize its financial losses.

Then in March, investigators said that in an Odebrecht raid they found a spreadsheet containing the names of over 300 public officials and others plus amounts of money paid to them, totalling tens of millions of dollars. It is not yet known how much of that may have been bribes or legal campaign contributions.

On that news, the firm announced it was ready to cooperate with prosecutors.

In addition to plea deals with individuals, federal prosecutors have separately signed five leniency deals with companies for lighter sentences in return for information. They have not identified the companies, but Odebrecht is not among them.

Lima acknowledged that Odebrecht could possibly provide the most information, given the size of the company and its deep ties to politicians. But he also said it was not certain that any request for a leniency deal from Odebrecht would be approved.

"We have one space left, there is only one company remaining that will be awarded a leniency deal with us," he said. "Maybe it's Odebrecht, maybe it's not. It depends entirely on who brings us new and substantiated information that we can use."

(Reporting by Brad Brooks; Editing by Tom Brown)