Brazil's Rousseff warned of illegal campaign donations, donor to say: paper

Suspended Brazilian President Dilma Rousseff attends a news conference with foreign media in Brasilia, Brazil, June 14, 2016. REUTERS/Ueslei Marcelino (Reuters)

BRASILIA (Reuters) - Marcelo Odebrecht, the former chief executive of Latin America's largest construction company, will admit in plea bargain testimony that he personally oversaw illegal campaign donations for suspended President Dilma Rousseff in 2010 and 2014, newspaper Folha de S. Paulo said on Tuesday. The newspaper said Odebrecht will acknowledge having warned Rousseff on May 26, 2015 in Mexico that prosecutors were about to discover illegal transfers to Rousseff's re-election strategist, Joao Santana. Odebrecht was arrested 24 days later as police deepened an investigation on a massive kickback scheme at state-run oil company Petrobras. Folha said that under the terms of the plea agreement Odebrecht will testify that Rousseff did not pay attention to his warning. Folha did not say how it obtained that information. Rousseff confirmed in a statement to the press that she met with Odebrecht in May 2015 in Mexico but said she never discussed campaign donations with him. A spokeswoman at Odebrecht's corporate offices declined to comment on the newspaper report. In Brazil, plea bargain testimony to prosecutors is confidential until approved by a judge. The strongest signal Odebrecht was seeking to collaborate came on June 2, when Federal Judge Sergio Moro suspended one of several lawsuits against Odebrecht executives for 30 days. Marcelo Odebrecht, the scion of the family that controls the company, formally known as Odebrecht SA, was sentenced to 19 years in prison after being convicted of corruption and money laundering in the Petrobras case. Under Brazilian law, plea bargain deals to reduce jail time can take place after sentencing in certain cases. As a consequence of the Petrobras-focused corruption probe, known in Brazil as "Operation Car Wash," many of Odebrecht's 15 subsidiaries are refinancing up to 35 billion reais ($10.4 billion) in loans and stepping up asset sales. Rousseff was suspended last month to face a Senate trial over allegedly breaking budget laws. She has repeatedly denied any wrongdoing. ($1 = 3.37 reais) (Reporting by Silvio Cascione Editing by W Simon)