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Last Updated: Monday, 6 September, 2004, 15:41 GMT 16:41 UK
Brazil uncovers corrupt officials
By Tom Gibb
BBC correspondent in Sao Paulo

President Luiz Inacio Lula da Silva
Lula's government may escape the fall-out
Federal prosecutors in Brazil say they have identified 137 politicians and more than 400 government officials involved in a corruption scandal.

Prosecutors believe between $30bn and $60bn was illegally sent abroad between 1996 and 1999 - equivalent to up to a quarter of Brazil's national debt.

Most of the money is believed to be from corruption and drug smuggling.

It is potentially the largest corruption scandal to hit Brazil in more than a decade.

The case is being described by local commentators as a time-bomb in Brazilian politics.

'Blind eye turned'

The money was sent through a provincial bank called the Banestado.

Prosecutors said last week that had identified 137 politicians and 411 government officials they believe are involved.

While they are not giving out names, these are believed to include senior members of Congress.

Several top opposition leaders are being fingered by the national press.

Officials of the Central Bank in office at the time are also under suspicion for turning a blind eye to the scheme.

The scandal is more likely to hurt the opposition than the government of President Luiz Inacio Lula da Silva, who was only elected to office two years ago.

His Workers' Party faces a crucial test in mid-term elections early next month.

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