Brazil Police Arrest Dozens as Scandal Escalates

Brazilian police arrested dozens of corruption suspects Tuesday as the scandal around state oil company Petrobras continued to escalate, and with it the threat to President Dilma Rousseff's government.

Federal police said they had uncovered a "professional and institutionalized" bribe-paying system at construction giant Odebrecht, one of the companies implicated in a multi-billion-dollar corruption scandal that has rocked the Brazilian government.

Police staged raids in nine states across the country to execute 43 arrest warrants or temporary detention orders targeting what they said was a parallel accounting network to handle bribery payments.

Rousseff, meanwhile, attended what was described as an event "in defense of democracy and legality" at the presidential palace, where legal scholars gave speeches accusing the leftist president's opponents of violating the constitution by seeking to oust her.

"No coup!" chanted audience members, the rallying cry of the pro-government camp in the face of massive protests demanding the president's impeachment.

A congressional impeachment committee weighing the allegations against Rousseff decided not to examine explosive accusations that she used some of the proceeds from the Petrobras bribery scheme to fund her presidential campaigns.

The case against Rousseff so far deals only with alleged irregularities in government accounting procedures.

But her opponents sought to expand the accusation to include allegations from a senator charged in the Petrobras case, who said Rousseff "knew everything" about the corruption and directly benefited from it.

Rousseff's allies fired back that her opponents were trying to change the rules mid-game.

The committee ultimately agreed to set aside the new allegations to keep the process from stalling.

Rousseff's presidency appears to be in peril as she fights impeachment, protests, recession and scandal.

And her decision to call her predecessor and mentor, Luiz Inacio Lula da Silva, to the rescue backfired last week when a judge blocked his appointment as her chief of staff over pending money-laundering charges linked to the Petrobras scandal.

Lula, who presided over a booming Brazil from 2003 to 2011, is fighting a Supreme Court injunction blocking his political comeback -- and the ministerial immunity that comes with it.

Ministers can only be tried before the Supreme Court in Brazil.

A Supreme Court judge blocked the former president's cabinet appointment after the crusading anti-corruption judge leading the Petrobras probe, Sergio Moro, released a damning wire-tapped phone call between Rousseff and Lula.

In the call, the president tells her mentor she is sending him his official ministerial papers, to be used only "if necessary" -- widely interpreted as an attempt to help him dodge potential arrest.

Lula flew to Brasilia on Monday, where he has been meeting with Rousseff and trying to rally backers to oppose her impeachment.

Newspaper O Globo reported that "no one wants to speak with Lula on the phone anymore" since the damaging wire-tap was revealed.

Investigators accuse Odebrecht of colluding with competitors to divvy up Petrobras contracts over the course of a decade, paying huge bribes and then inflating the contracts by even larger amounts.

Former chief executive Marcelo Odebrecht was sentenced to nearly 20 years in prison earlier this month.

The suspects arrested Tuesday are accused of corruption, racketeering and money laundering, police said.

In an indication the scandal may reach beyond Petrobras, investigators said one of the projects for which Odebrecht paid bribes was the Sao Paulo stadium that hosted the opening match of the 2014 World Cup.

Prosecutor Carlos dos Santos Lima said that made it "clear" that the sprawling investigation "is going to touch other areas besides the oil sector."

"A lot of things are going to be discovered," he told a press conference.

Investigators say the ruling Workers' Party was directly involved in the corruption, which Petrobras estimates cost it more than $2 billion.

Rousseff chaired Petrobras during much of the period under investigation, but has not been charged.