The government of Brazil's new President Michel Temer scrambled on Tuesday to distance itself from a multibillion-dollar corruption scandal that broke less than a week after he took office, involving fraud in the country's largest pension funds, Reuters reported
The new corruption case could hamper the conservative Temer's efforts to restore credibility and turn the page on the leftist government of impeached President Dilma Rousseff
Police on Monday arrested five people linked to fraudulent investments made by four huge pension funds of state-run companies. The investigation snared dozens of businessmen and fund managers suspected of involvement in a fraud scheme valued at around 8 billion reais ($2.5 billion), including the chief executive of the world's biggest beef exporter.
The coveted appointments of directors to the funds' boards were made by political parties and the probe is expected to spread to Brazil's political establishmen.
Temer's office said the appointments were made during the 13 years of Workers Party rule that ended with Rousseff's removal from office last week, and the "irregularities" uncovered by the police had nothing to do with the current administration.
"The Workers Party appointed the pension fund directors from the moment it took office in 2003 and they were closely linked to the unions," said a Temer aide who asked not to be named.
The investigation focuses on investments in overpriced assets, including private equity funds with artificially inflated share prices, according to the federal police.