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Story by The Wall Street Journal

Brazil’s federal police arrested João Vaccari Neto, the treasurer of Brazil’s ruling Workers’ Party, or PT, as part of an investigation of alleged corruption involving contracts between state-run oil firm Petroleo Brasileiro SA and construction firms.

Mr. Vaccari is accused of receiving “irregular donations” from companies for the party, according to a federal police spokesman. The spokesman didn’t elaborate on the allegation and said more details would be given at a news conference later Wednesday.

A Workers’ Party spokeswoman wasn’t immediately available for comment.

Earlier this month, Mr. Vaccari testified before a congressional committee investigating allegations of kickbacks and bribery at Petrobras and said donations to his party were all legal and approved by the country’s electoral court.

The donations to PT were similar to those made by the companies under investigation to many other political parties, Mr. Vaccari told the committee. Brazilian police and prosecutors allege Petrobras executives conspired with many of the company’s suppliers to inflate the value of contracts.

The extra money was then skimmed and distributed among the Petrobras executives and several political parties, according to investigators. Executives of construction companies have been arrested during the investigation, and earlier this year, Brazil’s Federal Supreme Court approved investigations of dozens of politicians.

Mr. Vaccari denied in his testimony ever discussing donations or the PT’s finances with former Petrobras executive Pedro Barusco. Mr.Barusco has turned state’s evidence and admitted to participating in the scheme. Mr. Barusco told the committee in testimony in March that he had discussed bribes with Mr. Vaccari.