Fugitive Brazilian ex-banker convicted of corruption arrested in Italy

The former director of Brazil's state-owned bank, who was convicted for his role in the country's biggest corruption scandal, has been arrested in Italy after three months on the run.

Italian police tracked down Henrique Pizzolato after discovering he was travelling on a false Italian passport in the name of his brother who died in 1978. He was detained on Wednesday in the town of Maranello where he was staying with a cousin who works at the local Ferrari factory.

His arrest could now signal the start of an extradition battle between Brazil and Italy, with Italian authorities still sore over Brazil's refusal in 2009 to extradite a former Italian terrorist convicted of several murders during the country's so- called "years of lead" in the 1970s.

A former union leader linked to Brazil's ruling Workers Party, Pizzolato was sentenced to 12 years and seven months in prison for his role in the so- called mensalão scandal in which leading Workers Party officials operated a vote-buying scheme in congress. He fled Brazil last September when those convicted in the mensalão case started to be imprisoned.

Brazil’s justice minister says the government will now seek his extradition under a 1989 treaty between the two countries. However as the holder of dual Brazilian and Italian citizenship, Pizzolato can fight the request on the grounds that Italian law strictly limits the extradition of its citizens.

In 2001, Italy denied a Brazilian extradition request for the Brazilian-Italian banker Salvatore Cacciola. That decision caused anger in Brazil where Cacciola was wanted for crimes committed during the collapse of the country's Marka bank. He had fled to Italy in 2000 and was only extradited to Brazil in 2008 after his arrest in Monaco during a weekend visit to the principality.

The police colonel who led the arrest of Pizzolato described the detainee as “merely an Italian held in Italy for using false documents” for which he could receive three years.

Brazil’s federal police however believe Pizzolato falsified documents when he applied to change his status to an Italian citizen resident in the country, which could provide grounds for a possible extradition.

Relations between the two countries were strained in 2009 when Brazil granted political refugee status to Cesare Battisti, sought by Italy for his role in four murders carried out in the 1970s by the far-left Armed Proletarians for Communism group.

That decision caused fury in Italy with calls for a boycott of Brazil. In a radio interview, Brazilian-Italian politician Renata Bueno said the Battisti case could complicate efforts to extradite Pizzolato, but an official at Italy’s foreign ministry denied any linkage saying “whatever linkage with the Battisti case makes no sense”.