FILE PHOTO: Antonio Palocci (L), former finance minister and presidential chief of staff in recent Workers Party (PT) governments, is escorted by federal police officers as he leaves the Institute of Forensic Science in Curitiba, Brazil, September 26, 2016. REUTERS/Rodolfo Buhrer/File photo

BRASILIA (Reuters) - Former Brazilian Finance Minister Antonio Palocci has struck a plea deal with federal police, newspaper O Globo reported on Thursday, raising the stakes in a corruption scandal engulfing high-ranking politicians and prominent businessmen.

Representatives for Palocci and the federal police were not immediately available for comment.

Palocci served as Finance Minister under former President Luiz Inácio Lula da Silva, who is currently serving time for taking bribes, and as chief of staff under Lula’s successor Dilma Rousseff.

He was arrested in September 2016 and sentenced to 12 years in prison for corruption and money laundering.

His testimony could fuel new investigations and lead to arrests, O Globo said, citing an unnamed source close to the matter.