BRASILIA, Sept 5 (Reuters) - Brazil on Monday banned IESA Oil & Gas from government work for paying bribes, the third construction and engineering company barred in the massive graft and political kickbacks scandal involving contracts with state oil company Petrobras.

The Ministry of Transparency, Brazil’s primary anti-corruption agency, said IESA would not be able to bid for new government contracts for at least two years, and lifting the ban will depend on repayment of losses to Petrobras.

Brazilian builder Mendes Junior Engenharia was barred from bidding for government contracts in April and the local unit of Swedish construction company Skanska AB was banned in May.

All of the banned companies have denied wrongdoing. Skanska, the world’s No. 5 construction firm, has challenged the Brazil government decision to ban its subsidiary from new contracts.

The ministry said in a statement that IESA took part in a cartel that fixed prices on contracts with Petróleo Brasileiro SA, as the state-led oil company is formally called.

It said IESA used a fictitious consultancy contract to pay bribes to Paulo Roberto Costa, the former Petrobras director of refining and supply who was arrested in March 2014 at the start of the corruption investigation dubbed “Operation Car Wash” by Brazilian police. Costa admitted involvement in the graft scheme.

Dozens of construction company executives have been arrested in the probe and some 50 politicians are under investigation in a scandal that has shaken Brazil’s political establishment to the core and contributed to the impeachment of former president Dilma Rousseff who was removed from office last week.

IESA representatives did not immediately respond to requests for comment.

Of the 29 companies investigated for involvement in the bribery scheme, three have been banned and nine are negotiating leniency deals that require recognition of guilt and repayment of damages, a ministry spokesman said. Accusations against three others have been dropped.

The ministry had been called the Comptroller General’s office, but was renamed by the new government of President Michel Temer, who has vowed to crack down on corruption in Brazil. His government, however, has been hit by corruption allegations that have forced three cabinet minister to resign. (Reporting by Anthony Boadle, editing by G Crosse)