Former Rio State Governor Sérgio Cabral has denied wrongdoing after being arrested and accused of embezzling $65 million (£52 million/€61 million) due to be spent on construction projects, including ones connected to the Olympic and Paralympic Games.
Cabral, Governor from 2007 until 2014, is accused of taking a five per cent cut on every contract negotiated to construct buildings in Rio de Janeiro.
This allegedly included upgrade costs at the Maracanã Stadium where the Olympic and Paralympic Ceremonies took place as well as the final of the FIFA World Cup in 2014.
He is also accused of money laundering and criminal conspiracy.
It is claimed this all contributed to the perilous condition of the State Government coffers today after a state of "public calamity" was declared earlier this year.
The Government's inability to pay funds owed to the Rio 2016 Organising Committee is thought to have contributed to the failure to pay staff and contractors who worked on the Games.
It also comes amid health and education service cuts to the people of Rio.
Cabral, whose tenure as Governor was also dogged by corruption allegations, has denied wrongdoing.
According to Globo, he claims to have a "clear conscience about the absurd lies" he has been accused of while he "believes in justice" to prevail.
A request for an enquiry into all construction contracts associated with the Olympics and Paralympics was filed by Rio de Janerio Councillors earlier this year.
Five companies implicated in the still ongoing "Operation Car Wash" Brazilian investigation were also involved in Olympic construction in Odebrecht, OAS SA [OAS.UL], Andrade Gutierrez SA, Queiroz Galvao SA and Carioca Christiani Nielsen Engenharia SA.
This does not necessarily mean there was any wrongdoing.
Cabra is the second former Rio State Governor to be arrested in the last week.
Anthony Garotinho, who served in the position from 1999 until 2002, was also detained after being accused of running a vote-for-cash scheme in this year's election.