By Gram Slattery
RIO DE JANEIRO, July 4 (Reuters) - Police in Rio de Janeiro arrested 43 people on Thursday for allegedly taking part in a murderous gang that extorted companies providing services to state-run oil company Petrobras and established a secret cemetery where it disposed of rivals.
The arrests underline the growing power of militias in and around South America's third largest city, comprised in part of retired and off-duty police officers, who control the distribution of utilities and basic goods for millions of residents.
It also illustrates the growing threat of militias and other organized crime groups to parts of Brazil's oil and gas sector. Investigators said the militia monopolized the distribution of cooking gas in the hardscrabble city of Itaboraí and even extorted companies transporting workers to Petrobras' uncompleted Comperj refinery.
"We've managed to identify, up to now, at least 77 people in this organization, lawyers and police among them," Romulo Santos, a Rio police organized crime investigator, said in televised remarks.
"Initially, they acted to intimidate the population, executing rivals, criminal rivals, often during the day. Starting in the second half of last year ... we started to identify a large amount of disappearances. During the investigation, we even identified where there could be a clandestine graveyard."
Police said the organization frequently maimed and tortured victims, and was likely involved in a mass shooting in a bar in Itaboraí in January that killed 10 people.
Brazilian President Jair Bolsonaro, who took power in January, has occasionally hailed the militias as a preferable alternative to other organized crime groups that operate in Brazil's cities. Critics say their methods are little different than the groups they displace.
Itaboraí, a city of 240,000 located northeast of Rio proper, is home to the Comperj refinery, construction of which has stalled in recent years after it was caught up in a corruption probe. Petroleo Brasileiro SA, as Petrobras is formally known, has booked some 6.5 billion reais ($1.71 billion) in writedowns for overpriced works and services at the facility.
The company is in talks with China National Petroleum Corp to help finish the refinery and possibly give a shot of adrenaline to the beleaguered city, but negotiations have moved slowly.
Neither Petrobras nor CNPC immediately responded to a request for comment.
As of Thursday morning, police were seeking to make additional arrests, local media reported. One leader of the group, they said, had escaped by jumping out a fourth-story window. (Reporting by Gram Slattery; editing by Jonathan Oatis)