FOR the 20 men hanging on at the Pousada do Trabalhador, a 600-bed boarding house on the dusty outskirts of this boom town northeast of Rio de Janeiro, the dream that Brazil’s oil wealth would bring a better life was over.

    Their jobs at Comperj, a US$15-billion oil refinery being built here in Itaborai by state-run energy giant Petrobras, are gone, and their employer — a mid-sized engineering company’s bankrupt.

    The men are the latest victims of Brazil’s biggest-ever corruption scandal, a multi-billion dollar graft scheme involving Petrobras, engineering companies and politicians that is battering the world’s seventh-largest economy.

    As the scandal has deepened in recent months, key infrastructure projects have been suspended or scrapped, some suppliers have sought bankruptcy protection and job losses are mounting by the tens of thousands.

    Petrobras’ size — it is Brazil’s biggest company — amplifies the scandal. Each year it invests double the government’s entire discretionary infrastructure budget, giving it enormous power to shape Latin America’s largest economy.

    All told, economists expect the chain reaction set off by the scandal will tip an already weak economy into its worst recession in a quarter century, a harsh reversal for a country that was booming just a few years ago.

    “Our employer went bankrupt, then bankrupted us,” Ediney Morao, 38, an equipment operator from Sao Paulo told Reuters as he prepared to leave the boarding house earlier this month.

    “I took leave for Christmas and New Year, came back and suddenly, there’s no work.”

    There are tens of thousands like Morao, dependent on Petrobras’ more than US$40 billion of annual capital spending. Most job losses have come since November as police and prosecutors, backed by guilty pleas from key conspirators, unravel a web of price-fixing, bribery and political kickbacks.

    Formally known as Petroleo Brasileiro SA, Petrobras accounts for more than 10 percent of Brazil’s investment, 87 percent of oil output and all domestic fuel production. Its annual revenue equals about 8 percent of GDP.(SD-Agencies)