Brazil’s Odebrecht Bribe Bug Has Already Infected 11 Countries

Despite their different political affiliations and ideologies, Colombian President Juan Manuel Santos, former Brazilian President Luiz Inácio Lula da Silva, and former Peruvian President Alejandro Toledo have one rather damning connection: their futures are tied to the construction company responsible for the biggest corruption scandal in history.

Just months after becoming the world’s newest Nobel Peace Prize laureate, Santos received last week the questionnaire from the National Electoral Council (CNE) to respond to allegations that he received illegal campaign funds from Brazil’s Odebrecht.

Lula, who also was in court last week on bribery-related accusations in connection with a different construction company, was also recently implicated in more than one scheme of the Odebrecht scandal, which could dampen his 2018 presidential bid.

Toledo, on the other hand, was ordered to pre-trial detention for allegedly receiving US$ 20 million in bribes from the construction behemoth, though he has been allegedly on the run since. Interpol issued a red-alert notice to 190 member countries in an attempt to capture him, but Toledo, who is likely in California, can’t be detained unless a US judge approves his capture.

Toledo has, however, communicated through social media affirming his innocence and declaring he is being persecuted for his anti-poverty ideologies by his “political enemies who do not believe in democracy, who believe they must take away the rights of the poor – the right to learn to fish.”

Odebrecht employees and representatives have admitted to bribing government officials and political parties across three continents, particularly Latin America, in schemes starting as early as 2001 to win public sector contracts.

The construction firm’s CEO Marcelo Odebrecht is serving a 19-year prison sentence, following last year’s conviction for paying more than US$ 30 million in bribes to executives of Brazil’s state-run oil company Petrobras.

However, what started as a country-wide investigation, dubbed Operation Car Wash (Operação Lava Jato) in Brazil, has turned into a tsunami engulfing Latin America with no signs of retreating in sight.

The biggest shock came in December when Odebrecht, together with Braskem, a Brazilian petrochemical company, pleaded guilty to bribery charges in the United States, paving the way for the largest anti-corruption settlement in history: the two companies agreed to pay a combined total penalty of at least US$ 3.5 billion to authorities in Brazil, the United States, and Switzerland.

As a result of the plea agreement, Odebrecht executives began to confess to bribery arising from the company’s contracts in fellow Latin American countries and evidence of the corruption cascaded down across the continent.

Brazilian Roots

The scandal in Brazil in entering its fourth year of spotlight since investigations ended the company’s undetected corruption streak. Operation Car Wash has since unearthed evidence of US$ 349 million in bribes in the country and has partly contributed to the impeachment of former President Dilma Rousseff by garnering public support against her government.

Accusations also extend to Dilma’s vice president and now current president, Michel Temer, who could lose his mandate if the pair is convicted of accepting bribe money from Odebrecht and other construction firms to finance their 2014 campaign.

Dilma and Temer, political foes since the impeachment as his party was responsible for opening the proceedings, will face trial together scheduled to begin June 6, a process that could last a year before a verdict is reached. To heighten the political insecurity in Brazil, the three next men in line to succession have also been implicated in bribery allegations by an Odebrecht executive.

Next year’s elections may seem like an opportunity for a new beginning, but the growing number of accusations against high-profile politicians, especially those against Lula who remains a popular figure in Brazil and asserts he is illegitimately being targeted for political reasons, offers little solace.

Among other reasons, having Lula out of the race could further empower right-wing extremist Jair Bolsonaro, an evangelical known for his hate speeches against women, blacks, indigenous people, members of the LGBTQ community, and other minorities.

Odebrecht’s Grip

Odebrecht has confessed to paying US$ 98 million in bribes to Venezuela’s Hugo Chávez and his successor Nicolás Maduro over the last decade. If the allegations are true, Venezuela has received the most bribes from the construction group outside of Brazil.

Next on the list is Panama with US$ 59 million for which 17 executives and former officials have been charged while President Juan Carlos Varela has been accused.

Varela, who had been advocating for proposed charges to be filed, became implicated in February by one of the partners of Mossack Fonseca — the law firm at the center of last year’s Panama Papers scandal — who said Varela admitted to him he accepted bribes from Odebrecht, accusations Varela has denied. Peruvian authorities, similarly to Varela, had been taking aggressive measures to fight Odebrecht-related corruption involving US$ 30.4 million in bribes until their own names became implicated.

Toledo, as well as former President Alan García, are being investigated by Operation Car Wash while a third former president, Ollanta Humala, has been implicated by Marcelo Odebrecht himself, but he has not been named in the investigations.

In Guatemala, where US$ 18 million in bribes are estimated, investigators have cited ex-President Otto Pérez Molina, ex-Vice President Roxana Baldetti – both of whom are currently in prison for unrelated charges – and former Minister Alejandro Sinibaldi, who has been on the run since last year in connection with another investigation.

Similarly to the situation in Brazil, the accusations against Colombia’s Juan Manuel Santos could tarnish next year’s election, given that Santos’ political opponent, Oscar Iván Zuluaga, as well as businessmen, congressmen, ministers, and other high-profile politicians have become implicated in the investigations relating to suspected US$ 11 million in bribes in Colombia, leaving little untainted names on the table for the candidacy.

Besides the countries whose top leaders are facing direct Odebrecht-stained accusations, investigations have also reached other Latin American countries unearthing accusations against business executives and lower-level officials.

Trailing behind Venezuela’s hefty sum is the Dominican Republic with US$ 92 million in admitted bribes by Odebrecht, in which local company representatives have been cited. The bribery amount in Argentina is estimated at US$ 35.5 and incriminates a former minister, Julio de Vido, and the director of the Federal Intelligence Agency and a member of President Mauricio Macri’s inner circle, Gustavo Arribas. Both denied all accusations.

In Mexico, the amount cited totals US$ 10.5 million and incriminates Mexico’s state-run oil company, Pemex, though no names have been cited yet by investigators. Lastly, though bribe estimates for Ecuador reach US$ 33.5, investigations have moved slowly and no one has been accused. Investigation efficiency could improve as a result of the newly formed cooperative between Ecuador and Colombia to investigate Odebrecht-related crimes in both countries.

What Needs to Be Done

When US$ 787 million in bribes spanning 11 countries goes unnoticed for more than a decade, it points to a sequence of systematic deficiencies that allows for such corruption to flourish.

In response to the Odebrecht scandal, the secretariat of Transparency International issued five specific recommendations to help combat it, most of which focuses on increasing transparency and coordination between different task forces.

But a critical recommendation put forth by the watchdog group states that agents and companies accused of facilitating or funding corruption schemes, such as the Panamanian law firm Mossack Fonseca and Brazil’s National Development Bank (BNDES), should be sanctioned and the resources generated by fines and settlements should be used to fund corruption prevention programs, social accountability and educational outreach, similar to the Siemens Integrity Initiative established by the German company after its corruption and bribery scandal, an initiative that has yielded results.

On the positive side, prosecutors from ten Latin American countries plagued by the Odebrecht scandal signed earlier this year in Brazilian capital Brasília a joint cooperation agreement to investigate bribery schemes across the region, an initiative Transparency International has lauded.

The next immediate step is to put pressure on the Brazilian Congress to approve anticorruption measures prosecutors presented to Congress in 2015, policies that lawmakers continue to stall and that Transparency International deems “indispensable to avoid impunity and assure a positive outcome of these investigations.”

Whether authorities will listen to these policy recommendations is unclear, but investigations continue to unravel despite top-down barriers, which at least points to progress.

Manuella Libardi is a Master’s student of International Relations at the Barcelona Institute of International Studies (IBEI), from Brazil. She holds an undergraduate degree in journalism and English.

This article appeared originally in https://www.opendemocracy.net/

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Eike Batista talks in the Brazilian senate about corruption at BNDES - Wilson Dias/ABr

Once World’s Eighth Richest Man, Brazilian Gets 30 Years in Jail for Corruption

A Brazilian businessman famous for amassing and then losing a multi-billion-dollar fortune has been ...

It seems the future never arrives in Brazil What Lies Ahead in Brazil? Brazil Has No Exemplary Past or Present. But What Lies Ahead for the Country? Europeans, US, developed country, developing country. Bolsonaro, future B. Michael Rubin For years, experts have debated what separates a developing country from a developed one. The GDP (Gross Domestic Product) of a country is one simple way to measure its economic development. Another way to measure a country's progress is the extent of public education, e.g. how many citizens complete high school. A country's health may be measured by the effectiveness of its healthcare system, for example, life expectancy and infant mortality. With these measurement tools, it's easier to gauge the difference between a country like Brazil and one like the U.S. What's not easy to gauge is how these two countries developed so differently when they were both "discovered" at the same time. In 1492 and 1500 respectively, the U.S. and Brazil fell under the spell of white Europeans for the first time. While the British and Portuguese had the same modus operandi, namely, to exploit their discoveries for whatever they had to offer, not to mention extinguishing the native Americans already living there if they got in the way, the end result turned out significantly different in the U.S. than in Brazil. There are several theories on how/why the U.S. developed at a faster pace than Brazil. The theories originate via contrasting perspectives – from psychology to economics to geography. One of the most popular theories suggests the divergence between the two countries is linked to politics, i.e. the U.S. established a democratic government in 1776, while Brazil's democracy it could be said began only in earnest in the 1980s. This theory states that the Portuguese monarchy, as well as the 19th and 20th century oligarchies that followed it, had no motivation to invest in industrial development or education of the masses. Rather, Brazil was prized for its cheap and plentiful labor to mine the rich soil of its vast land. There is another theory based on collective psychology that says the first U.S. colonizers from England were workaholic Puritans, who avoided dancing and music in place of work and religious devotion. They labored six days a week then spent all of Sunday in church. Meanwhile, the white settlers in Brazil were unambitious criminals who had been freed from prison in Portugal in exchange for settling in Brazil. The Marxist interpretation of why Brazil lags behind the U.S. was best summarized by Eduardo Galeano, the Uruguayan writer, in 1970. Galeano said five hundred years ago the U.S. had the good fortune of bad fortune. What he meant was the natural riches of Brazil – gold, silver, and diamonds – made it ripe for exploitation by western Europe. Whereas in the U.S., lacking such riches, the thirteen colonies were economically insignificant to the British. Instead, U.S. industrialization had official encouragement from England, resulting in early diversification of its exports and rapid development of manufacturing. II Leaving this debate to the historians, let us turn our focus to the future. According to global projections by several economic strategists, what lies ahead for Brazil, the U.S., and the rest of the world is startling. Projections forecast that based on GDP growth, in 2050 the world's largest economy will be China, not the U.S. In third place will be India, and in fourth – Brazil. With the ascendency of three-fourths of the BRIC countries over the next decades, it will be important to reevaluate the terms developed and developing. In thirty years, it may no longer be necessary to accept the label characterized by Nelson Rodrigues's famous phrase "complexo de vira-lata," for Brazil's national inferiority complex. For Brazilians, this future scenario presents glistening hope. A country with stronger economic power would mean the government has greater wealth to expend on infrastructure, crime control, education, healthcare, etc. What many Brazilians are not cognizant of are the pitfalls of economic prosperity. While Brazilians today may be envious of their wealthier northern neighbors, there are some aspects of a developed country's profile that are not worth envying. For example, the U.S. today far exceeds Brazil in the number of suicides, prescription drug overdoses, and mass shootings. GDP growth and economic projections depend on multiple variables, chief among them the global economic situation and worldwide political stability. A war in the Middle East, for example, can affect oil production and have global ramifications. Political stability within a country is also essential to its economic health. Elected presidents play a crucial role in a country's progress, especially as presidents may differ radically in their worldview. The political paths of the U.S. and Brazil are parallel today. In both countries, we've seen a left-wing regime (Obama/PT) followed by a far-right populist one (Trump/Bolsonaro), surprising many outside observers, and in the U.S. contradicting every political pollster, all of whom predicted a Trump loss to Hillary Clinton in 2016. In Brazil, although Bolsonaro was elected by a clear majority, his triumph has created a powerful emotional polarization in the country similar to what is happening in the U.S. Families, friends, and colleagues have split in a love/hate relationship toward the current presidents in the U.S. and Brazil, leaving broken friendships and family ties. Both presidents face enormous challenges to keep their campaign promises. In Brazil, a sluggish economy just recovering from a recession shows no signs of robust GDP growth for at least the next two years. High unemployment continues to devastate the consumer confidence index in Brazil, and Bolsonaro is suffering under his campaign boasts that his Economy Minister, Paulo Guedes, has all the answers to fix Brazil's slump. Additionally, there is no end to the destruction caused by corruption in Brazil. Some experts believe corruption to be the main reason why Brazil has one of the world's largest wealth inequality gaps. Political corruption robs government coffers of desperately needed funds for education and infrastructure, in addition to creating an atmosphere that encourages everyday citizens to underreport income and engage in the shadow economy, thereby sidestepping tax collectors and regulators. "Why should I be honest about reporting my income when nobody else is? The politicians are only going to steal the tax money anyway," one Brazilian doctor told me. While Bolsonaro has promised a housecleaning of corrupt officials, this is a cry Brazilians have heard from every previous administration. In only the first half-year of his presidency, he has made several missteps, such as nominating one of his sons to be the new ambassador to the U.S., despite the congressman's lack of diplomatic credentials. A June poll found that 51 percent of Brazilians now lack confidence in Bolsonaro's leadership. Just this week, Brazil issued regulations that open a fast-track to deport foreigners who are dangerous or have violated the constitution. The rules published on July 26 by Justice Minister Sérgio Moro define a dangerous person as anyone associated with terrorism or organized crime, in addition to football fans with a violent history. Journalists noted that this new regulation had coincidental timing for an American journalist who has come under fire from Moro for publishing private communications of Moro's. Nevertheless, despite overselling his leadership skills, Bolsonaro has made some economic progress. With the help of congressional leader Rodrigo Maia, a bill is moving forward in congress for the restructuring of Brazil's generous pension system. Most Brazilians recognize the long-term value of such a change, which can save the government billions of dollars over the next decade. At merely the possibility of pension reform, outside investors have responded positively, and the São Paulo stock exchange has performed brilliantly, reaching an all-time high earlier this month. In efforts to boost the economy, Bolsonaro and Paulo Guedes have taken the short-term approach advocated by the Chicago school of economics championed by Milton Friedman, who claimed the key to boosting a slugging economy was to cut government spending. Unfortunately many economists, such as Nobel Prize winner Paul Krugman, disagree with this approach. They believe the most effective way to revive a slow economy is exactly the opposite, to spend more money not less. They say the government should be investing money in education and infrastructure projects, which can help put people back to work. Bolsonaro/Guedes have also talked about reducing business bureaucracy and revising the absurdly complex Brazilian tax system, which inhibits foreign and domestic business investment. It remains to be seen whether Bolsonaro has the political acumen to tackle this Godzilla-sized issue. Should Bolsonaro find a way to reform the tax system, the pension system, and curb the most egregious villains of political bribery and kickbacks – a tall order – his efforts could indeed show strong economic results in time for the next election in 2022. Meanwhile, some prominent leaders have already lost faith in Bolsonaro's efforts. The veteran of political/economic affairs, Joaquim Levy, has parted company with the president after being appointed head of the government's powerful development bank, BNDES. Levy and Bolsonaro butted heads over an appointment Levy made of a former employee of Lula's. When neither man refused to back down, Levy resigned his position at BNDES. Many observers believe Bolsonaro's biggest misstep has been his short-term approach to fixing the economy by loosening the laws protecting the Amazon rainforest. He and Guedes believe that by opening up more of the Amazon to logging, mining, and farming, we will see immediate economic stimulation. On July 28, the lead article of The New York Times detailed the vastly increased deforestation in the Amazon taking place under Bolsonaro's leadership. Environmental experts argue that the economic benefits of increased logging and mining in the Amazon are microscopic compared to the long-term damage to the environment. After pressure from European leaders at the recent G-20 meeting to do more to protect the world's largest rainforest, Bolsonaro echoed a patriotic response demanding that no one has the right to an opinion about the Amazon except Brazilians. In retaliation to worldwide criticism, Bolsonaro threatened to follow Trump's example and pull out of the Paris climate accord; however, Bolsonaro was persuaded by cooler heads to retract his threat. To prove who was in control of Brazil's Amazon region, he appointed a federal police officer with strong ties to agribusiness as head of FUNAI, the country's indigenous agency. In a further insult to the world's environmental leaders, not to mention common sense, Paulo Guedes held a news conference on July 25 in Manaus, the largest city in the rainforest, where he declared that since the Amazon forest is known for being the "lungs" of the world, Brazil should charge other countries for all the oxygen the forest produces. Bolsonaro/Guedes also have promised to finish paving BR-319, a controversial highway that cuts through the Amazon forest, linking Manaus to the state of Rondônia and the rest of the country. Inaugurated in 1976, BR-319 was abandoned by federal governments in the 1980s and again in the 1990s as far too costly and risky. Environmentalists believe the highway's completion will seal a death knoll on many indigenous populations by vastly facilitating the growth of the logging and mining industries. Several dozen heavily armed miners dressed in military fatigues invaded a Wajãpi village recently in the state of Amapá near the border of French Guiana and fatally stabbed one of the community's leaders. While Brazil's environmental protection policies are desperately lacking these days, not all the news here was bad. On the opening day of the 2019 Pan America Games in Lima, Peru, Brazilian Luisa Baptista, swam, biked, and ran her way to the gold medal in the women's triathlon. The silver medal went to Vittoria Lopes, another Brazilian. B. Michael Rubin is an American writer living in Brazil.

Brazil Has No Exemplary Past or Present. But What Lies Ahead for the Country?

For years, experts have debated what separates a developing country from a developed one. ...

Don’t Count on the Government Rescuing You, Brazil Tells States

Governors of at least 14 Brazilian states have threatened to declare a state of ...

Advertisement for black toilet paper.

A Brazilian Fancy Black Toilet Paper Infuriates Black Community

A Brazilian manufacturer has been blasted for appropriating the black empowerment slogan – “Black ...

Former speaker of the House, Eduardo Cunha - ABr

Brazil’s Former House Speaker and Jailbird Threatens to Blow Up Business World

In jail for fraud, Eduardo Cunha, Brazil’s former lower house speaker and chief architect ...