Odebrecht testimonies detail extent of corruption in Brazil
Huge bribery probe leads some to question robustness of country’s ‘young’ democracy
When Brazilian construction group Odebrecht was building one of the country’s biggest hydroelectric power plants, the Santo Antônio dam in the Amazonian state of Rondônia, it left nothing to chance.
The company, which is now at the centre of Brazil’s biggest corruption investigation, allegedly bribed almost everyone associated with the project to ensure it went smoothly.
Politicians, police, union bosses and the region’s indigenous leaders were all allegedly paid off to eliminate any opposition, according to testimony given by former Odebrecht executives submitted to the Supreme Court.
The indigenous chiefs had their own code name, “tribe”, on a software system used by Odebrecht to keep track of the bribes and kickbacks paid on hundreds of projects throughout Brazil. “Sums were paid regularly to the indigenous leaders via deposits in their bank accounts,” Henrique Serrano do Prado Valladares, a former Odebrecht executive, said in testimony provided to prosecutors in exchange for leniency.
What began as a probe into corruption at state-owned oil company Petrobras — operation Lava Jato, or “Car Wash” — has now expanded to include Odebrecht, one of its major contractors. The extent of Odebrecht’s bribery in the Santo Antônio dam and other projects has been detailed in a series of plea bargains from 77 former executives recently filed with the Supreme Court.
It provides the most detailed evidence so far of how far corruption has penetrated into society. Television station Globo News described the testimony as a 900-hour “corruption tutorial”.
The Supreme Court has authorised investigations into 74 cases involving serving politicians and handed just over 200 more to the lower courts for processing, including those of three former presidents. Michel Temer, current president, has been implicated in the plea bargains but vehemently denies wrongdoing. Analysts fear the corruption allegations could hinder his ability to revive the recession-hit economy through budget reforms, including an overhaul of the pension system.
The Odebrecht revelations also raise serious questions over how effective the Lava Jato investigation will be in ending corruption in the long term. “The frontiers in Brazil between the private sector and the state have always been very blurred,” said Carlos Melo, a political scientist at São Paulo’s Insper university. “Unfortunately, it is not possible to say that this [Odebrecht] is an exception.”
Just how blurred has rarely before been so starkly revealed. In their testimony, former Odebrecht executives showed how they not only routinely paid off anyone who stood in the way of their projects, but that the practice was so brazen they came to treat it almost as a joke.
Regular alleged recipients of bribes, from presidents to the lowest public servants, were given flippant nicknames on the spreadsheets used to keep track of the payments. The software system was operated by a department at Odebrecht known as the “structured operations” section.
Luiz Inácio Lula da Silva, the former president, for instance, was allegedly called simply “amigo”. Another ex-senator with Mr Lula da Silva’s Workers’ Party was known as “Ferrari”. Former opposition leader and now Temer ally, Aécio Neves, was called “mineirinho”, after his home state of Minas Gerais. Other recipients were given less flattering names, such as “ugly”, “dwarf” or “Barbie”. All politicians named in the plea bargains deny wrongdoing.
Football references were also common. Arthur Maia, the politician from Mr Temer’s ruling coalition in charge of pushing through pension reform, was named as a “volante”, or midfielder, with the Brazilian team Internacional, prosecutors said in a document filed with the Supreme Court.
In Odebrecht parlance, Internacional was code for Mr Temer’s Brazilian Democratic Movement Party, of which Mr Maia was then a member, and volante meant a representative from the lower house of congress. Mr Maia has denied receiving illegal payments.
Analysts say that in a country in which corruption forms a shadow system beneath the official veneer of rules and regulations, only root-and-branch reform will eliminate it. But there are ominous signs that corruption in Brazil went well beyond Odebrecht and Petrobras.
Insper’s Mr Melo pointed to a recent scandal over the payment of bribes to health inspectors in Brazilian meat plants, which shows that corruption is more widespread and deep-seated.
He noted how Brazil suffered a major federal political scandal, usually related to vote-buying in congress or campaign finance, about every decade. But the same type of scandals also occurred at the state and municipal levels, he said.
Electoral reform might help solve the problem. But regulatory authorities have shown an inability to properly track corruption in politics and the civil service on a day-to-day basis.
Odebrecht’s plea bargains, for instance, mention payments to officials from the government’s fiscal watchdog and kickbacks to an official running the investment arm of the government unemployment benefits fund.
One explanation, according to Mr Melo, was that Brazil was still a relatively “young” democracy that had yet to “institutionalise” its system of checks and balances to eliminate corruption.
“It’s bad,” Mr Melo conceded, adding: “Not all of Brazil is like this. But there is a lot of this in Brazil.”
With additional reporting by Carina Rossi in São Paulo
https://www.ft.com/content/e38e50d8-28f3-11e7-9ec8-168383da43b7
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