Mary O’Grady untangles the Brazilian corruption scandal alphabet soup:
Trickle-Down Corruption in BrazilThe rot starts with Petrobras and with the opaque national development bank.
In 2014 Brazilian prosecutors began to probe a money-laundering racket at a car wash in Brasilia. The Petrobras corruption uncovered by “Operation Car Wash” turned out to be like pulling on the loose thread of a king-size blanket. It unraveled the Lula narrative that Petrobras is a carefully guarded national treasure, operated for the benefit of Brazilians. It also led investigators to the web of corruption run by Odebrecht and Braskem, two companies that benefit from BNDES project financing.
What is more, as the Journal’s Samantha Pearson reported last week, the “ ‘Car Wash’ case has encouraged local prosecutors to dig into hundreds of bribery scandals, paralyzing cities around the country.”
During the 1995-2003 presidency of Fernando Henrique Cardoso, economically liberal technocrats made an effort to pry political fingers off Petrobras by offering minority shares to private capital and professionalizing its board and management. Lula, who succeeded President Cardoso, framed that as surrendering the patrimony of the people to evil capitalists. To push back, he and his Workers’ Party packed the executive level of the company with political appointees and gained influence on the board.
One important contractor for Petrobras was Odebrecht. Both the Odebrecht and the Braskem plea agreements, while not naming names, describe individuals instrumental to the bribery schemes. In both cases there is at least one “executive at Petrobras,” and more than one elected official. The Braskem plea cites two “high-level” members of the executive branch and two government ministers. Petrobras says it is cooperating with Brazilian investigators.
The Odebrecht agreement describes a network of shell companies and a special Odebrecht unit called the Division of Special Operations. A U.S. Justice Department press release in December called this a “Department of Bribery.”
Former Odebrecht CEO Marcelo Odebrecht is serving a 19-year sentence on corruption charges.
And, by the way, BNDES was to finance Odebrecht’s renovation of Cuba’s Port of Mariel, “but Brazilian backing for the Castro military dictatorship is a state secret.”
Read the whole thing.
Prior Odebrecht posts.