Petrobras: The Mother of All Corruption, Bribery and Money Laundering Scandals

Human Wrongs Watch

By K Rajan*

11 April 2015, World News Report — Brazilian President Dilma Rousseff is having a tough time shrugging off her role in the Petrobras controversy. She was on the board of directors of Petrobras between 2003–2010–the period when the alleged kickback and money laundering took place. 

Already 34 sitting politicians and 18 companies are being investigated in the mother of all scandalsWhat appeared to be a minor act of impropriety and oversight by oil giant Petrobras — the fourth-largest company in the world in terms of market capitalization and a host of top Brazilian politicians and business houses is unfolding into the biggest-ever deceit, bribery, kickback and corruption scandal in the world.

.

It is today like a volcano about to erupt.

.

Petrobras producing over 2 million barrels of oil per day owns oil refineries, oil tankers, is a major distributor of oil products and the world leaderin development of advanced technology from deep-water and ultra-deep water oil production.

Headquartered in Rio de Janeiro, Petrobras a semi-public multinational energy corporation is bigger than even Microsoft, BP, Industrial and Commercial Bank of China and Chevron-Texaco in terms of market value and the third most profitable company in the Americas.

Petrobras was riding high tide till February 2014 when an investigation by Brazilian Federal Police and public prosecutors called Operation Car Wash — found out Petrobras involvement in the largest corruption and money laundering scandal in Brazil’s history.

Many Brazilian politicians, businessmen and some Petrobras directors— were alleged to have set up “suspicious” contracts worth $22 billion. Twenty Seven people including João Vaccari Neto, treasurer of the Workers’ Party and Renato Duque, former head of services of Petrobras were charged with corruption and money laundering in the Petrobras scandal

The recent arrest of seven people by Brazil’s federal police in the Petrobras case is just a tip of the iceberg. The scam has every potential to violently shake up the Dilma Vana Rousseff government, already beleaguered by a weak economy and one of the highest disapproval ratings in the past 20 years of any president.

Already 34 sitting politicians and 18 companies are being investigated. Last month the Supreme Court mentioned 47 politicians who should be investigated. That is in addition to dozens of Brazil’s top construction and engineering company executives who have also been indicted.

Investigators are also probing several irregularities at Caixa Econômica Federal, Brazil’s second-largest public bank, and the Health Ministry.

Even Brazilian President Dilma Rousseff may have a tough time explaining her role in the controversy.

According to informed sources Rousseff who promised during her election campaign “to supercharge the economy while avoiding the corruption and mismanagement that have plagued other oil-rich countries in the developing world” was one of the chief patrons promoting Petrobras interests.

President Rousseff who had been Brazil’s Energy Minister from 2003-2005 was part of Petrobras board of directors between 2003–2010–the period when the alleged kickback and money laundering took place.

Petrobras was reportedly siphoning off millions of dollars of its ill gotten gains to lawmakers to funding political campaigns. Allegedly some Petrobras divisions diverted 3 per cent of their value into slush funds for political parties.

It is worth remembering that the Petrobras scandal, popularly known as Petrolão, or big oily, was being perpetrated at the same time that the Supreme Court was hearing testimony in another political bribery scandal known as the Mensalão, or big monthly payments. The Supreme Court held firm to hand down prison sentences to those convicted in the Mensalão scandal.

Mensalão was all about bribing politicians.

This episode of corruption at Petrobras has exacerbated an already weak economy where jobs across many industries are under threat.

Those who profited from this corruption must face the consequences. A strong deterrent, that is blind to privilege, both political and social, is the only way to limit a repetition of this sorry tale.

All this has upset the Brazilians who are upset with the government and asking for accountability. They want Rousseff’s impeachment.

According to Transparency International the framework to prevent corruption in Brazil is relatively strong on paper with the exception of whistleblower protection legislation.

Transparency Internationals’ research on the state of corruption in Brazil suggests that the country has made good progress in the past three years passing key anti-corruption laws, but that it is stymied by a political system that makes the cost of entering politics too high. This only encourages corruption among the political classes.

In light of all this it is unlikely that President Rousseff who started a second term in January will be impeached because of the Petrolão scandal because under the Brazilian Constitution that can only happen for misconduct in the current term.  So that means President Rousseff’s is safe.

But then an impartial and fair Investigation to bring to justice those involved in the Petrobras scandal can act as a framework for future reform.

*Source: World News Report. Go to Original.

**Photo: Dilma Rousseff receiving the presidential sash from Luiz Inácio Lula da Silva, 1 January 2011. | Author: Fabio Rodrigues Pozzebom/ABr | Agência Brasil | Wikimedia Commons

2015 Human Wrongs Watch