Brazil’s new anti-corruption law: hard to read

January 31, 2014

The Economist, 01/29/2014

At firstblush, it is just what the doctor ordered. Brazil’s new “Law to Combat Corruption”, which went into effect on January 29th, honours the country’s commitment to curb palm-greasing under the OECD’s anti-bribery convention. By focusing on the corruptors—which could be any firm operating in Brazil, including foreign ones without a permanent presence—it complements the “Administrative Improbity Law” of 1992 that targeted crooked public officials. And it comes at an auspicious time, as the government prepares to dole out more contracts linked to the football World Cup in June and the 2016 Olympic Games in Rio de Janeiro—and against the backdrop of scandals involving alleged backhanders paid by Alstom and Siemens, two European engineering giants, to Brazilian officials.

In many ways the Brazilian statute is harsher than similar remedies elsewhere. Fines slapped on firms can reach 20% of their gross annual revenue or, if turnover is hard to determine, 60m reais ($25m). Unlike America’s Foreign Corrupt Practices Act (FCPA), it requires no proof of bosses’ intent or knowledge: so long as the charged firm benefits from corrupt acts committed by an employee (even one acting through a subsidiary or a subcontractor) it is on the hook. Unlike Britain’s Bribery Act, it does not regard robust internal safeguards as a statutory defence (only as a potential mitigating factor). Unlike either, it allows courts to dissolve a company in particularly egregious cases.

But then graft is a bigger ill in Brazil, which ranks 77th out of 177 countries in the corruption-perceptions index compiled by Transparency International, a Berlin-based lobby. Bribes discourage domestic as well as foreign investment, according to José Ricardo Coelho or FIESP, São Paulo state’s main business lobby, which has embraced the new law with gusto. If accompanying regulations are implementation are clear and consistent, Mr Coelho argues, the law will be a boon for business.

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Brazil to investigate ex-president Lula in vote-buying scandal

April 8, 2013

Reuters, 04/06/2013

Brazilian federal prosecutor has opened an investigation into allegations that former President Luiz Inacio Lula da Silva was involved in a vote-buying scheme in Congress that led to the conviction of close aides for corruption.

The federal prosecutor’s office said in a statement late on Friday it asked the federal police to probe accusations of a businessman at the centre of the corruption case, Marcos Valerio, who alleged that Lula not only knew about the illegal scheme but received money from it.

Lula has repeatedly denied the allegations that he knew of the vote-buying scandal known as the “mensalão,” under which operatives from the ruling Workers’ Party paid lawmakers in Congress to back the government’s legislative agenda. The scandal, which erupted in 2005, almost brought down Lula’s government at the time and led to the biggest political corruption trial in Brazilian history.

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Brazil opens inquiry into claims of wrongdoing by ex-president

April 8, 2013

Simon Romero – The New York Times, 04/06/2013

Brazil’s Public Ministry, a body of independent public prosecutors, has begun an investigation into a claim connecting former President Luiz Inácio Lula da Silva to a vast vote-buying scheme that involved the channeling of funds to the governing Workers’ Party.

The inquiry, which was announced in the capital, Brasília, on Friday and comes after several months of analyzing testimony, opens a new phase in what has arguably been Brazil’s largest corruption scandal, already involving the conviction of Mr. da Silva’s powerful former chief of staff, José Dirceu de Oliveira e Silva, on conspiracy and bribery charges last year.

The move by the Public Ministry, which asked the federal police to carry out the investigation, is thought to be the first time that Mr. da Silva has been directly investigated in connection to the scheme, called the mensalão, or big monthly allowance, for the regular payments that some lawmakers received. The scandal emerged in 2005, during Mr. da Silva’s first term as president. At 67, he remains a towering figure in Brazilian politics.

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Dilma faces mounting difficulties

January 3, 2013

The Economist, 12/13/2012

The administration of President Dilma Rousseff and the ruling Partido dos Trabalhadores (PT) have been put on the defensive following a new corruption scandal as well as recent fall-out from the largest corruption trial in Brazilian history, known as the mensalão (“big monthly stipend”), in which several PT officials have been sentenced to prison by the Supreme Court. Moreover, Brazil’s economy is struggling to recover from a slowdown that began in 2011, despite the government’s stimulus measures. Even though unemployment is at historically low levels, these developments threaten to erode Ms Rousseff’s popularity and complicate the political scene in 2013.

Political rivals from allied parties and the opposition also have begun to stir. In addition, the president faces a mobilisation of political forces in Congress which are opposed to her recent veto of parts of a controversial oil royalties bill. All this points to a more fluid political environment than previously expected in 2013, when Ms Rousseff will be preparing the ground for a re-election bid at the October 2014 elections.

In the latest corruption case, a federal police investigation code-named Porto Seguro has led to arrests and the indictment of several government officials, including the head of the president’s office in the state of São Paulo, Rosemary Nóvoa de Noronha; the deputy attorney-general, José Weber Holanda; and brothers Paulo Vieira and Rubens Vieira , who were political appointees at Brazil’s water and aviation regulatory agencies, respectively.

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A healthier menu

December 21, 2012

The Economist, 12/22/2012

SO RARELY has political corruption led to punishment in Brazil that there is an expression for the way scandals peter out. They “end in pizza”, with roughly the same convivial implication as settling differences over a drink. But a particularly brazen scandal has just drawn to a surprisingly disagreeable close for some prominent wrongdoers. The supreme-court trial of the mensalão (big monthly stipend), a scheme for buying votes in Brazil’s Congress that came to light in 2005, ended on December 17th. Of the 38 defendants, 25 were found guilty of charges including corruption, money-laundering and misuse of public funds. Many received stiff sentences and large fines.

The supreme court must still write its report on the trial, and hear appeals—though it is unlikely to change its mind. So in 2013 Brazilians should be treated to an unprecedented sight: well-connected politicos behind bars. José Dirceu, who served as chief of staff to the former president, Luiz Inácio Lula da Silva, was sentenced to almost 11 years; Delúbio Soares, former treasurer of the ruling Workers’ Party (PT), got almost nine. Under the penal code, at least part of such long sentences must be served in jail. The justices also decided that the three federal deputies found guilty will automatically lose their seats if and when those verdicts are confirmed.

Lula was not charged, and has always insisted he knew nothing of the scheme. But Marcos Valério, a former advertising man sentenced to 40 years, claims to have evidence that Lula knew what was going on, and that some of the dirty money paid his personal expenses. These allegations may be merely a desperate attempt by a condemned man to bargain down his jail term. The attorney-general characterised Mr Valério as a “player”, and said his claims should be treated with caution. But if he has significant new evidence the mensalão may yet rumble on.

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Brazil’s Lula knew about vote buying scheme – newspaper

December 11, 2012

Reuters, 12/11/2012

Former Brazilian President Luiz Inacio Lula da Silva knew about and used funds from a far-reaching vote-buying scheme to pay for personal expenses, according to testimony by a convicted former consultant to the ruling Workers’ Party.

The testimony, reported on Tuesday by the Estado de S.Paulo newspaper, was given in September to Brazil’s attorney general’s office by Marcos Valerio, an advertising executive recently convicted as a bagman in the scheme.

Valerio also testified that an aide to the former president made veiled threats when the scandal erupted in efforts to keep him quiet, the newspaper said.

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Will Brazil’s ‘mensalao’ corruption trial bring change?

December 7, 2012

Joao Fellet, Alessandra Correa – BBC Brasil, 12/07/2012

When, four months ago, Brazil’s Supreme Court began to judge one of the largest political scandals in the country’s recent history, many wondered if the trial could really deliver a decisive blow against corruption.

As the case approaches its end, a total of 25 out of 37 defendants have been convicted, some of them key political figures.

There is still room for those who were convicted to appeal, but few think the court will change its ruling and absolve them.

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