Why is Brazil able to investigate the economic and political powers?

Gabriela Esquivada – Infobae America, 7/26/2015

Photo by Folha

Photo by Folha

Experts affirm that the country developed a balance of power that differs from other neighboring nations. Independent prosecutors, attainable justice.

In recent months the Petrobras scandal has grown like a snowball, to the point that its impact, in the near and distant future “is very unpredictable and will depend, to a significant extent, on the economic developments of the crisis,” affirmed specialist Carlos Eduardo Lins da Silva, global scholar for the Brazil Institute of the Woodrow Wilson International Center for Scholars. The former editor in chief and ombudsman of Folha de Sao Paulo adds: “Although I do not think it will happen at this moment, you cannot rule out a possible impeachment of President Dilma Rousseff.”

This mere possibility, and the overall development of the cause – in which prosecutors have charged two leading Brazilian businessmen, Marcelo Odebrecht and Otavio Azevedo, with criminal organization, corruption and money laundering – make a special case of Brazil in Latin America. In countries like Argentina, the excessive proximity between justice and the political and economic powers can be synthesized in examples like the legendary “list on a napkin” which linked judges to the President at the time, Carlos Menem, as well as the lack of resolution of the tragic terrorist attack on the Association Mutual Israelita Argentina (AMIA) in 1994, the investigation of which led to the mysterious death of its prosecutor, earlier this year in January. Furthermore, in Ecuador, the justice system is also questioned, and in Venezuela, it is even more difficult to prove the independence of the third branch of the republican power. Sérgio Giovanetti Lazzarini told Infobae that his country “has developed a set of checks and balances amongst the powers that really stands out among other comparable countries.” The Professor and Director of Graduate Studies at Insper also added: “The judiciary power is largely independent. We also have a number of control and investigative agencies that have acted independently of government (the Federal Police, the Court of Auditors, The Public Prosecutor’s Office).”  Historian Jeffrey Lesser, in  charge of the Samuel Candler Dobbs chair and head of the Department of History at Emory University agrees with him. “As a rule, the justice system (particularly the Supreme Court, STJ), operates in Brazil much more independently than in other countries. It is part of a long legacy of independence that has existed, even (believe it or not) during the military dictatorship.”

Why does the Prosecution work?

Like many Latin American nations, after the end of World War II and the beginning of the Cold War, Brazil has suffered institutional instability. But several factors helped it emerge out of dictatorship differently than its neighbors.  Thus, while relatives of those killed in the bombing of the AMIA continue to pursue justice, in Brazil the Prosecutor’s Office investigates the country’s largest company for bribes and corruption of an estimated $800 million in illegal funds – which were allegedly channeled to the Workers Party (PT) which is in power, a case that has damaged the image of president Rousseff and affected her predecessor Lula. Personal ties of top-notch figures like Odebrecht and Lula da Silva have failed to hide the scandal; justice has operated without limitation in the biggest case of corruption, which led to the investigation of thirteen senators, twenty-two congressmen and two governors in office; the arrest of former Workers’ Party treasurer, Joao Vaccari, and a request for access to recent reports to the Ministry of Foreign Affairs to explore possible extensions of the case to Venezuela.

Matthew Taylor, also a scholar at the Wilson Center and former professor at the University of São Paulo, distinguished “the various factors that have contributed to the effectiveness of the Brazilian judicial system in this case.” The first being that “judges and prosecutors are independent and have received credible assurances of such independence in the 1988 Constitution.”

Lins da Silva agreed: “The Public Prosecutor’s Office, created by the 1988 Constitution, is an independent branch of power. It is neither under the Executive nor the Legislative, or the Judiciary. In Brazil, the judiciary is independent, and the Federal Police is also very autonomous, despite being formally under the control of the executive branch. But more that Justice, the Public Prosecutor’s Office is a real force in Brazil. Its mission is to protect society and to preserve the Constitution.”

Dr. Taylor – who teaches at the School of International Service, at American University –, expanded on this first factor: “Judges and prosecutors are recruited by competitive public contests, which means that, except in the superior courts, both the judges and the prosecutors are more responsive to colleagues that politicians.” Other factors, he completed: “being a judge or prosecutor carries enormous prestige; they are an elite within the legal profession. Finally, they are extremely well paid and receive significant benefits.”

The press and the new generations, against impunity   

Lazzarini, also co-author of the book on Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond – pointed out another element contributing to the balance of powers: “We also have an independent press, which has widely exposed cases of crimes and details of investigations.”

For example, one can simply turn to Veja magazine, which has recently published the statements of businessman Leo Pinheiros, identifying former president Lula’s role, whose friendship he shared during the scandal. But perhaps the most crucial thing in order for what is written in the constitution to become grounded in reality, has been that “the generational replacement of judges and prosecutors has removed the oldest and most timid generation, formed during the military regime , and replaced it with a group that is much more aggressive in promoting equality before the law,” noted Taylor, who is also the author of Judging Policy: Courts and Policy Reform in Democratic Brazil, which won the Victor Nunes Leal Prize for Best Political Science Book.   “Both the prosecutors and the judge in this case are young, extremely well qualified and, judging by their public statements, extremely frustrated by the culture of impunity that has prevailed in Brazil. They are eager to take advantage of important changes in Brazilian law which prohibits money laundering and have no qualms about imprisoning members of society that were previously considered too powerful to be tried, such as important politicians and rich businessmen,” he explained.

What is meant by the “culture of impunity”?

— It has not been easy to combat corruption in Brazil, explains Taylor, who has studied the subject in depth and is co-editor, along with Timothy J. Power, of Corruption and Democracy in Brazil: The Struggle for Accountability —. There were laws in place that made the prosecution of politicians particularly difficult, and there were large legal loopholes that led to tolerance to money laundering and corruption. But for much of the last twenty years we have seen a slow, sustained march towards improvement, which helped stabilize the currency, and made corruption more visible. Several institutions were strengthened, such as the courts, the prosecutor’s office, the federal police, and the office of the comptroller general.

At the same time, as noted by all the experts who were consulted for this story, there was a major change in the legal framework, “driven by international treaties as well as by civil society,” explained Professor Taylor. He gave an example: “Only the end of the century [XX] the laws on money laundering hardened, and rules were changed to allow courts to prosecute cases against politicians, without having to  first consult the Congress (formerly the legislature had to vote to allow the continuation of a legal case).”

Petrobras: more Mensalão than Collor de Melo

Professor Lesser — who has studied in depth the diversity of the country, evident in his book Immigration, Ethnicity, and National Identity in Brazil, among many other award-winning books, both in English and Portuguese — became interested in the issue of Petrobras due to its various dimensions and the underlying paradox. “On one hand, over the past decade (essentially since Workers’ Party took office), the government itself has been more alert to the fight against corruption. One of the ironies of the case of Petrobras is that this “good intention” is often politicized and used against the leadership, in this case, against Lula and Dilma.”

Other records show that particularly under the management of Workers’ Party, the judiciary has been able to act independently and the prosecution enjoyed an operational capability which gave it a margin of its own power, an unthinkable deed during, for example, Fernando Collor de Mello’s time as president. As the youngest president of Brazil, he assumed office with a virtual plan of assault on the State, delegated in his campaign treasurer, Paulo Cesar Farias, and was eventually impeached by Congress – thanks to, in addition, the titanic task of investigation by the press – while justice acquitted him.

For Professor Lins da Silva, special adviser to the São Paulo Research Foundation (FAPESP) and to the Geopolitical Information Service, the Petrobras case is original and also has a history: “What we’re seeing in Brazil is completely unprecedented in our history. Top executives and even the owners of some of the largest corporations in the country are being formally charged, tried and sentenced to prison, just as was done in the Mensalão case with very important politicians. The Supreme Court has also been remarkably independent, as proven by the Mensalão trials.” On November 15, 2013 – the same day that in 1889, Emperor Dom Pedro II was overthrown and the republic was born –  the Supreme Court ordered the arrest of 12 political figures with high profile, and that is how the Mensalão case was born. The word refers to a “monthly allowance”, usually little quantities of money given to kids for them to learn how to manage money. However, this case had everything but “little quantities of money”, in fact, we are talking about monthly figures of around $12,000USD, on average, that the Workers’ Party paid to each of its allies in Congress to buy their votes.

The defendants amounted to 40, of whom 25 were convicted on charges including bribery, money laundering, embezzlement of public funds and conspiracy.”  The case ended in 2014, when the chief of staff [of President Lula da Silva], the leader of the ruling party and the president of the Chamber of Deputies were imprisoned,” summarized Taylor.

He then stressed: “The most important thing is that Brazil has derived lessons from a sustained progression of scandals.”  None of that can be said about Argentina, where the vice president, Amado Boudou, and the head of government of the City of Buenos Aires (also presidential candidate), Mauricio Macri, are being sued; and neither of Venezuela, where the political violence of those in power is marked by suspected links to drug trafficking.

“Recall that in 1992, although President Collor was impeached, the Supreme Court decided to acquit him on a technicality. He lost his political rights for eight years, but was subsequently elected senator. Now he is accused to have partaken in the Petrobras scandal, and has had his flashy cars towed by the police,” added Taylor.

“Legal institutions have learned a lot since 1992,” continued the expert. “They know what kinds of processes will be tolerated in the higher courts, they are more careful about preserving the rights of those being charged to avoid rejection by technicalities, and they have done much to attain the support of society, making it more difficult for corrupt or tolerant judges to reverse the convictions.”

The Mensalão case “has done much to show that nobody is above the law.” Professor Taylor also highlighted: “There are not many democracies in the world that may have survived the chain of imprisonments of so many powerful people. It sets a very important precedent for Brazilian democracy.”

Scandal and justice: the consequences 

Dr. Giovanetti Lazzarini, from the São Paulo University Insper, was pessimistic about the upcoming impact of the Petrobras case, but optimistic about the future: “In the short and medium term, Brazil is expected to suffer an economic slowdown, but for our future development, the controls of the balance of powers will undoubtedly have a positive impact.”

Professor Taylor also focused on the economic issue in the short term: “This has made life very uncomfortable in Brasilia,” summarized the expert. “Politicians of all parties are now watching their backs, and Rousseff’s government faces a crisis – almost as severe as those faced by the governments of the post- military period. The effects on the economy are very real, with the shrinking of Petrobras and the challenges that construction firms now face.”  For Professor Lesser, the political consequences in the short term can be broken down into three: “First, there will be a return to the great distrust of government, which existed during much of the post-Second World War period, situation that improved during President Lula. Now, it seems that the general public does not trust the political system. Second, there is a visible gap between demand and performance, public expectations and the government’s ability to meet them. Lastly, this particular case – since it involves large industries –, has helped accelerate the downward cycle of the Brazilian economy, especially with respect to the credit rating and the strength of the currency.”  Although he evaluates it with reservation – “one must wait and see” – the investigator Lins da Silva sees the glass as half full: “I am very optimistic about the relationship between the public and private sectors, which will change forever and for the best, in Brazil,” he said, one day after the end of the Petrobras case. Along the same lines of the Mensalão case, Professor Taylor believes the Petrobras case has also shown that employers are to be held accountable. “Business leaders who are now in jail, such as Marcelo Odebrecht, were titans of the industry – he said.  They were in with presidents and enjoyed a top-notch lifestyle across the world. The fact that executives corporations are in prison, and that several have already been sentenced to five or more years, is something new in Brazil, and sends a very clear signal to both entrepreneurs and politicians: those who do not play by the rules, are to be punished.”   Taylor emphasized this message: “This is new for Brazilian politics, which for a very long time suffered with the blurred line that separates the private from the public.”   

The remaining incognita  

According to the Wilson Center’s Brazil Institute’s researcher, there are two questions that remain unanswered: 1) Will the Supreme Court advance in the prosecution of political leaders involved, no matter what?

“There are already disturbing signs that senior judges have been meeting in secret with government representatives. The retirement of Joaquim Barbosa from the Supreme Court, after the Mensalão case, eliminated one of the most active, anti-corruption judges, and showed the high personal cost of fighting a broken system,” he noted. “And the government is under great pressure from congressional leaders to control past investigations, even if there is little they can do to control prosecutors or judges.”

2)  Will prosecutors and judges continue to play an active role in punishing the crimes committed by powerful businessmen and political leaders?

“Already, some of the prosecutors involved in the Petrobras case complain of threats and challenges they face. This can weaken the will of some of their less motivated colleagues.”  In short, Taylor affirmed, the big question for the long term is whether transparency is here to stay or not. “It is important to recognize how important this case is for Brazilian democracy, but also, how much uncertainty remains about how it will develop. Businessmen who are in prison are likely to remain in jail.”

Read original article here

Translated from Spanish by Júlia Cardoso, an undergraduate senior at the Elliott School of International Affairs, George Washington University, and summer intern at the Brazil Institute, Woodrow Wilson International Center for Scholars.

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