Petrobras scandal

Paulo Sotero – The Editors of Encylocpædia Britannica

Petrobras scandal, Brazilian political corruption scandal beginning in 2014 that involved the indictment of dozens of high-level business people and politicians as part of a widespread investigation alleging that many millions of dollars had been kicked back to officials of Petrobras, Brazil’s huge majority-state-owned oil company, and to politicians—especially members of the ruling Workers’ Party (Partido dos Trabalhadores; PT) of Pres. Dilma Rousseff—by prominent Brazilian corporations in return for contracts with Petrobras.

The malfeasance was revealed by a federal investigation begun in 2014 under the code name Lava Jato (“Car Wash”). The massive scheme to defraud Petrobras—Brazil’s largest enterprise and a symbol of the country’s entrenched economic nationalism—did not fully come to light, however, until after the narrow reelection of President Rousseff on October 26, 2014. By the time of her second inauguration, on January 1, 2015, Rousseff’s approval rating had collapsed to 14 percent, with some two-thirds of Brazilians blaming her for Petrobras’s troubles.

Dubbed “Petrolão”—after mensalão (“big monthly bribe”), the vote-buying scandal that had plagued the government of Rousseff’s predecessor and mentor, Luiz Inácio Lula da Silva (better known simply as “Lula”)—the episode came to be viewed as the largest corruption scandal in Brazilian history. By June 2015 a massive scheme to defraud Petrobras on contracts to develop the so-called pre-salt oil reserves found offshore in 2007 had appeared on investigators’ radar. Moreover, reports suggested that federal prosecutors were also looking into the electricity-generating sector, pension funds for employees of state-owned companies, and the National Bank of Economic and Social Development (BNDES). The latter had provided billions of dollars in subsidized financing to Petrobras and other “national champions,” such as billionaire Eike Batista, whose wealth plummeted spectacularly in 2013.

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