Brazilian prosecutors take step closer to political elite

Joe Leahy and Aline Rocha – Financial Times, 7/27/2015

Luiz Inácio Lula da Silva, Brazil’s firebrand former president, told a weekend meeting of trade unionists that the country’s political left was suffering from “persecution”.

Unnamed “elitists” were jealous of the achievements of his left-leaning ruling Workers’ party (PT) in raising the living standards of the poor, he said.

“What we see on the television looks like the Nazis criminalising the Jewish people,” he said. Mr Lula da Silva was right about one thing — the PT-led ruling coalition is under pressure as never before. But rather than Nazis, the “persecutors” are Brazil’s increasingly proactive and independent federal police, public prosecutors and judges.

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Brazil jolted by probe of ex-leader ‘Lula’

Rogerio Jelmayer and Luciana Magalhaes – The Wall Street Journal – 7/16/2015

Brazil’s ruling party was newly buffeted on Thursday as federal prosecutors opened an investigation into former President Luiz Inácio Lula da Silva for alleged influence peddling on behalf of a Brazilian construction giant.

Officials are trying to determine whether the popular Mr. da Silva used his clout upon leaving office to convince international leaders to award contracts to Odebrecht SA, and to push Brazil’s development bank, known as BNDES, to finance those deals with subsidized loans.

Under Brazilian law, both acts are criminal offenses, with influence peddling punishable by up to five years in prison. The alleged offenses occurred between 2011 and 2014, after Mr. da Silva left office, and involved a series of big infrastructure deals that Odebrecht won with nations including Ghana, Angola, the Dominican Republic and Cuba.

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Brazil oil giant faces $98bn shareholder lawsuit in US over corruption scheme

Rupert Neate – The Guardian, 7/10/2015

A US judge has told Petrobras bosses to prepare for a $98bn lawsuit over allegations that executives at the Brazilian oil company and senior politicians were involved in a huge money-laundering and corruption scheme dubbed “Operation Carwash”.

US district judge Jed Rakoff on Friday threw out Petrobras’s efforts to get the case dismissed and told the company and investors who are bringing the class action lawsuit to prepare for trial as soon as February 2016. Senior executives and Brazilian politicians are likely to be called to appear before the New York court, if the case gets the final go-ahead.

Shareholders, led by the UK Universities Superannuation Scheme, which manages the pension funds of British academics, claim they lost billions as a result of the scandal which has been dubbed “Operation Carwash” because huge sums of money were allegedly laundered through a money exchange in a nondescript gas station in Brasília, the Brazilian capital.

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Brazil ministers rebut new wave of campaign funding allegations

Maria Carolina Marcello and Eduardo Simões – Reuters, 6/26/2015

Two Brazilian ministers denied on Friday that there was anything illegal about campaign donations made in recent years by a businessman allegedly involved in massive corruption scandal at state-run oil company Petrobras.

President Dilma Rousseff’s chief of staff, Aloizio Mercadante, denied that 500,000 reais ($159,908) in campaign donations made to him in 2010 by companies owned by Ricardo Pessoa were linked to kickbacks at Petrobras.

Social Communications Minister Edinho Silva said in a separate statement that 7.5 million reais donated by Pessoa to Rousseff’s presidential campaign last year were legal and approved by Brazil’s Supreme Electoral Court. Silva was the treasurer of Rousseff’s campaign.

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US court to hear arguments that Brazil oil giant should stand trial for corruption

Rupert Neate – The Guardian, 6/25/2015

A US court will hear arguments on Thursday that oil giant Petrobras should stand trial for a culture of bribery and corruption that has rocked Brazilian businesses and political elite and lowered the company’s value by $90bn.

Investors, led by the UK Universities Superannuation Scheme, which manages the pension funds of British academics, claim they lost billions as a result of the huge money laundering and corruption scheme. The investors, which also include the retirement funds of state workers in Ohio, Idaho and Hawaii, claim in court filings that Petrobras was “rotten to the core”.

The scandal, which has been dubbed “operation carwash” because huge amounts of money were allegedly laundered through a money exchange in a nondescript gas station in the Brazilian capital, has already led to the indictment of more than 40 Brazilian executives allegedly involved in the bribery scheme dating back to 2006.

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Brazil ‘Carwash’ shrugs off notoriety tied to Petrobras scandal

Will Connors and Paulo Trevisani – The Wall Street Journal, 6/21/2015

The Posto da Torre, or Tower Gas Station, inspired the code name for a sweeping corruption probe into Brazilian oil giant Petróleo Brasileiro S.A., a case that has led to criminal charges against some in the highest echelons of the country’s business and political elite.

The station’s notoriety hasn’t stopped customers in Brazil’s capital from lining up for its cheap gas and fried snacks.

About 2 miles west of the city’s main government buildings, the Tower Gas Station played a central role in the investigation dubbed “Operation Car Wash,” according to authorities. Prosecutors say money launderers used a currency exchange and money-wiring service on the premises to help Petrobras executives transfer money from the oil company into overseas bank accounts.

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Roots of a Brazilian scandal that weighs heavily on the nation’s economy, politics

Marla Dickerson – The Wall Street Journal, 6/19/2015

Brazilian prosecutors allege that for at least a decade up until 2014, some of the country’s largest construction firms colluded to inflate the cost of contracts at state-owned oil giant Petróleo Brasileiro SA by an average of about 3%.

Crooked Petrobras executives who brokered the deals got a portion of the ill-gotten gains, authorities say, funneling the rest to a slush fund for lawmakers and political parties, the prosecutors say. A web of money launderers allegedly helped them hide the money overseas.

The criminal investigation, dubbed Operation Car Wash after a gas station that was allegedly used to launder money, came about almost by accident. In 2013, investigators in southern Brazil were tracking the movements of an admitted money launderer named Alberto Youssef. Their curiosity was piqued when Mr. Youssef gave a $78,000 Land Rover to a former Petrobras executive name Paulo Roberto Costa. Authorities said that break helped them uncover one of the largest corruption scandals in Brazilian history.

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