How Brazil’s ‘nine horsemen’ cracked a bribery scandal

Will Connors/Luciana Magalhaes – The Wall Street Journal, 04/06/2015

Last summer, a haggard-looking former oil executive stared across a table at six stone-faced federal prosecutors in a cramped office in southern Brazil.

For weeks, he had promised to tell what he knew about a suspected money-laundering scheme but kept holding back, according to prosecutors. Then, he learned they were investigating his family, too, for potential evidence tampering.

Paulo Roberto Costa began to talk.

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Brazil attorney general seeks investigation into political figures in big kickback scandal

US News/AP – Brad Brooks, 03/02/2015

Brazil’s attorney general on Tuesday asked the Supreme Court for permission to investigate 54 people, the majority top political figures, for alleged involvement in what prosecutors say is the country’s largest corruption scandal yet uncovered.

Attorney General Rodrigo Janot’s request opens an expansive new phase of the investigation into the kickback scheme at state-run oil company Petrobras.

“We’re going to work with tranquility, with balance. Those who must pay will pay,” Janot told supporters outside his office late Monday night. “We’re going to investigate. This will be a long process, we’re just now beginning. The investigation begins and we’ll follow it through to the end.”

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Brazil graft case sets back economy

Marla Dickerson/Rogerio Jelmayer – The Wall Street Journal, 02/01/2015

A corruption scandal at state-controlled Petróleo Brasileiro SA has created political headaches for President Dilma Rousseff . Now it’s threatening Brazil’s economy.

What began as a probe of money launderers operating out of a gas station has reached the executive suites of Petrobras and the nation’s best-known construction firms, which prosecutors accuse of ripping off the oil giant. The fallout is battering some of the nation’s most important business sectors.

Petrobras, Brazil’s largest company and a major source of capital investment, is in chaos. Still scrambling to calculate the extent of the massive fraud, it has canceled planned projects and delayed payments to accused contractors, setting off a chain of defaults and credit downgrades.

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Brazil graft cases: beginning of impunity’s end?

Brad Brooks – AP/The Washington Post, 12/19/2014

A federal investigation into a kickback scheme at Brazil’s state oil company has, so far, ensnared 30 executives. In Sao Paulo, prosecutors accuse 33 businessmen of running a “cartel” to profit from the city’s subway system.

And in perhaps the most stunning turn of all, the oil and mining tycoon who once was Brazil’s richest billionaire is on trial for something that, until recently, was not even seen as a crime: profiting from inside information.The aggressive crackdown on corruption by Brazil’s rich and powerful suddenly raises a once unfathomable question: Is this the beginning of the end for the nation’s entrenched culture of impunity?

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

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

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

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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