Petrobras boomtown turns desolate as refinery’s billions vanish

Sabrina Valle and Carlos Caminada – Yahoo Business, 05/04/2016

Located just 30 miles east of Rio de Janeiro’s bustling Copacabana beach, Itaborai looks like many oil boomtowns after the bust — except the deserted stores and empty glass towers that loom over this town of 220,000 speak of some bigger cataclysm than the collapse of crude prices.

“They said this would be the new oil city,” says Jefferson Costa, one of scores of migrants from Brazil’s impoverished north lured here by a multibillion-dollar petrochemical project that was supposed to create more than 100,000 jobs. Work on the complex, known as Comperj, has stopped, and unless new investors materialize, the single refinery now standing may never produce a single drop of fuel. “It’s empty inside,” says Costa, a plumber who lost his job six months ago when construction came to a halt. “People say it will become a large warehouse.”

Comperj has become a symbol of pervasive corruption at Brazil’s state-run oil producer, Petrobras. A sprawling investigation by federal police and prosecutors dubbed Operation Carwash has revealed massive graft, implicating construction conglomerates, banks, oil service providers, shipbuilders and politicians. About 2 percentage points of the 3.8 percent contraction in Brazil’s gross domestic product last year can be attributed to the effects of the scandal on the company and its suppliers, according to estimates from Tendencias, a consulting firm based in Sao Paulo.

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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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Dilma Rousseff, facing impeachment in Brazil, has alienated many allies

Andrew Jacobs – The New York Times, 05/01/2016

BRASÍLIA — They were idealists, united in the struggle against Brazil’s military dictators.

As democracy flourished, so did their careers. One of them, Paulo Ziulkoski, became the leader of an association of Brazilian cities. The other, Dilma Rousseff, rose even higher, becoming the president of Latin America’s largest country.

But their friendship soon fell apart. During a contentious meeting with the nation’s mayors in 2012, Ms. Rousseff rejected pleas for a share of Brazil’s soaring oil revenues. After the room erupted in jeers, Mr. Ziulkoski said, she stormed up to him, poked a finger in his face and humiliated him with a string of expletives.

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Brazil prosecutor vows to keep Petrobras corruption probe on course

Luciana Magalhaes and Reed Johnson – The Wall Street Journal, 04/26/2016

CURITIBA, Brazil—A member of the prosecutorial team spearheading Brazil’s landmark corruption investigation says he and his colleagues will press forward with the vast criminal probe, despite fears that a new government coalition might try to shut it down.

The future of Operation Car Wash, which uncovered a yearslong embezzlement ring centered on state oil company Petróleo Brasileiro SA, or Petrobras, is among the questions raised by the prospect of President Dilma Rousseff being removed from office.

Ms. Rousseff, who was chairwoman of Petrobras during much of the alleged wrongdoing, hasn’t been implicated by prosecutors in the scandal. She faces impeachment on separate charges of violating federal budget laws, allegations that she denies.

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VP Leads Brazil While Embattled Rousseff Travels

Rafael Romo – CNN, 04/21/2016

It’s a new chapter in Brazil’s deep political crisis, which at times reads like a tropical telenovela. The South American country now has a new president, although it will only be for a few days.

Brazilian Vice President Michel Temer is technically in charge of Brazil — albeit temporarily. How is this possible? It’s all thanks to a particular clause in the Brazilian Constitution which implies that if the president in power leaves the country, the vice president assumes control of the executive power.
His former running mate and current political rival, embattled President Dilma Rousseff, is visiting the United States and plans to attend a climate conference in New York on Friday. That means Temer is not only calling the shots at home, but has effectively become the president … until she returns.

Brazil’s Political Crisis, Explained

Zack Beauchamp – Vox, 04/21/2016

Brazilian President Dilma Rousseff is in the midst of a stunning fall from grace.

In 2013, Rousseff had a roughly 80 percent approval rating. Today, it’s around 10 percent. Just this Sunday, one house of Brazil’s Congress voted to impeach her.

The story behind Rousseff’s collapse is extraordinary — but also a bit complicated. If you’re just learning about it, it might be a little bit difficult to parse why Rousseff is in so much trouble, and why this is all blowing up now.

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Impeachment rebounds on Brazil’s Speaker Eduardo Cunha

Reed Johnson and Luciana Magalhaes – The Wall Street Journal, 04/19/2016

SÃO PAULO—The impeachment of Brazil’s President Dilma Rousseff is exposing members of all the country’s major parties to heightened criticism, but none more so than Eduardo Cunha, speaker of the lower house and the man who launched the effort.

While Mr. Cunha and his pro-impeachment allies seek to cast Ms. Rousseff’s government in the worst possible light, his opponents are trying to delegitimize the proceedings by turning a spotlight on the ethical conduct of Mr. Cunha and his supporters.

Even as the Chamber of Deputies voted overwhelmingly on Sunday to impeach the unpopular leftist president, the raucous voting session turned into something of an unofficial referendum on Mr. Cunha. Several lawmakers used their allotted time during the voice vote to pillory the speaker, who has been indicted on a charge of pocketing millions in funds plundered from Brazil’s state-owned oil company and hiding the money in overseas accounts. Mr. Cunha has long denied wrongdoing.

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