The Rendon Group Snapshot Report
Each week The Rendon Group’s media analysts will focus on a different continent and a different issue affecting that continent. As always, we remain available to answer any questions you may have and to provide additional information upon request. For more information regarding The Rendon Group’s products and services, please contact us at Alert@Rendon.com or +1-202-745-4900.
Operation Car Wash: Corruption Scandal Deepens in Brazil
Protestors took to the streets of São Paulo in March following initial reports of a corruption scandal involving Petrobras. Protestors called for President Dilma Rousseff’s impeachment, asserting that the former chairwoman of Petrobras was aware of corruption at the company. (International Business Times)
This week’s snapshot focuses on Brazil’s widespread corruption scandal, dubbed Operation Car Wash. The investigation has expanded to include the country’s largest contractors, four dozen public officials reaching into the upper echelons of the ruling party, and at least $23 billion in public works contracts. As federal prosecutor Athayde Ribeiro Costa told reporters, “Corruption in Brazil is endemic and tending to metastasis.”
News summary of events during the week of 28JUL15 – 03AUG15
- 28JUL: Police arrested the chief executive of the nuclear power unit of Brazil’s state controlled electric utility Eletrobras, who is accused of taking bribes from construction companies. (WSJ)
- 29JUL: Peru’s chief anti-corruption prosecutor praised Brazil’s willingness to investigate whether Brazilian companies paid bribes in Peru. (EFE)
- 29JUL: The president of Brazilian construction giant Odebrecht, was charged with corruption and money laundering following accusations that he bribed senior officials at the state oil company, Petrobras. (BBC)
- 29JUL: Brazilian authorities accused Italian oil company Saipem of being involved in the Petrobras corruption scandal. (WSJ)
- 31JUL: Petrobras received 69 million reals (USD 20.3 million) that was recovered from a Swiss bank account owned by former Petrobras executive, Pedro Barusco. (Fox)
- 31JUL: Federal prosecutors signed a leniency deal with Camargo Correa, the first construction firm to be implicated in the scandal, to collect evidence of alleged-price fixing. (Reuters)
- 03AUG: Police arrested Jose Dirceu, who served as chief-of-staff to former President Luiz Inacio Lula, making Dirceu the most senior member of the Workers’ Party to be arrested as part of the investigation. (BBC)
Sample of Twitter handles regarding Brazil’s Operation Car Wash
- @viaSimonRomero – Simon Romero, New York Times bureau chief in Brazil
- @JebBlount – Jeb Blount, Brazil-based oil, gas, and energy correspondent for Reuters
- @wconnors – Will Connors, reporter at the Wall Street Journal
- @AnthonyBoadle – Anthony Boadle, correspondent at Reuters
- @DLBiller – David Biller, Brazil-based reporter for Bloomberg News
Sample of Third Party Validators regarding Brazil’s Operation Car Wash
Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Center for Scholars
“You can’t put this genie back in the bottle. People are going to have to face the consequences. There used to be the idea that people in positions of power in Brazil were untouchable. They’re no longer untouchable.”
– Politicians face investigations in Brazil’s biggest ever corruption scandal, The Guardian, 06MAR15
André Camargo, professor of law at Insper Business School
“Even just 10 years ago, [corruption] was so commonplace that people weren’t even scared of getting caught…There are markets where it is humanly impossible to play by the book because the bureaucracy that has been created is so insuperable.”
– Petrobras shows corruption is now a high-stakes game in Brazil, Financial Times, 15APR15
Silvio Campos Neto, economist at Tendencias
“[Petrobras] is the most important company in the country and at times when we are struggling to recover growth, such a huge bribery scandal will not give a positive message to potential investors.”
– At the Car Wash: Brazil’s Petrobras corruption saga continues, Latin Correspondent, 22JUN15
Adriano Pires, Director of the the Brazilian Center for Infrastructure
“Brazil’s government created a system in which big state-owned companies are used for political objectives and are in charge of these big infrastructure consortiums. It’s an atmosphere that favors corruption…This investigation is another blow for the Brazilian electricity sector, which was already suffering from government intervention.”
– In Hideaway for Brazil’s Rich and Famous, a New Scandal Emerges, Bloomberg Business, 28JUL15
Carlos Melo, political analyst at Insper
“Institutional mechanisms are needed, but it is necessary to go beyond, creating a general law of state-owned companies, making sure that boards are effective and work with transparency and keeping agencies vigilant.”
– Petrobras Tightens Controls in Wake of Price-Fixing Scandal, The Wall Street Journal, 31JUL15
Sample of open source research conducted by TRG analysts related to Operation Car Wash
1.Brazil Arrests Nuclear Chief in Widening of Graft Case
Media: New York Times
Byline: SIMON ROMERO
Date: 28 July 2015
RIO DE JANEIRO — The sweeping corruption scandal shaking Brazil’s establishment intensified on Tuesday after the police arrested the mastermind of the military’s secret nuclear program during the 1970s and ’80s.
With the arrest of that figure, Othon Luiz Pinheiro da Silva, a retired navy admiral, what started as a bribery inquiry at the national oil company, Petrobras, seems to have taken on a life of its own, with one prominent figure after another becoming ensnared in accusations of a broad web of graft involving state-controlled enterprises and some of the country’s most powerful private companies.
2. Peru welcomes Brazilian cooperation in corruption probe
Media: EFE (Spain)
Date: 29 July 2015
Lima, Jul 29 (EFE).- Peruvian anti-corruption prosecutor Joel Segura praised on Wednesday the willingness of his counterparts in Brazil to investigate whether Brazilian companies paid bribes in Peru to win contracts for work building portions of a pair of transnational interoceanic highways.
Segura told the official Andina news agency that his office has received indications that Brazil intends to cooperate with the probe.
The Peruvian Attorney General’s office will send prosecutors to Brazil in the coming days to interview witnesses and to pore over documentation gathered by Brazilian investigators.
3. Brazil businessman Odebrecht charged in corruption scandal
Date: 29 July 2015
The president of Brazil’s construction giant Odebrecht has been charged with corruption and money laundering.
Marcelo Odebrecht is accused of paying millions of dollars in bribes to senior officials at the state oil company Petrobras to secure lucrative building contracts.
He denies the allegations. Mr Odebrecht is the third-generation heir of a company founded by his grandfather.
Twelve other people have been charged with corruption involving Petrobras.
4. Brazil says it has leniency deal with builder in corruption probes
Byline: Anthony Boadle
Date: 31 July 2015
Brazil’s antitrust regulator CADE and federal prosecutors signed a leniency deal on Friday with engineering company Camargo Correa aimed at obtaining evidence of alleged price-fixing of contracts to build a nuclear power plant.
Camargo Correa was the first of Brazil’s construction firms to have its top executives convicted of corruption and money laundering in the massive kickback scandal involving over-priced contracts with state oil firm Petroleo Brasileiro SA.
The bribery investigation dubbed “Operation Car Wash” spread beyond Petrobras to the electricity sector on Tuesday with the arrest of top executives at Eletronuclear, the nuclear power unit of state-led utility Eletrobras, and builder Andrade Gutierrez, for alleged bribes paid on contracts to build the Angra 3 nuclear reactor.
5. Ex-Lula aide Dirceu held in corruption probe
Date: 03 August 2015
Police in Brazil say they have arrested Jose Dirceu, who served as chief-of-staff under then-President Luiz Inacio Lula da Silva from 2003 to 2005.
He is the most senior member of the governing Workers’ Party to be arrested as part of an investigation into alleged corruption at state-owned oil giant Petrobras.
Dirceu was already under house arrest.
He was sentenced in 2012 for his role in another corruption scandal known as the Mensalao.
He was found guilty of using public funds to pay opposition parties for support in Congress and sentenced to 10 years and 11 months.