Canadian Manufacturing

Brazil’s biggest companies rocked by sweeping kickback probe

Prosecutors laid charges against 35 people in corruption scandal on contracts worth up to US$4-billion



SAO PAULO, Brazil—Prosecutors investigating a sprawling kickback scheme at Brazil’s state-run oil company Petrobras filed charges December 11 against 35 people, including executives from some of the nation’s biggest construction firms.

The formal charges cap a months-long investigation dubbed “Operation Car Wash,” which is proving to be one of Brazil’s biggest corruption schemes yet uncovered with authorizes saying they’ll seek the return of nearly $400 million from the accused.

Authorities allege top officials from Petrobras operated the kickback scheme on contracts worth upward of $4 billion, with money from the inflated contracts eventually being fed back to the governing Workers’ Party and other top parties for political campaigns.

“These people stole the pride of Brazilians,” Prosecutor-General Rodrigo Janot said at a news conference in the southern city of Curitiba, where a top informant in the case is being held. “We’re far from being at the end” of the investigation.

Prosecutor Deltan Dallagnol added that “we’ve begun to destroy the impunity of powerful groups who’ve acted against the interests of the nation for many years.”

Executives charged include those from the companies OAS, Camargo Correa, UTC, Mendes Jr., Engevix and Galvao Engineering—along with two former executives from Petrobras itself.

The charges include corruption, money laundering and the formation of a criminal organization. A federal judge now will decide whether to accept all or some of the charges and begin a trial.

Many of the allegations centre on what police have heard from Alberto Youssef, a convicted black-market money dealer and among those charged. He has said that he laundered hundreds of millions in the scheme and that the governing party benefited from it.

Youssef, who is talking to police in exchange for less jail time, claims recently re-elected President Dilma Rousseff and former President Luiz Inacio Lula da Silva knew about the kickbacks. He has offered no proof, and both leaders deny the allegation.

The case hits hard at some of Brazil’s biggest private firms, which consistently are among the top donors to political campaigns via legal contributions.

Two former Petrobras executives are among those charged. Renato Duque, former director of services, was detained last month and Paulo Roberto Costa, a former director of Petrobras’ downstream operations, was arrested in March. Costa, who has made a plea bargain, has told prosecutors he accepted bribes from construction firms and other contractors to win bids from the oil producer.

Petrobras, Brazil’s biggest company, is in charge of tapping offshore oil fields and creating wealth that leaders hope will propel the country to developed world status. But the debt-plagued firm hasn’t met development goals, and the riches remain buried deep under the sea floor.

Polls say Brazilians widely believe their government is corrupt. This case has only added to the suspicions, especially when it comes to big infrastructure works involving public funds.

Anger over corruption added gas to last year’s big and spontaneous anti-government protests that rocked city streets across Brazil. Citizens vented frustration about the woeful state of public services in the country, and many linked the siphoning off of their tax dollars via corruption to the poor quality of hospitals, schools, transportation and public security.

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