This year has seen Brazil uncover one of the biggest financial scandals in the country’s history, involving big companies and corrupt politicians.
In March, Operação Lava Jato (Operation Car Wash), an investigation conducted by the Federal Public Prosecutor and the Brazilian Federal Police, exposed a major criminal network that embezzled billions of dollars — and was formed by politicians, public servants, contractor executives and moneychangers.
The operation got its name from the fact most of the stolen money was laundered through a network of gas stations and car washes. The highest-profile business involved in the scandal is state-owned oil company Petrobras, although many others have been discovered through documents that have been disclosed.
The ongoing investigation found that the scheme has been operating for more than a decade and is so expansive that the authorities still haven’t figured out how much money was actually embezzled. Current estimates place the amount around $US 3.8 billion, the majority of it by Petrobras. In a report, the Federal Public Prosecutor stated that “although it is not possible to measure the total amount of damage, it can be said that the criminal scheme operated for at least 15 years in Petrobras.”
Due to its magnitude and scope, it is now considered “the biggest corruption scandal in the history of the country.”
Understanding Lava Jato
Operation Car Wash was triggered on March 17, when moneychanger Alberto Youssef was found guilty of money-laundering through a massive corruption network. The Federal Police found a list of 750 constructions and public works that were a part of the scheme. But the main actor involved was former director of Petrobras’ supply unit Paulo Roberto Costa, who was incarcerated three days after Youssef’s conviction and later granted house arrest.
According to Brazilian authorities, Youssef was the financial agent while Costa was the “political operator.”
The contractors and companies involved (including Petrobras) distributed state contracts between them that were obtained through embezzlement and bribery of several government officials. The money was later on passed to different political parties through the laundering scheme.
Since then, as the investigation progresses, new information has been unveiled. As of last month, the operation, now in its seventh phase, has been able to associate nine companies — Odebrecht, Camargo Corrêa, Andrade Gutierrez, Iesa, Engevix, Mendes Júnior, UTC Engenharia, Queiroz Galvão and Galvão Engenharia — with the scheme, thanks to Costa’s confessions, and has issued 85 warrants. The companies implicated in the scandal have denied all accusations.
Different testimonies have indicated that the money went to finance the 2010 electoral campaigns of multiple political parties, including President Dilma Rousseff’s Workers Party (PT), the Brazilian Democratic Movement (PMDB) and the Progressive Party (PP). According to Costa, the principal operators that received and distributed the money were the PT’s treasurer João Vaccari Neto and Fernando Soare,s aka “Fernando Baiano,” of the PMDB. Costa also confessed to his involvement in a $US 7.7 million embezzlement scheme to finance the campaign of Pernambuco’s Socialist candidate Eduardo Campos — who was killed in a plane crash earlier this year — in 2010.
Many others have been implicated and all of them deny any involvement, suggesting that there is still a long way to go before this case gets any closure.