Corruption in Brazil
This article needs to be updated.(April 2015)
|Corruption by country|
Corruption in Brazil exists on all levels of society from the top echelons of political power to the smallest municipalities. Operation Car Wash showed central government members using the prerogatives of their public office for rent-seeking activities, ranging from political support to siphoning funds from state-owned corporation for personal gain. Specifically, mensalão typically referred to the practice of transferring taxpayer funds as monthly allowances to members of congress from other political parties in consideration for their support and votes in congress. Politicians used the state-owned and state-run oil company Petrobras to raise hundreds of millions of reais for political campaigns and personal enrichment.
Corruption was cited among many issues that provoked the 2013 protests. Corruption reduces public investments in health, education, infrastructure, security, housing, among other essential rights, expanding social exclusion and inequality.
All types of corruption exist. Clientilism, cronyism and nepotism are widespread in Brazil, and many critics mention how some of the members of Brazilian Supreme Court are seen openly mingling with politicians. Bribery (called propina or suborno in Portuguese) is also rife in the police force and throughout the Brazilian bureaucracy. But one of the most common types of corruption in Brazil is embezzlement of public funds through overbilling, called superfaturamento in Portuguese (literally "super invoicing"). This technique allows individuals to enrich themselves, and also finance political campaigns (as seen in the Petrobras scandal), and is closely linked to public contracts with private enterprises. Construction is a prime example, in contracts to build roads, sewage, and public buildings. It is estimated that 30% of all Brazilian public funds are embezzled this way each year. Petrobras president Aldemir Bendine in 2015 estimated the company's losses to corruption scandals at $2 billion US. The company's stock declined, although it later began to recover.
The scale of corruption in Brazil is immense, but largely under-reported in the media and historically not investigated, prosecuted or punished, so it is difficult to estimate just how large the problem is. The Car Wash (Lava Jato) investigation may be changing this trend. Corruption in Brazil increases the already enormous Brazilian shadow economy which some sources estimate at 16.1% of the gross domestic product, a number that probably needs to be adjusted up considerably if corruption as such is included as part of the shadow economy. Transparency International's 2016 Corruption Perception Index ranks the country 79th place out of 176 countries.
Political corruption is considered to be widespread in Brazil. A series of sources documenting historical corruption have only recently started to be published, some of them with references up to Colonial times. A unique complex network analysis revealed associations between those involved in corruption scandals included not only active (elected and non-elected) politicians, but also companies, both state-owned and private companies which had been favored in selection processes for execution of large infrastructure projects, some of which were cited both in the Panama Papers and Paradise Papers. The complexity of such corruption networks has been compared to the mafia, drug traffic networks and terrorist networks.
The practice of "superfaturamento"—overbilling—in Brazil is considered to be extremely common in contracts and purchases for public institutions. Recent examples have been reported in small primary schools where products like pencils and notebooks were bought with padded invoices, as well as in grand-scale construction projects roads, football stadiums(not least in connection with large scale events such as the Olympics and FIFA's World Cup). A particularly notable example is the city of Brasilia itself, which historians believe was systematically overpriced when built in the early 1960s.
Little or no evidence of corruption was made public during the military dictatorship era (1964-1988). Recently, however, several cases have become increasingly public knowledge and have been reviewed in books including Elio Gaspari's series of historical analyses and in the news. Cases ranged from smuggling whiskey and luxury clothes to outright extortion of companies by military-appointed governors (e.g. Haroldo Leon Peres in the state of Paraná), who illegally favored their companies in contractor licensing (e.g. Antonio Carlos Magalhães and Magnesita) and used public money to save their own companies from bankruptcy (e.g. Paulo Maluf and his wife Sylvia in the Lutfalla case). British documents pointed out a number of other cases which were suppressed in the 1970s referring to overpriced purchase of UK equipment for construction of ships in Brazil.
With the fall of the military dictatorship, with the start of redemocratization process, accusations of corruption started to hit the news and receive attention, involving all levels of government, including then-president José Sarney, although the accusations ceased to be processed in the National Congress. The main accusations referred to overbilling and irregularities in public infrastructure projects in collaboration with private companies, such as the case of the Ferrovia Norte-Sul (Norte-Sul Railway). Sarney was also accused of practicing nepotism, favouring relatives and friends in radio and TV concessions. The dissatisfaction led part of the Partido do Movimento Democrático Brasileiro (PMDB) to leave and establish the Partido da Social Democracia Brasileira (PSDB). The apex of the political crisis occurred during the production of the new Constitution, at the Assembleia Nacional Constituinte de 1987, where the length of Sarney's government was put in check, and in the end kept at 5 years, as opposed to 4.
A Parliamentary Investigation Commission (CPI) was started in 1988 to investigate the corruption accusations, and several requests for impeachment were filed.
The first accusations appeared in the second semester of Collor's government. The then-president of Petrobras, Luís Octávio da Motta Veiga, quit, alleging pressure from the former financial secretary of Collor's campaign, Paulo César Farias ("PC Farias"), and the president's brother-in-law, ambassador Marcos Coimbra, to offer loans to the airline company VASP, which had been recently privatized. In 1991 the First Lady Rosane Collor was accused of irregularities at the charity Legião Brasileira de Assistência (LBA). In May 1992, Pedro Collor, the president's brother, accused PC Farias of illicit enrichment and being a "goon" for the president in his business in an interview to Veja.
The scandals piled up until 1993, when another Parliament Investigation Committee (CPI) was established, which became popularly known as the "CPI do Orçamento", presided by then-senator Jarbas Passarinho. However, in 2014, the accusations were removed by the Supremo Tribunal Federal and Collor was exculpated.
Fernando Henrique Cardoso Government
Fernando Henrique Cardoso's government led by the Brazilian Social Democracy Party (PSDB) was also hit by a series of corruption accusations, firstly regarding federal "help" offered to banks such Nacional and Econômico, and the creation of the Programa de Estímulo à Reestruturação e ao Fortalecimento do Sistema Financeiro Nacional (Proer).
Many issues involved privatization of State companies. One of the people cited in accusations was former director of Banco do Brasil, Ricardo Sérgio de Oliveira, which was in charge of financial resources for FHC's campaign, and who would have favored business with a consortium formed with Telecom Itália and Daniel Dantas' Opportunity Asset bank. Phone call recordings were central to several accusations regarding PSDB. Conversations between the minister of Communications, Luiz Carlos Mendonça de Barros, and the then-president of the Brazilian Development Bank, BNDES, André Lara Resende, demonstrated efforts to benefit the Opportunity consortium.
Probably the worst accusations referred to the purchase of Congressional votes to introduce a constitutional amendment to allow for reelection to Executive roles, namely the President. Telephone recordings made public by Folha de S.Paulo in 1997 revealed conversations between representative Ronivon Santiago (Progressistas Party - State of Acre) and a Senhor X, where Santiago reports to have received, along with another four representatives, 200 thousand reais to vote for the reelection amendment, which had been paid by the then-governor of the state o Acre, Orleir Cameli.
By the end of 2000-2001, the attentions in FHC's government had moved from the corruption accusations to the energy crisis ("Crise do Apagão"), which happened right after the wave of blackouts started in 1999. The 1999 blackout was blamed on a lightning strike, although researchers at the National Institute for Space Research (INPE) demonstrated the official version to not hold. FHC tried to awart a similar crisis in 2001 by imposing energy rationing.
While Lula was in office reports surfaced of payments made to deputies in return for a pledge to support the government with their votes in Congress. According to investigators more than a dozen construction companies bribed or gave kickbacks to corrupt politicians in return for profitable contracts with state-owned petroleum company Petrobras. Former president of Grupo OAS Jose Aldemario Pinheiro and OAS executive Agenor Medeiros each were sentenced to 16 years incarceration on 6 August 2015. Three other OAS employees received shorter sentences.
Operation Car Wash
Operation Car Wash is an investigation being carried out by the Federal Police of Brazil, Curitiba Branch, and judicially ordered by Judge Sérgio Moro on March 17, 2014. Initially a money laundering investigation, it expanded to cover allegations of corruption at the state-owned oil company Petrobras, whose executives took kickbacks for awarding contracts to construction firms at inflated prices. The operation has issued more than a hundred search warrants, and ordered temporary and preventive detention and coercive measures in its investigation of a money laundering scheme suspected of moving more than R$38.1 billion" (approximately US$11.3bn) as of November 22, 2016. Because of the unusual nature of its actions, defendants' lawyers accuse the operation of "selectivity" and "partiality", and of being "a criminal case that violated minimum rules of defense for a large number of defendants".
Throughout the investigation, former Brazilian president Dilma Rousseff, who chaired the board of Petrobras from 2003 to 2010, denied knowledge of any wrongdoing  The Brazilian Supreme Court authorized the investigation of 48 current and former legislators, including former president Luiz Inácio Lula da Silva, in March 2016.
Operation Car Wash has resulted in the arrest of many important political figures, including:
- Treasurer of the Workers' Party, João Vaccari Neto, arrested for receiving "irregular donations."
- Former Lula chief of staff José Dirceu, arrested for orchestrating a large part of the bribery.
- Speaker of the Chamber of Deputies (lower house of the Congress of Brazil) Eduardo Cunha (PMDB-RJ), investigated for receiving more than US$40 million in kickbacks and bribes.
- Former minister of mines and energy Edison Lobão is being investigated for taking more than US$50 million from Petrobras.
- Former Brazilian President and current Senator Fernando Collor de Mello of the Christian-conservative Christian Labour Party, charged with corruption.
To counteract widespread corruption in the private and public sector, Brazil enacted the Clean Company Act 2014 (Law No. 12, 846), which held companies responsible for the corrupt practices of their employees and liable without a finding of fault. Bid rigging and fraud are prohibited in public procurement, as well as bribery of Brazilian public officials. If found guilty of corruption the companies can be suspended, dissolved or fined.
In an article done by Global Compliance News, there is stress put on the difference between individuals and legal entities in Brazilian anti-corruption Law. Firstly, only individuals can be criminally punished if found guilty of bribery. Legal entities (i.e. companies and organizations) are punished through the use of judicial and administrative sanctions. During this process, if found guilty legal entities are subject to losing 0.1% to 20% of their gross revenue along with the removal of all public loans, assets, and government subsidies. Foreign public officials found guilty of corruption are liable to penalties and up to eight years of imprisonment, while at the same time being subject to any punishments placed on legal entities. However, in spite of all this, Brazilian legislation does not put a limit on hospitality expenses to officials; although any amount can be considered corrupt.
Ranking of corruption
Based on data released by the Superior Electoral Court, the Movement to Combat Electoral Corruption released a balance on 4 October 2007 with the parties that include the largest number of parliamentarians quashed by electoral corruption since 2000. The Brazilian Social Democracy Party appeared in third place on the list with 58 cases, behind only the Democrats and the Brazilian Democratic Movement.
According to analysis released on 8 September 2012, of 317 Brazilian politicians who were barred from running in elections by the Clean Record Act the Brazilian Social Democracy Party has the largest number of barred candidates with 56 party members.
Anti-corruption sentiment in Brazil is a common subject in politics, media, art and activism. During the democratic period in the country, the press could report corruption cases  and the opposition against the corruption was adopted by virtually all Brazilians. A study found that corruption was seen as the country's biggest problem.
During the Fourth Brazilian Republic, Adhemar de Barros was appointed by the president Getúlio Vargas as governor of São Paulo. Ademar was accused of unjust enrichment and fired by Vargas, but was elected as governor of São Paulo by direct vote. The motto “He steals, but he also works” (“Rouba, mas faz”) was first attributed to Ademar, suggesting that a politician that builds a good government can be elected despite his electoral crimes. Various politicians opposed Adhemar and the corruption in the country; Jânio Quadros beat Adhemar in gubernatorial elections and was elected president, by accusing Juscelino Kubitscheck of taking advantage of the construction of Brasilia, to make a government characterized by embezzlement. Other politicians, like Levy Fidelix, inspired by Jânio, also made anti-corruption speeches in their electoral campaign. The theme was platformed in various electoral debates.
Among the military
Positivism was a philosophy present in the military environment. Various prominent figures declared that the military coup in 1964, was in order to combat the corruption in the country. According to the military rulers, all civil politicians were selfish and corrupted; only the military could save the country. Even Jânio Quadros was a target of the regime's politics of persecution. After the return of democracy, political immunity was given to congressman, to avoid unfair persecution, like those of the dictatorship. This controversial law is the subject of debate, because possible corrupt politicians, when charged, can seek protection by only being tried by the Supreme Court Jair Bolsonaro, a former military officer and current president of republic, made controversial speeches against the establishment and parliamentarian forces.
During the 2010s, several movements were created to combat political corruption, like the Free Brazil Movement. Movements like “Fora Collor” (Get-out, Collor) and “Fora Dilma” (Get-out, Dilma) were supported by popular masses. Military guerrillas stole money from Adhemar de Barros’ safe box during military dictatorship.
By political system
The three branches of power in Brazil were associated with corruption or with the protection of corrupt politicians. During the impeachment process of Fernando Collor de Mello, supporters of parliamentary system said that parliament needed powers to more easily change the chief of government. Brazilian populists claimed that the legislative branch was made up of the corrupt. The supreme court was accused of being the greatest supporter of political corruption. Brazilian monarchists claimed that the spread of corruption, was a consequence of the republican system of government.
Right-wing politicians accuse left-wing politicians of being corrupt. This stereotype was created during the government of Luiz Inácio Lula da Silva, when the mensalão scandal was discovered. In the second term of Dilma Rousseff's Presidency in 2016, Citizens and right wing politicians began the movement to impeach Rousseff due to the economy failing.This was caused by how much money she took out of public banks for her federal campaign in order to become elected. Once Rousseff was impeached from the office, Michel Temer took over and completed the term in 2018. During his term, Temer began to slowly introduce far right ideals to the public. After his term in 2018, Jair Bolsonaro was elected President and became the first president with right-wing ideals for the first time since 2001. Jair Bolsonaro built up his political campaign through Youtube at first, slowly influencing citizens with far right ideas overtime before running for office. Jair Bolsonaro claimed in his political campaign, that the Worker’s Party was the most corrupt political party in the world. The idea that left-wing activists protect criminals like thieves, rapists and murders, encouraged right-wing politicians to believe that the corrupt are also protected by leftists.
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