Petrobras scandal rocks Brazil

The system is simple, diabolical and efficient: an individual facing corruption charges gets a reduced sentence if they turn in other suspects, who are in turn offered the same deal, and so the case extends indefinitely.

This is how Brazilian judge Sérgio Moro has managed to explore the pit of corruption into which Petrobras, Latin America’s largest state-owned company, has sunk.

The elements of the case comprise an endless list of rigged bids worth millions of reales, surcharges on refinery construction work, bank accounts emptied out from one day to the next to avoid seizure, suitcases filled with cash, private jets carrying dizzying amounts of money, a Workers’ Party (PT) treasurer at the heart of the scheme, and several of the nation’s biggest businessmen doing jail time for bribery in the same penitentiary as the original whistleblower, Alberto Youssef.

The ominous name that Brazil’s Federal Police have given the latest stage of the operation, Final Judgment, says it all. The eyes of all Brazilians are now trained on this public behemoth and on the pernicious news coming out of it every day.

So far there have been 16 arrests. Petrobras’ former supply director, Paulo Roberto Costa, and two officers from a supply company all applied for the “rat-on-your-colleagues reward program” and are now serving their sentences at home.

The other 13, who include entrepreneurs, company officials, executives and black-market currency dealer Alberto Youssef, are all behind bars at a penitentiary in Curitiba. Youssef got his own prison cell, however, because his lawyer fears for his safety given that he has become a target for many people.

All of them were part of a well-known scheme: top officers at Petrobras accepted fees from companies wishing to secure contracts. Shady characters carried cash-filled suitcases to and fro in a scheme that involves over 10 billion reales (over €3.3 billion), although nobody knows the exact figure for sure.

Companies involved in the scheme had – and still have – contracts worth €20 billion. But how much of that was lost along the way? Ten percent? Twenty? Fifty? Costa and Youssef claim that political parties, including the Social Democrats (PSDB) and the ruling PT, took a share of three percent.

With its 86,000 employees, Petrobras is not just any old company. It refines 98 percent of the oil consumed in Brazil, works with nearly 20,000 suppliers and represents a tenth of all investment carried out in Brazil. That is why the government of President Dilma Rousseff, who was re-elected to a second term in October, is worried not just about the political fallout from the case, but also its economic and social repercussions.

Of the country’s 10 largest engineering and construction firms, only two have not been engulfed by the Petrobras scandal. This has led some observers to note that the nation’s major public works projects could grind to a halt. In other words, the entire country could stop functioning properly.

That was the gist of the message that José Costa Neto, president of Brazil’s state-owned electricity company Eletrobras, delivered on Thursday. The same day, the governor of Paraíba, Ricardo Coutinho, added that President Rousseff was very concerned about the future of the country’s public works.

The defense lawyer for one of the suspects said this week that paying bribes was an inevitable move. “Otherwise, the project did not get awarded. Whoever ignores this ignores the history of this country.”

Ricardo Semler, a 55-year-old businessman, wrote in a recent column in Folha de São Paulo: “I want to make it clear that this wave of executive incarceration is a historic step for this country. Our company stopped selling equipment to Petrobras in the 1970s. It was impossible to sell them anything without a bribe. We tried again in the 1980s and even more recently. In 40 years of reiterated attempts, we did nothing.”

The political offshoots of the case are hard to predict. Costa and Youssef are openly accusing PT treasurer João Vaccari of accepting bribes to finance his party’s political campaigns. They have also pointed their fingers at intermediaries in other parties. Meanwhile, Rousseff is weathering the storm as best she can, offering few public appearances and embracing the theory that her administration is allowing corruption to be investigated.

Working in her favor is the fact that entrepreneurs who seemed untouchable until recently are now behind bars. The attorney general said it clearly the other day: “Before, here in Brazil you had the justice of the three Ps: puta [whore], preto [black] and pobre [poor]. But it hasn’t been like that for a few years.”

Meanwhile, former president Lula da Silva, Rousseff’s mentor in the PT, has reportedly told her to wait before appointing her new cabinet, just to make sure that no member is tainted by the Petrobras scandal.