Odebrecht’s bribery division ran deeper than we thought

Author

Gustavo Ribeiro
June 26, 2019 • Reading Time: 7 minutes

Odebrecht’s bribery division ran deeper than we thought

In December 2016, when Odebrecht admitted to running a transnational corruption scheme, it sent shockwaves through Latin America. Governments fell, high-profile politicians went to jail, and thousands of projects were shut down. Odebrecht admitted to paying USD 788m in bribes between 2001 and 2016—which resulted in USD 3.3bn in unlawful benefits—in a deal with the U.S. Department of Justice.

Turns out Odebrecht wasn’t telling the whole truth.

The International Consortium of Investigative Journalists has launched a new collaborative investigation, involving 17 newsrooms across Latin America and based on findings by Ecuadorian website La Posta—which had access to secret communications between executives. The findings show Odebrecht’s bribery network ran deeper than the company revealed, including:

  • Punta Catalina thermoelectric plant. Over USD 39m in secret payments went through the gigantic Punta Catalina thermoelectric plant in the Dominican Republic. Two investigations missed that.

  • Peruvian pipelines. The company paid USD 3m in kickbacks related to a pipeline in Peru—and included a politician who was reportedly planning to assassinate an adversary.

  • Quito subway. Secret emails discuss bribes to elected officials in order to secure the Quito subway project, worth USD 2bn. The documents, however, don’t name the recipients.

  • Caracas and Panama City subway. Odebrecht paid USD 18m for the project in Panama, and USD 34m to construct a subway line in the Venezuelan capital.

Odebrecht has recently filed for court-supervised reorganization—one step away from bankruptcy. It was expelled from several countries, lost most of its projects, and reduced its staff by 80% over the past 4 years. But even if Odebrecht fades away, it is set to continue rocking Latin American politics.

Supreme Court keeps Lula in jail (for now)

A panel of five Supreme Court justices continued its ruling on two appeals by former President Lula. The first was a habeas corpus request, which was refused by the court. The second was a request to have Lula’s conviction for corruption and money laundering vacated, on the grounds that the politician wasn’t given a fair trial by then-Judge Sergio Moro. The justices decided to rule on that motion only in the second half of the year—and that Lula should remain incarcerated until then, in a 3-2 vote.

Justice Celso de Mello, who swung the decision against Lula, displeased both sides of the issue.

He made sure to say that his vote for keeping Lula behind bars doesn’t necessarily mean he will vote against Lula’s motion. Justice Mello grounded his decision on the fact that, after multiple convictions, the former president can’t benefit from temporary release. But added, however, that the leaks promoted by The Intercept—which cast doubts over Mr. Moro’s fairness—haven’t had their authenticity proven, and could have been doctored.

Sympathizers of the government have scheduled demonstrations of support to Mr. Moro and Operation Car Wash for Sunday, June 30. Right-wing groups, which were split last month when pro-Bolsonaro protests took place across the country, are now on the same page. And organizers believe that the possibility of Lula’s release should galvanize the acts.

Fewer benefits for civil servants?

The Supreme Court is set to rule on the constitutionality of parts of Brazil’s Fiscal Responsibility Law, which sets up guidelines for public administrations. Justices will decide whether administrations which spend more than 60% of their total revenues on wages and debt payments can cut down civil servants’ workweeks—and consequently their salaries.

The main bottleneck for state finances around the country is spending on payroll. Data from the Public Treasury showed that only four of Brazil’s 27 states have managed to reduce costs on personnel in 2018, with some seeing huge increases, well above inflation.

States managed to increase their revenues by increasing rates of State Goods and Services Tax (ICMS)—their main source of resources—but all of these gains were swallowed up by increased spending on personnel. Meanwhile, though state revenues have increased this year, at a total of BRL 628 billion they are still considerably lower than 2014 levels, exemplifying the struggle of a desperately slow economic recovery. 

Also noteworthy

Trade 1. Foreign Minister Ernesto Araújo will fly to Brussels today in a sign that the EU-Mercosur free-trade deal may finally be close to completion after 20 years of negotiations. According to the Paraguayan Ministry of Foreign Affairs, the pending issues—which foreign ministers will discuss tomorrow—are related to import quotas for beef, dairy products, and sugar. Mercosur has reportedly offered to double the quotas for European cheese, from 5,000 to 10,000 tons per year.

Trade 2. Despite supporting the deal, Brazil’s National Confederation of Industry has asked the government to protect some industrial sectors—giving them at least 10 years to adapt before free trade starts. They want to make sure the rules help include Brazil in production chains, and facilitate foreign direct investment here.

Guns. President Bolsonaro revoked the two decrees he had signed loosening up gun control rules in Brazil, as Congress was set to strike them down. However, the president promised to draft a bill that, if approved by lawmakers, would give him powers to change the legislation on his own. 

Impeachment. As reporter Martha Castro anticipated last week, Rio’s City Council has decided to shelve an impeachment request against Mayor Marcello Crivella in a 35-13 vote. Mr. Crivella extended an olive branch to city councilors, and had in his favor voters’ lack of interest for the process, as well as the proximity to next October’s municipal elections.

São Paulo. Member of Congress Joice Hasselmann, the government’s whip in Congress, has said President Bolsonaro is “fond” of the idea of her running for Mayor of São Paulo. But she is already facing opposition from another Bolsonaro—Eduardo, the president’s third-oldest son and one of his most trusted advisors. Eduardo Bolsonaro wants José Luiz Datena, the presenter of a true crime show, to be the president’s candidate.

Drugs. A member of the crew which would fly President Bolsonaro’s backup plane on his way to Osaka (for Friday’s G20 Summit) was arrested in Seville transporting drugs. The president was to make a stop in the Spanish city before heading to Japan, but changed the stop to Lisbon. On Twitter, President Bolsonaro said the Ministry of Defense will cooperate with Spanish authorities and open its own internal investigation.

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