Petrobas scandal probe widened


Published: Saturday 7th March 2015 by The News Editor

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The Brazilian supreme court has approved an investigation of dozens of top politicians, including a former president and leaders of congress, for alleged connections to what prosecutors call the biggest corruption scandal ever uncovered in Brazil.

In total, 54 people are to be investigated by the attorney general, including 21 federal deputies and 12 senators – though that figure is expected to grow as evidence is gathered on corruption involving the state energy company Petrobras.

The investigations and any possible trials will take years to play out, but the action throws the second term of president Dilma Rousseff into further disarray as she faces duelling political and economic crises.

She is not being investigated despite serving as chairwoman of the Petrobras board for several years as the kickback scheme played out.

Experts say the investigations could create further gridlock in congress just as Brazil and its sputtering economy desperately need fiscal and political reform measures passed.

But the investigation is widely viewed as a necessary evil for the nation’s democracy to advance and shake off deep-rooted impunity for the rich and powerful.

“You can’t put this genie back in the bottle. People are going to have to face the consequences,” said Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Centre for Scholars in Washington.

“There used to be the idea that people in positions of power in Brazil were untouchable. They’re no longer untouchable.”

Federal investigators revealed a year ago that they had started an investigation into the scheme, and efforts until now focused efforts on big construction and engineering firms that allegedly paid over 800 million dollars (£524 million) in bribes and other funds. The money purportedly won them inflated contracts with Petrobras, and prosecutors say some of that cash flowed into the campaign coffers of the president’s Workers’ Party and its allies.

During the first phase of the inquiry, investigators struck plea bargain deals with several “operators” who said they helped move the money around in the deals, along with former top executives from Petrobras who acknowledged raking in hundreds of millions in bribes.

That testimony paved the way for the opening of investigations into politicians who also allegedly benefited from kickbacks.

Among those the high court said would now be investigated are former president and current senator Fernando Collor, who was forced from the presidency by a corruption scandal in 1992 before making a political comeback in recent years.

Also to be investigated are Senate leader Renan Calheiros and Eduardo Cunha, who is the leader of the lower house.

Both are members of the powerful Brazilian Democratic Movement Party, part of the governing coalition led by the Workers’ Party. Both have already shown they are ready to create serious gridlock in congress because of the investigation.

Rosemary Segurado, a political scientist at the University of Sao Paulo, said the two congressional leaders would use the investigation as a “bargaining chip” if Ms Rousseff’s government doesn’t help protect them in some fashion, “causing problems by blocking important projects.” She cited tax, fiscal and political reforms needed as Brazil’s economy stalls into recession.

Also on the investigation list are Rousseff’s former chief of staff and current senator, Gleisi Hoffman; Ms Rousseff’s former Energy Minister Edison Lobao; and Antonio Palocci, a former finance minister under the previous president, Luiz Inacio Lula da Silva, and who was Ms Rousseff’s first chief of staff.

Under Brazilian law, the Supreme Court must approve any investigation of legislators or top officials in the executive branch. Any criminal charges or trials of such figures must also must be approved and judged by the top court.

The scandal has seriously damaged the reputation of Petrobras, Brazil’s largest company. It is responsible for tapping upward of 100 billion barrels of offshore oil found in recent years, wealth that leaders have repeatedly said they view as the nation’s “passport” to achieving developed-world status.

But the debt-plagued company is struggling – it was recently downgraded to junk status by Moody’s Investors Service and it said this week it would sharply cut back investment and sell off assets.

Published: Saturday 7th March 2015 by The News Editor

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