The Bright Side of Brazil's Petrobras Scandal

By Robert Souza The grandeur of Brazil is captivating: jewel-blue waves constantly cascade onto the golden sand of sunlit beaches, açaí palm trees decorate the rainforest, and Christ the Redeemer overlooks the nation from atop Rio de Janeiro's superlative summit. But beyond the beautiful landscapes lies a country plagued by corruption and inequality. The Petrobras scandal, a corruption affair of unparalleled proportions in a modern democracy, illuminates this reality. However, a silver lining has emerged as the investigation of this scandal could engender a deviation from the climate of impunity from which Brazilian elitists have long operated. Last year, Brazilian authorities inadvertently began unearthing the Petrobras scandal after arresting a well-known money launderer, Alberto Youssef, for what was the ninth time. Unbeknown to prosecutors, things would be different this time. Youssef prefaced his interrogation with an alarming conjecture: "Guys," he reportedly told prosecutors, "if I speak, the republic is going to fall." And speak he did. Youssef divulged shocking information that led to the uncovering of a massive kickback scheme involving many elitists from Brazil's public and private sectors. Starting in 2004, a small cartel composed of construction executives surreptitiously devised a strategy to inflate contract prices and significantly overcharge Petrobras, Brazil's state-run energy company, for their services. Free to charge exorbitant sums, these construction executives accrued enormous profits. A select group of Petrobras employees in the know were rewarded handsomely for turning a blind eye. Additionally, and unsurprisingly, since Petrobras is 51 percent government-owned, much of the dirty money was sent on a circuitous route to the pockets of various political figures. Considering losses to Petrobras itself amounted to an estimated $5.3 billion, there was more than enough money to go around. According to David Segal's compelling piece in The New York Times, kickbacks included: "Rolex watches, $3,000 bottles of wine, yachts, helicopters, and prostitutes," among other things. Such a vivid display of corruption, happening concurrently with Brazil's severe economic recession, has necessitated political accountability. The problem is that inequality and corruption are thoroughly embedded in Brazilian culture, and inadequate political accountability predates Brazilian independence. Inequality has been ingrained in Brazil since the pervasive avarice of colonial times, when Portuguese colonists grew rich off the exploitation of slaves. A caste system was developed, and the problem was exacerbated as class boundaries were firmly established with the passage of time. Even after Brazil abolished slavery in 1888, the Brazilian elite retained their political, social, and economic advantages. Consequently, even in a post-slavery Brazil, inequality and corruption remained customary and the problems persisted unmitigated. So given how long Brazilian elitists have enjoyed a secure grip on unchecked power, the Petrobras scandal itself should come as no surprise. What is most surprising about this scandal, aside from its unexampled magnitude, is that members of Brazil's elite class are actually being investigated and convicted. Thus far, 93 people have been convicted of crimes relating to Petrobras, most of them well-connected politicians and business magnates. That number is expected to increase as the recent revelations of the Panama Papers, a trove of leaked documents from a Panama-based law firm specializing in shell companies, linked at least 57 Brazilians to the Petrobras scandal.

Even Brazil's exceptionally popular former president, Luiz Inácio Lula da Silva, known simply as Lula, has found himself at the center of the Petrobras scandal. In March, Brazilian police raided Lula's home in São Paulo and took him into custody for inquiries concerning his alleged involvement in the kickback scheme. Lula was released hours later and decried the incident as a politically motivated show for the media. Nonetheless, the detention of such a renowned politician reflects a willingness to go after and hold those involved accountable, regardless of stature.

The scandal has reached as far as Brazilian President Dilma Rousseff's inner circle, catalyzing massive anti-government demonstrations, but Rousseff herself has not been implicated directly. However, Rousseff has been accused of violating fiscal laws to obscure the government's deficit problem, making her the subject to a widely supported impeachment process. Should the full Senate vote to put her on trial, as is expected, Rousseff could find herself suspended from office as early as this Wednesday. Vice President Michel Temer, who has avoided facing inquiry over the Petrobras affair despite widespread suspicion, would then replace her as acting president for the duration of the trial. Ironically, the man both third in line to the presidency and leading the drive for impeachment, House Speaker Eduardo Cunha, has himself been indicted for Petrobras-related crimes. As of right now, it is impossible to predict with certainty whether or not significant change will occur. But the good news is that, unlike in the not-so-distant past, Brazil is a democracy where people can openly address corruption issues. With the press relentlessly covering the Petrobras scandal, and the judiciary working tirelessly to hold those involved accountable, there is ample reason to be optimistic. The status quo of corruption that has long contaminated the soul of Brazil is finally being challenged in a meaningful way, and such a challenge, if successful, could very well prompt a new beginning for the country.

As Riordan Roett, director of Latin American Studies at Johns Hopkins School of Advanced International Studies, told The New York Times: "Corruption is such a part of public life [in Brazil] ... but now people are being held accountable. There is a sense that things could actually change."

Robert Souza earned an MA in International Relations from Suffolk University and is a Fellowship Editor at Young Professionals in Foreign Policy.

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