Brazil

Brazil’s Odrebrecht scandal fallout descending across region

By Marina Lopes and Nick Miroff
The Washington Post

Corruption charges stemming from Brazilian construction behemoth implicating members of the political elite across Latin America

BRASILIA, Brazil — Some of the world’s most iconic companies cast themselves as emblems of their nation’s values — all-American Coca-Cola, for instance, or quintessentially Japanese Toyota. And for a while, that was also true of the Brazilian construction behemoth Odebrecht. In a good way.

Odebrecht was on a cloud during the first decade of the millennium, when Brazil won hosting rights to the 2014 World Cup and the 2016 Olympic Games, affirming its status as a rising star. With the charismatic President Luiz Inácio Lula da Silva touting Odebrecht abroad, the company secured lucrative foreign contracts to build highways, transportation systems, stadiums and power plants.

But Odebrecht’s other export was Brazilian-scale corruption, undermining countries it was supposed to be building up. The company is today at the core of Brazil’s biggest-ever graft scandal, a $2 billion kickback scheme in which nearly 100 executives and politicians have been imprisoned.

The fallout is spreading across the region, creating a test for other countries tainted by Odebrecht’s dirty money. Prosecutors in Brazil, the United States and elsewhere have unearthed evidence that could implicate current and former presidents across the Americas in criminal conduct.

The case, known as “Car Wash,” has been a breakthrough for judicial independence in Brazil, garnering broad public support. Whether it will lead to cleanups or coverups elsewhere has become a barometer of good governance across Latin America. So far, there have been few arrests outside Brazil, but prosecutors in several countries in the region are pressing for more information from Brazilian investigators and former company executives.

“The scale of what Odebrecht did was unique, but it’s not like the Lula government or Odebrecht invented corruption in Latin America,” said Brazil expert Brian Winter, editor of the Americas Quarterly journal (who once worked with the Herald.) “What was unique about Odebrecht was that they got caught.”

penalties

In December, Odebrecht agreed to pay US$3.5 billion in global penalties, the largest foreign bribery settlement in the history of the US Department of Justice, which, together with Swiss and Brazilian prosecutors, uncovered an US$800 million web of graft spanning at least 12 countries in Latin America and Africa.

The company had a secret branch, the “Structured Operations Division,” which managed payments through accounts in the British Virgin Islands and hidden servers in Switzerland, functioning “as a stand-alone bribe department,” prosecutors said.

Marcelo Odebrecht, the company’s former chief executive, has been sentenced to 19 years in prison, and so far, nearly 80 Odebrecht executives have accepted plea deals in exchange for more lenient sentencing.

Odebrecht remains in business, but it has shed nearly a third of its 180,000 employees since the scandal erupted, and its revenue has plunged 50 percent. It has signed plea agreements in the United States, Switzerland and the Dominican Republic and is negotiating deals with Peru, Colombia and Panama.

Although it may seem counterintuitive, Winter said, the countries most shaken by the scandal so far are the ones whose judiciaries are strong enough to act. In Peru, former president Alejandro Toledo is accused of taking more than US$20 million in bribes from the company, and Peru’s government think he’s on the lam in United States.

Just as fury in Brazil over the Car…

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