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Monday, January 30, 2017

The Brazilian House of Cards Is Collapsing

The scandal of scandals is swallowing the political class whole.

The dream of any decent libertarian is to watch those in power running from the public eye as a deer runs from a wolf: to eat popcorn while watching an endless procession of handcuffed politicians off to the jailhouse, and ultimately to dance and drink champagne at the funeral ceremony of the political establishment.

A branch inside Odebrecht that was entrusted solely with doling out bribes and kickbacks is rumored to have had an excel file just for Lula. His codename in it? “Friend.”

Most libertarians resign themselves to knowing that someday this grand party will happen, even though one might not see a direct path to it and surely are not in a rush to buy a suit and new shoes for it: that is unless you are a Brazilian libertarian, for we are about to throw one hell of a mad party.

In a previous article I attempted to explain to Americans the feeling that on any random morning, one may wake up and find that another big politician was arrested in a corruption scandal. I posited that the next shoe to drop would be what just might be the biggest corruption plea bargain in history: Odebrecht.

And what misdeeds have they ventured into?

Odebrecht was the biggest construction company in Brazil and had very intimate ties with the former president Luis Inácio Lula da Silva and his successor, Dilma Rousseff. So close were those ties that the “Structured Operations Department,” a branch inside Odebrecht that was entrusted solely with doling out bribes and kickbacks is rumored to have had an excel file just for Lula. His codename in it? “Friend.”

Hand in Every Cookie Jar

The list of works Odebrecht got into is mind-boggling. Mining, biofuels, petrochemicals, railroads, roads, ports, airports, building almost everything from hotels to stadiums, water and sewage and because why not, submarines and rockets. They operate in 25 countries, mostly Latin America and Africa, and employ 130,000 people. And by the looks of it, it’s all covered with dirt.

Seventy-seven executives have confessed to crimes, bribes, kickbacks and all in between, in what may have been an effort to spread confessions along the upper echelons of the company so everyone can get a reduced sentence. Given that the company has had a hand in pretty much every public works program since 2002, it’s expected that many governors, senators, house members and mayors will be ratted out. The final number is probably between 100 and 200 big politicians. There are many informal bets out there on the exact number.

Marcelo Odebrecht, former chairman and CEO of Odebrecht and already sentenced to 19 years in prison, is expected to drop the ultimate political shoe and deliver at least two former presidents and many others.

The general perception is that nothing was done unless a bribe, a kickback, or illegal campaign financing was involved.But it won’t be just the Workers Party, the party of Lula and Dilma that will get hit. Their former biggest ally and now party in power, the Brazilian Democratic Movement Party will also get hit just as bad if not worse, especially the current president Michel Temer and the senate leader, Renan Calheiros. The opposition party, the Social Democrat Party of Brazil is rumored to be heavily hit as well, since they have many senators, governors and so on. Many lesser parties are expected to get a strong kicking for good measure.

The general perception is that nothing was done unless a bribe, a kickback, or illegal campaign financing was involved. Contracts were cooked and competition for those contracts was rigged, and with pre-arranged winners. One example of that is the very suspicious airport concession done under Dilma for the World Cup. Odebrecht, the biggest company, won the biggest airport, Galeão. OAS, the second biggest, won the second biggest airport, Guarulhos, and UTC, the third, won the third biggest airport, Viracopos. Both OAS and UTC have also gone into plea bargains.

So what exactly will be in Odebrecht’s plea bargain after all? Possibly every major public work done in Brazil in which they were involved.

Odebrecht is also under investigation for bribes in Venezuela ($98 million), the Dominican Republic ($92 million), Panama ($59 million), Argentina ($35 million), Ecuador ($33.5 million), Peru ($29 million) and Mozambique ($1 million), for a total of $788 million worldwide. The values have been reported by the US Department of Justice as Odebrecht is also being investigated in the US for crimes associated with Braskem, a daughter company of Odebrecht and Petrobrás. It was created in 2002, the year Lula took office.

I honestly don´t see how this corruption scandal could be bigger and deeper into the entrails of the Brazilian state.

And any morning now, we will know far better just what they have done. We are really just one step away from it at this point.

From Small Fry to Big Fish

But it won’t stop there. The modus operandi of the investigators is to arrest operators, the people who actually make money getting things from point A to point B, and give them the option to make a plea bargain as long as they provide new information. So hundreds of people with no political commitment to the parties and a desire to not die of old age in jail end up widening the investigation even more. Given that at this point the investigation has arrested dozens of money launderers, odds are that they are somehow connected to pretty much every dirty politician in the country.

Due to this technique, two money launderers were so sure they would eventually get fished out that they stepped up to the police and delivered a former governor of Rio de Janeiro, Sergio Cabral. He is now arrested and is reported to cry violently in jail, so loud it can be heard 150 feet away. Bask in this for a few seconds. This also pointed towards Eike Batista, former business mogul who went fugitive and holed himself up somewhere in the US, maybe in Trump Tower.

(Seriously, I cannot for the life of me make this up.)

Eike returned to Brazil and was arrested on the morning of January 30th. Since he likely has no party affiliations or debt of allegiance, it´s expected he will have quite a lot to say, and more arrests will follow.

That’s why it’s not surprising that the government did everything it could to try to save Odebrecht. Marcelo Odebrecht was arrested while Dilma was still in office, and one senator arrested for obstruction of justice* confessed Dilma nominated a judge solely on the agreement that he would grant a habeas corpus if Marcelo asked. When the request came, all judges voted against, except the one allegedly nominated for the service.

They even went to the point of proposing a leniency law, which made it so companies involved in such scandals could confess to wrongdoing, explain nothing, pay a fine and go back into operations as if nothing had happened. Such a law never came to a vote, but it was considered and written. Also as I explained in my previous article, attempts were made to create laws so politicians were granted amnesty for illegal campaign financing, so they could simply confess all bribes as campaign financing and walk away. Didn’t work.

Mysterious Deaths

Marcelo Odebrecht and his company resisted in almost every way possible to making the plea bargain, but every single exit door was shut in front of them. As the company slowly veered towards bankruptcy and the siege tightened, they surrendered. Any morning now, 19 months after the arrest of Marcelo, Odebrecht’s plea bargain will come out in its full beauty.

But just shy of the goalpost, Brazil got a brutal shaking when the Supreme Court judge in charge of the operation died.

His plane crashed.

Just when you think things cannot get any more ridiculous, a plane that was carrying Teori Zavascki, the judge in charge of the investigation in the Supreme Court and the one who had to sign off on the deal to lift secrecy just happens to crash a couple of weeks before doomsday.

It might have been an accident, yes. A fun fact is that Dilma passed a law in 2015 throwing secrecy over plane crash investigations, so it´s possible we will never really know. That law came months after a Brazilian Socialist Party candidate running for president against Dilma died in a plane crash in 2014. The owner of the private jet was found dead in a motel in 2016, poisoned.

The whole process plus Operation Carwash will have to be handled by a new judge, but which one? There are ten left, and the process will be redistributed randomly. The court composition is such that we are essentially playing political Russian roulette. One judge is a former lawyer for the Workers Party and Lula. Another one blatantly skipped reading a part of the constitution during a vote on the impeachment process, and said part would have completely refuted his argument. Another, the oldest one in the house, once switched a vote because a famous newspaper said he would vote one way, and since his vote wouldn’t matter in the final score he voted the other way just for giggles. Yet another is cousin to a former president impeached for corruption, who is now a senator. One of them is a black belt in jiu-jitsu though, which is kind of cool.

Dear House of Cards and Game of Thrones, step up your game.

Given this mess, the president of the court, Cármen Lucia, spent the whole weekend immersed in reading the plea bargains and signed off on them, completing the process. The final information is now only protected by secrecy due to their nature, but there is no longer any reason to keep it that way.  The Attorney General Rodrigo Janot can make a request and the secrecy will be lifted, but that might take a while, since it has been reported by a Brazilian news site, O Antagonista, that there is grave concern this will heavily impact the election for head of the senate and the appointment of the new Supreme Court judge, since he would have to be confirmed by many senators accused of crimes he would have to judge on.

This might very well change anyways since the situation is extremely volatile, and one might rationally expect that every single big politician in the country is biting his nails off at the moment. Secrecy may be lifted or the statement may just leak one way or another.

At any rate, the clock is ticking. Only one thin veil of secrecy separates the people and the world from the disgusting inner entrails of the deepest corruption scandal in our history. It may be tomorrow morning or it may take a few more weeks or days, but the political doomsday clock is ticking and if one pays close attention, it´s possible to hear the faint distant collective shuddering of our capital city and its tentacles, and the first sobs of what may be decades of violent crying in jailhouses all over the country.

Grab your champagne, gentleman.

PS: Dear House of Cards and Game of Thrones, step up your game.

*Do note that in the magnitude and purpose of this article, a senator being arrested for obstruction of justice is a passing note not worthy of explaining in the body of the text. Said senator was negotiating a bribe and an escape route for one major informant in the Car Wash Operation, former Petrobrás director Nestor Cerveró, so he would fly to Spain and shut up**. The senator, Delcídio Amaral, confessed having done this by order of former president Lula.

**And his plane might have crashed as well, who knows.

  • Raphaël Lima is a popular media commentator and author in Brazil. His youtube channel is one of the largest and most closely watched in the country.