wednesday, 1º june of 2016

Brazil Billionaire Ready To ´Sing Like A Canary´ About Petrobras Scandal

Incarcerated for orchestrating the crime of the century, a Brazilian billionaire named Marcelo Odebrecht seeks revenge and promises to bring down as many as 50 politicians in the processes. One of them may even be recently suspended president Dilma Rousseff.

The scandal stemming from Brazil’s state-run oil firm Petrobras has created unheard of dissaray in the capital. Dilma was chairwoman of the board of directors of the company from January 2003 to March 2010, putting her in the legal cross-hairs of criminal gross negligence charges if removed from political office. To say Brazil’s executive and legislative branches are running around like chickens with their heads cut off would be an understatement. Odebrecht, one of Brazil’s most successful executives, said he is ready to sing like a canary in an effort to lower his 19 year prison sentence, Folha de São Paulo columnist Monica Bergamo wrote on Tuesday. If there is one man who strikes fear in the hearts of Brazil’s political elites, it’s 47 year old Odebrecht. His plea bargain was reached last Wednesday. It could lead to more arrests and politicians forced to step down.

Odebrecht is a follow-the-money name in Brazil. It was Petrobras’ biggest private sector contractor, responsible for building oil refineries, among other things.  The company is also no stranger to the U.S., it is one of the biggest contractors at Miami International Airport and built the Ritz Carlton in Key Biscayne.

Bergamo said Odebrecht won’t be picking political favorites. He is supposedly going to provide federal prosecutors greater details about campaigns he helped finance illegally, including the Workers’ Party (PT), its allies in the Democratic Movement Party (PMDB) and the Social Democratic Party (PSDB).

On March 23, Federal Police said that Dilma’s 2014 campaign manager, João Santana, received R$21.3 million ($7 million) in bribes, but there has been no direct connection that illicit money went to her campaign. Santana was arrested in February on conspiracy charges.

Less than one month later, another fallen executive from construction giant Andrade Gutierrez said the company gave Dilma’s campaign R$30 million between 2010 and 2012. The money came from rigged contracts to build a Rio de Janeiro nuclear power plant and the monstrous Belo Monte hydroelectric dam, the largest hydroelectric project in the world today.

Each time an A-list Brazilian executive like Odebrecht is caught in the police dragnet, their plea bargains lead to more arrests.  The case is different in the capital, where politicians are granted immunity from criminal charges but are still not free from Supreme Court judges investigating the ransacking of Petrobras.

On Monday, Brazil’s Minister of Government Transparency, Fabiano Silveira, was forced to resign when it was revealed that he was giving “advice” to Senate leader Renan Calheiros on how to sideswipe ongoing legal probes. Silveira’s conversations were recorded by a man named Sergio Machado, the former CEO of Petrobras subsidiary Transpetro, The New York Times reported today. They were allegedly leaked to the press by Rodrigo Janot, the attorney general who became famous last year for publishing a list of more than 40 politicians, mostly from PMDB, PT and the allied Progressive Party, believed to be part of a “cartel” to steal from Petrobras.

Machado has essentially become an undercover investigator, trying to get politicians implicated in the graft scheme to say something that might save himself from prison.

Silveira’s resignation is the second one in a week. The interim government, led by Michel Temer, also lost their new Budget and Planning Minister, Romero Juca, after revelations that he and other congressman were conspiring to impeach Dilma in order to manipulate Petrobras investigators.

Dilma was impeached in the lower house of congress on April 17 for breaking the budget law, considered a crime of fiscal responsibility under the Brazilian constitution. Nevertheless, not one of the congressmen whose phones have been wire tapped showed concern over Dilma’s cooking the books on fiscal accounts. Each one revealed their level of paranoia over being swept away in the ongoing wave of arrests.

The PMDB is currently in charge of the government. They have been PT’s ally on all fronts for the past 14 years.

Between the Machado recordings and Odebrecht, the dominoes continue to fall. Brazil’s government is in major distress with no white knights to be found.

Odebrecht, whose net worth FORBES Brazil put at a hefty R$13.1 billion ($3.7 billion) in August, was arrested the first week of March 2016 for his key role in the Petrobras graft scheme.  He colluded with top government officials in contract rigging and money laundering. The Federal Police recently found a secret department at Odebrecht where the corporate giant kept an account of the politicians it was bribing. The politicians didn’t mind the bribes because it went to fund political campaigns.

Until the Petrobras scandal erupted last year, Dilma’s popularity ranking was in the sixties. Today, it is around 8%, according to polls by Datafolha in São Paulo.

A trial date is set for Petrobras directors in New York on Sept. 19. Lawyers for the plaintiffs, mainly U.S. and U.K. pension funds, say politicians could be called in to testify. Brazilian politicians are currently not part of the U.S. court cases against Petrobras.

PricewaterhouseCoopers estimated that the scheme ransacked at least $14 billion from the company. It’s led to the layoffs of roughly 30,000 people from companies like Odebrecht and Petrobras. The unemployment rate has gone from 5.4% three years ago to 11.2% today as a result of the political crisis rocking the country.

(Published by Forbes - May 31, 2016)

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