Operation Car Wash

Operation Car Wash
(Portuguese: Operação Lava Jato)

(L–R, top to bottom:) Headquarters of Petrobras in Rio de Janeiro; Coat of arms of the Federal Police of Brazil; Judge Sérgio Moro; Deltan Dallagnol with Rodrigo Janot; Federal Police in an operation; Odebrecht logo

Country: Brazil
Since: March 17, 2014
Judge: Sérgio Moro
Number of arrested people: 160[1][2]
Number of indicted people: 179[2]
Number of convicted people: 93[2]
Number of companies involved: 16[3]
Number of investigated people: 232[2]
Reimbursement request: R$38.1 billion[2] (c. US$11.3 billion)
Amount of misappropriated funds: R$3.6 billion[2] (c. US$1 billion)
Last updated: December 2016.

Operation Car Wash (Portuguese: Operação Lava Jato) is an ongoing criminal investigation being carried out by the Federal Police of Brazil, Curitiba Branch, and judicially commanded by Judge Sérgio Moro since March 17, 2014.

Initially a money laundering investigation, it has expanded to cover allegations of corruption at the state-controlled oil company Petrobras, where executives allegedly accepted bribes in return for awarding contracts to construction firms at inflated prices. This criminal "system" is known as "Petrolão—Operation Car Wash".[4] The operation has included more than a hundred warrants for search and seizure, temporary and preventive detention and coercive measures, with the aim of ascertaining a money laundering scheme suspected of moving more than R$30 billion (c. US$9.5 billion as of July 23, 2017.[5]) Because of the exceptionality of their actions, lawyers accuse the operation of "selectivity" and "partiality" in their case, being "a criminal case that violated minimum rules of defense for a large number of defendants".[6]

On January 19, 2017, a small plane carrying Brazilian Supreme Court Justice Teori Zavascki crashed into the sea near the tourist city of Paraty in the state of Rio de Janeiro, killing the magistrate and four other people. Zavascki had been handling the politically-charged Operation Car Wash corruption trials.[7]

Summary

The operation got its name because the alleged ring used a currency exchange and money transfer service at the Posto da Torre (Tower Gas Station) in Brasília to move the money acquired by illicit means.[8] The initial accusation came from businessman Hermes Magnus in 2008, who reported an attempt to launder money through his company, Dunel Indústria e Comércio, a manufacturer of electronic components. Investigations followed, which culminated in the identification of four large criminal rings, headed by:

The investigation discovered that the "doleiro" (black market dealer) Alberto Youssef obtained a Range Rover Evoque for Paulo Roberto Costa, a former director of Petrobras. Initial evidence pointed to improper payments to Alberto Youssef, made by companies that won RNEST (Abreu & Lima Refinery) contracts.

Main informers

Costa and Youssef entered into a plea bargain with prosecutors and the scope of the investigation widened to nine major Brazilian construction firms:

  • Camargo Correa
  • Construtora OAS
  • UTC Engenharia
  • Odebrecht
  • Mendes Júnior
  • Engevix
  • Queiroz Galvão
  • IESA Óleo e Gás
  • Galvão Engenharia

as well as politicians involved with Petrobras. Brazilian President Dilma Rousseff, who chaired the board of Petrobras from 2003 to 2010, denied knowledge of any wrongdoing.[9] The Brazilian Supreme Court authorized the investigation of 48 current and former legislators, including former President Luiz Inácio Lula da Silva, in March 2016.[4] Eduardo Cunha, ex-president of the Chamber of Deputies of Brazil from 2015 to 2016, was accused of taking approximately US$40 million in bribes and hiding funds in secret bank accounts. He is presently incarcerated.[10]

Impact on Petrobras

Petrobras delayed reporting its annual financial results for 2014, and in April 2015 released "audited financial statements" showing $2.1 billion in bribes and a total of almost $17 billion in write-downs due to graft and overvalued assets,[11] which the company characterized as a "conservative" estimate of the actual impact. Had the report been delayed by another week, Petrobras bondholders would have had the right to demand early repayment. Petrobras also suspended its dividend payments for 2015. Due in part to the impact of the scandal, and also to its high debt burden and the low price of oil, Petrobras was also forced to cut capital expenditures and announced it would sell $13.7 billion in assets over the next two years.[11]

Impact on politics

During the Peruvian presidential election in February 2016, a report by the Brazilian Federal Police implicated Peruvian president Ollanta Humala in bribery by Odebrecht for public works contracts. President Humala denied the charge and has avoided questions from the media on that matter.[17][18]

On March 4, 2016, former Brazilian president Luiz Inácio Lula da Silva was detained and questioned for three hours as part of a huge fraud inquiry into the dealings of state-owned oil company Petrobras. The former president's house was raided by federal police agents when he was brought in for questioning. Lula, who left office in 2011, denied allegations of corruption. Police said they had evidence that Lula, 70, received kickbacks. Lula's institute said in a statement the action against the former president was "arbitrary, illegal and unjustifiable", as he had been co-operating with the investigations.[19] Lula was found guilty of accepting bribes for 3.7 million reais (1.2 million dollars). The sentence was passed on July 12, for nine and a half years in prison. However, he would stay free during the appeal.[20]

On March 8, 2016, Marcelo Odebrecht, CEO of Odebrecht, was sentenced to 19 years in prison, after being convicted of paying more than $30 million in bribes to Petrobras executives.[21][22]

References

  1. ↑ "Operação Lava Jato". Federal Police of Brazil. Archived from the original on January 19, 2014.
  2. 1 2 3 4 5 6 Ministério Público Federal. "Resultados da Operação Lava Jato". Retrieved February 21, 2015.
  3. ↑ Ministério Público Federal. "Brazilian Federal Police". Retrieved February 21, 2015.
  4. 1 2 Connors, Will (April 6, 2015). "How Brazil's 'Nine Horsemen' Cracked a Bribery Scandal". The Wall Street Journal. Retrieved May 12, 2015.
  5. ↑ Economia UOL. Commercial dollar: quotation and charts. Retrieved July 23, 2017.
  6. ↑ "Leia o manifesto dos Advogados que comparam Lava Jato à inquisição".
  7. ↑ Raquel Stenzel (January 20, 2017). "Brazil Supreme Court judge handling graft probe killed in plane crash". Reuters. Retrieved January 20, 2016.
  8. ↑ Connors, Will (June 21, 2015). "Brazil 'Carwash' Shrugs Off Notoriety Tied to Petrobras Scandal". The Wall Street Journal. Retrieved June 22, 2015.
  9. ↑ Costas, Ruth (November 21, 2014). "Petrobras scandal: Brazil's energy giant under pressure". BBC. Retrieved May 12, 2015.
  10. ↑ "Brazil arrests top lawmaker behind impeachment of former president Rousseff: Police". Retrieved October 22, 2016.
  11. 1 2 Kiernan, Paul (April 22, 2015). "Brazil's Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges". The Wall Street Journal. Retrieved May 12, 2015.
  12. ↑ Jelmayer, Rogerio (April 15, 2015). "Brazil Police Arrest Workers' Party Treasurer João Vaccari Neto". The Wall Street Journal. Retrieved August 27, 2015.
  13. ↑ Magalhães, Luciana (July 3, 2015). "Brazilian Police Arrest José Dirceu, Ex-Chief of Staff, in Petrobras Probe". WSJ. Retrieved September 9, 2015.
  14. ↑ Romero, Simon (August 21, 2015). "Expanding Web of Scandal in Brazil Threatens Further Upheaval". The New York Times. Retrieved September 9, 2015.
  15. ↑ "Brazil speaker, former president charged in Petrobras corruption". Yahoo. Retrieved December 22, 2016.
  16. ↑ dayra2 (March 11, 2016). "Ministro consejero Fonseca Mora se va de licencia" [Counselor minister Fonseca Mora goes on license]. Panamá América (in Spanish). Retrieved December 22, 2016.
  17. ↑ Leahy, Joe. "Peru president rejects link to Petrobras scandal". FT.com. Financial Times. Retrieved February 24, 2016.
  18. ↑ Post, Colin. "Peru: Ollanta Humala implicated in Brazil’s Carwash scandal". Peru reports. Retrieved February 23, 2016.
  19. ↑ BBC News Brazil Petrobras scandal: Former president Lula questioned
  20. ↑ "Former Brazilian President Lula found guilty of corruption". Reuters. July 12, 2017. Retrieved July 10, 2017.
  21. ↑ Fonseca, Pedro (March 8, 2016). "Former Odebrecht CEO sentenced in Brazil kickback case". Reuters. Retrieved March 8, 2016.
  22. ↑ "Brazil Petrobras scandal: Tycoon Marcelo Odebrecht jailed". BBC. March 8, 2016. Retrieved March 8, 2016.
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