Tag Archives: Lavo jato

Brazil – Former President Lula Sentenced to Nine and a Half Years in Prison

In a decision, where the true political ramifications are, as of yet, unknown, last week, the former two-term president of Brazil, Luiz Inácio Lula da Silva, was sentenced to nine years and six months in prison by judge Sergio Moro. Lula, of the Partido dos Trabalhadores (PT) or Worker’s Party, served as Brazil’s president between 2003 and 2011. Probably Brazil’s most popular politician in recent decades, Lula was sentenced for his part in the ever-widening Lavo Jato corruption scandal. The sentence is connected to some UK£590,000 in bribes that Lula allegedly received from the Brazilian engineering firm OAS. Apparently, Lula bought a seaside apartment in a complex built and operated by OAS for UK53,000, but OAS then ‘upgraded’ Lula to a lavishly refurbished duplex apartment worth nearly UK£600,000 in the same complex.

The Lavo Jato corruption scandal, which has engulfed the Brazilian, and increasingly the regional, political establishment centres upon bribes given to Brazilian politicians (and elsewhere) by the Brazilian construction giant, Odebrecht, in addition to a host of other companies, in return for a whole gamut of favours. In fact, Odebrecht alone has admitted to paying over US$1 billion in bribes and apparently, they even had a designated department whose sole function was to bribe governments across the region in return for state building contracts.

The scandal has rocked Brazil. The current president, Michel Temer is facing corruption charges, and a much discussed list, known as Fachin’s list, when released, contained details of prominent politicians that are under investigated for allegedly receiving payments from Odebrecht. This list is based on information provided to federal investigators in Brazil by 77 former Odebrecht executives as part of a larger plea bargain and includes at least eight government ministers, nearly a third of the whole cabinet.

The scandal has also dragged other Latin American executives into its orbit and has included allegations of corruption involving the former president of Peru, Alejandro Toledo (2001-2006), the sons of former Panamanian president, Ricardo Martinelli (2009-2014), current Panamanian president, Juan Carlos Varela, current Colombian president, Juan Manuel Santos, and in Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects.

Although this sentence hangs above Lula like the sword of Damocles, Judge Moro has allowed Lula to remain free until he appeals, a process that could take up to eighteen months. The decision will also have significant implications for the next presidential election in 2018. Lula has long been touted as a possible candidate for the beleaguered PT, and opinion polls suggest that he would be one of the hypothetical front runners in any election contest. Currently, as long as the legal action is ongoing, Lula is free to run. However, if he appeals and his appeal is successful, the verdict must completely quash Moro’s ruling. Any slight alteration or amendment to the sentence would still result in a conviction and would present Lula from running in the next election, as his case would have been heard in two different courts. If he accepts his sentence and does not appeal, he is also free to run, but he most likely will end up in prison. Not an easy choice for either Lula or the PT.

Panama – Ex-President Ricardo Martinelli Wanted in Panama on Charges of Spying

On Monday, as the current president of Panama, Juan Carlos Varela, was meeting with President Donald Trump in the White House, the former president of Panama, Ricardo Martinelli was fighting his extradition back to Panama in a court in Miami. Martinelli, who was president of Panama from 2009 until 2014, is accused of diverting and embezzling public funds in order to pay for a highly complex and sophisticated wire-tapping arrangement that allowed him to listen in on political opponents. He was arrested last week in Florida, where he has lived as a political refugee since the end of his presidency, claiming that President Juan Carlos Varela has pursued this corruption and spying case against him for political reasons.

Martinelli is accused of diverting approximately US$13.4 million that was set aside for targeted poverty relief, and using this money to instead illegally gain access to the phone calls and emails of 150 major political opponents. Martinilli’s defence in the face of extradition back to Panama is largely predicated on the argument that during his term in office, Martinelli fired the current president, Juan Carlos Varela, as his foreign minister, because it allegedly emerged that Varela was receiving illegal payments from foreign consulates. Varela’s actions, so Martinelli argues, are a type of payback for this.

Although not from the same party (Varela is from the Partido Panameñista and Martenelli is from Cambio Democrático), Varela and Martenelli established a coalition after the 2009 election, which saw Varela assume office as Martenelli’s vice-president and foreign minister. As relations became more acrimonious between the two men, Varela ran for, and won, the presidency in 2014, against the candidate of Cambio Democrático, José Domingo Arias. Shortly after he came to power, Varela launched an inquiry into the alleged illegal spying of former-president Martinelli, who then fled to the US.

Of course, this is not the first time that former president Martinelli, or former Panamanian presidents for that matter, have been embroiled in some form of corruption scandal. I have discussed the fallout from the Lavo Jato corruption scandal before on this blog, which was partly responsible for forcing Dilma Rousseff, the former president of Brazil, out of office last year. This scandal centers upon allegations of kickbacks from the Brazilian construction giant, Odebrecht, to former worker party president, Luiz Inácio Lula da Silva (2003-2011), but as the scandal has rumbled on, it has also dragged other Latin American countries into its orbit.

One of these is Panama. Prosecutors have been seeking to detain the sons of Ricardo Martinelli, Ricardo Alberto and Luis Enrique Martinelli, both of whom are accused of depositing part of a US$22 million bribe that Odebrecht paid in return for lucrative state contracts in Panama. In fact, current Panamanian president, Juan Carlos Varela, has been accused by a former advisor of receiving political donations from Odebrecht.

The US and Panama do have an extradition treaty (although rather an old one) and the US judge will decide Ricardo Martinelli’s fate next week.

Brazil – Pressure Increases on President Temer

The repercussions of the Lavo Jato corruption scandal continue to rock the foundations of the Brazilian political classes. The whole scandal centres upon bribes given to Brazilian politicians (and elsewhere) by the Brazilian construction giant, Odebrecht, in return for a whole gamut of favours. Odebrecht has admitted to paying over US$1 billion in bribes and apparently, they even had a designated department whose sole function was to bribe governments across the region in return for state building contracts.

A little over a month ago, a federal judge, Edson Fachin, released a list of prominent politicians that were to be investigated for allegedly receiving payments from Odebrecht, based on information provided to federal investigators in Brazil by 77 former co-operating Odebrecht executives. At least eight government ministers, nearly a third of the cabinet, were on this list, and it included President Michel Temer’s chief of staff, Eliseu Padilha, and his foreign minister, Aloysio Nunes Ferreira.

Well, now things have taken an even worse turn for the beleaguered government of Michel Temer. Last Friday, tapes were released by prosecutors, given to them by two brothers, Joesley and Wesley Batista, who are in control of the gigantic Brazilian meat packing firm, JBS. As part of a larger plea deal involving allegations of bribery and corruption, the Batista brothers released these tapes to the federal prosecutor, on which we can allegedly hear President Temer approving continued cash payments by the Batista brothers to the former Speaker of the House, Eduardo Cunha, in return for his silence. As part of their testimony, the Batistas also allege that President Temer received millions of dollars over the last seven years in order to fund his electoral campaigns.

The President’s office denies these allegations and disputes the validity of the tape. The Brazilian Attorney General, Rodrigo Janot however, has also accused President Temer of using his power to try and quash the investigation.

The political situation in Brazil has now only become more precarious. As has Temer’s presidency. In response to these revelations, yesterday saw violent protests in Brazil. Protestors in the capital Brasilía started a fire in the Ministry of Agriculture and damaged, and stormed, a number of other government buildings and ministries. There was an estimated 35,000 protestors on the streets of Brasilía calling for the resignation of President Temer and his cabinet in the wake of these fresh allegations of corruption. The protests, organized by labour unions and parties on the left, have clashed a number of times with police and in response, President Temer issued a decree that would allow troops, not only to guard government buildings, but also address the disorder more generally in Brasilía.

Allowing the military onto the streets of Brasilía to tackle public protests, in a country with Brazil’s past history of military authoritarianism is a good indication of how much pressure President Temer is facing. This decree was due to expire on May 31, but due to the political and public backlash to this decision, President Temer revoked this decree earlier today.

The combination of a corruption scandal and mass protests can, and indeed has, forced Latin American presidents to pre-emptively resign, or has forced the house to begin impeachment proceedings. Nonetheless, even in the face of mass protests, presidents who can boast institutional support have proven very difficult to remove from office.[1]

In this regard, things are looking bleak for President Temer. One of Temer’s coalition partners, the Partido Socialista Brasileiro (PSB), announced on Sunday that they were leaving the government coalition and joined opposition parties in calling for the President’s resignation. At the same time, the influential Brazilian bar association voted to support Temer’s impeachment. This decision will be laid formally before the lower house of Congress. Temer’s largest coalition partner, the PSDB, is apparently also considering whether they will continue as part of the ruling coalition.

This all comes at a time when Temer is trying to push an important pension bill through Congress, which would introduce a mandatory retirement age and reduce death benefits, legislation that is deemed crucial in order to deal with Brazil’s very large primary budget deficit. Given the scale of the current political turmoil, it looks like this will have to wait.

[1] See for example, Pérez-Liñán, Aníbal. 2007. Presidential Impeachment and the New Political Instability in Latin America. Cambridge University Press; or Mainstrendet, Leiv. and Einar. Berntzen. 2008. “Reducing the Perils of Presidentialism in Latin America through Presidential Interruptions.” Comparative Politics, 41(1), pp. 83-101.

 

Latin America – Odebrecht Scandal Expands across the Region

In my last post, I discussed the fallout from the Lavo Jato corruption scandal, which was partly responsible for forcing Dilma Rousseff, the former president of Brazil, out of office last year. Parts of this scandal involved allegations of kickbacks from the Brazilian construction giant, Odebrecht, to former worker party president, Luiz Inácio Lula da Silva (2003-2011). The scandal spread to Peru, where former president, Alejandro Toledo (2001-2006), has been accused of receiving US$20 million in bribes from Odebrecht in return for granting them the contract to build a large road and infrastructure project. This led to the Peruvian government offering a 100,000 soles award (approximately US$30,000) for information leading to Toledo’s arrest.

Well, the scandal rumbles on. And rumbles across the region, dragging into its orbit current and former presidents across Latin America.

In Panama, prosecutors are now seeking to detain the sons of former president, Ricardo Martinelli (2009-2014). Ricardo Alberto and Luis Enrique Martinelli are accused of depositing part of a US$22 million bribe that Odebrecht paid in return for lucrative state contracts in Panama. And current Panamanian president, Juan Carlos Varela, has been accused by a former advisor of receiving political donations from Odebrecht. In Colombia, a former senator who admitted receiving bribes from Odebrecht has accused current Colombian president, Juan Manuel Santos, of receiving illegal campaign donations from the Brazilian firm.

In Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. All of this comes amid a controversy over a government plan to settle a fifteen year debt incurred by Macri’s father when he owned the Argentine postal service. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects. And on Wednesday, prosecutors in Chile raided the Santiago offices of Odebrecht as part of a larger 10 country investigation into the political links and acitivies of the construction company.

So is there an explanation for such an encompassing and massive scandal? Part of the problem clearly lies with norms and regulations governing campaign financing across Latin America. There are few public subsidies to political parties and most campaigns are paid for by corporate donors, while repeated attempts to regulate donations have fallen short, given the lack of an incentive structure for doing so among the political classes.[1] The lack of strict regulations governing campaign financing is surely compounded by the rise of populist outsiders who appeal to “the masses” via television. Kurt Weyland has argued that “over the past 15 years, such personalistic leaders have sought to bypass established political parties and interest groups in order to reach “the people” through direct, most often televised, appeals aimed at building up a loyal following from scratch. Because its methods are costly, the new media-based politics has given ambitious politicians much higher incentives to resort to corruption.”[2]

Political donation kick-back schemes therefore like the one operated by Odebrecht are simply too difficult for many Latin American politicians to turn down, given the spiraling cost of electoral campaigns across the region. Expect more revelations to emerge.

Notes

[1] See the recent Economist article on campaign financing across the region: http://www.economist.com/news/americas/21717985-unavoidable-trade-offs-paying-democracy-how-latin-america-deals-campaign-finance.

[2] Kurt Weyland. 1998. The Politics of Corruption in Latin America. Journal of Democracy 9 (2): 108-121.