Petrobras Scandal: Bottom of the Brazilian Barrel or Light at the End of the Tunnel

Petrobras 3

Brazil is facing the worst economy in 25 years. The Zika virus is feeding fears, particularly for expectant mothers. And while the Rio Olympics are presenting an opportunity to shine the international spotlight on Brazil, the underclass are generally feeling that the only people who will benefit from the Games will be the fortunate rich and powerful.

And then, there is Petrobras, a government entity embroiled in a bid rigging scandal between officials in the state-owned energy company and construction companies that wish to win Petrobras projects. A secret cartel of construction companies work with Petrobras officials to select the construction company, purposely agree to exorbitant payments, after which the construction companies kick back payments back to the collaborating Petrobras officials, who use that money to fund friendly politicians, which is helpful for a state-owned organization. It is estimated that the scandal has resulted in over USD5 billion changing hands in various illegal transactions. That’s astounding.

Petrobras bidness 2

I have not done this explanation justice, which is why I want to point you to this very clear and effective explanation of the Petrobras Scandal, and the historical and political context, by Zach Beauchamp.

In Brazil right now, if anything can go wrong, it seems it will go wrong – just on the verge of commencing Brazil’s greatest party of them all, the Olympic Summer Games in Rio.

But one thing we can say about the Petrobras Scandal, something that Beauchamp points out at the end of his article. This scandal, which has been tabloid fodder for months in Brazil, is known only because of certain institutions doing their jobs and having the courage to maintain integrity. Apparently due to corruption in the past, Brazil has a constitution that created the “Public Ministry”, an independent government body designed to investigate the wrongdoing of government officials.

As Beauchamp explains, since the scandal broke, the Public Ministry and the police have been able to convict over 80 people related to the scandal, some fairly influential individuals.

In other words, despite the negative PR hanging over Brazil like a dark cloud, the work of the Public Ministry is, in my view, an indication more than the World Cup or the Olympic Games, that Brazil is taking a giant leap forward in the community of nations.

Petrobras bidenss 1