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

FIFA Official arrested
One of the seven FIFA officials arrested walks from the Baur du Lac hotel following a dawn police raid_New York Times

FIFA, the world organizing body for football, and famously the organizer of the World Cup, is based in Zurich, Switzerland. But when authorities quietly escorted 7 FIFA executives out of a posh hotel in Zurich where a FIFA executive meeting was being held in May, 2015, it was due to the work of the FBI in the United States. I thought, “Wow”, that’s influence. Why is the US driving this and not another country, perhaps one more steeped in football lore where the loss of purity in sport would rankle more deeply.

I’m still not clear on this, but according to this thorough and fascinating piece from ESPN, the roots of the investigation that led to arrests at FIFA began in an FBI Bureau in Brooklyn, New York. When FIFA announced in December, 2010 that not only did Russia win the right to host the 2018 World Cup, but that Qatar won that honor as well for 2022, suspicions ran particularly high that something fishy was up.

As the article explains, “even the laziest ExCo members lived like kings. They each received $200,000 annual stipends, along with liberal per diems every time they went to Zurich. And they controlled the votes that decided where the most watched event in sports, the World Cup, would be played. This selection process seemed engineered for bribery, the FBI agents thought.”

Chuck Blazer with FIFA head Sepp Blatter
Chuck Blazer and Sepp Blatter in better days.

The FBI first focused their attention on a member of the FIFA ExCo who happened to be based in New York, Chuck Blazer. He’s a large man, whom Russian President Vladimir Putin joked looked like Karl Marx, and was so caught up in cloak-and-dagger, stab-you-in-the-back FIFA politics, and so sick from the ravages of diabetes and cancer, that he turned. Blazer became the FBI’s inside man, recording conversations with other FIFA leaders for over a year, providing a “wealth of information” on the inner workings of a scandalous organization.

Another primer for the FIFA scandal is this piece from 60 Minutes, which features the lead FBI investigator John Burretta, as well as the long-standing thorn in the side of FIFA and the IOC, BBC journalist Andrew Jennings. Jennings’ talk on corruption in FIFA had fallen on deaf ears for years before he finally found redemption in these arrests.

John Burretta on 60 Minutes

Of all the things I learned, here’s the bit that got me. Not only did Blazer live in the luxurious Trump Tower (rent $18,000 a month), he had a smaller apartment next door, “reportedly for his cats”.