MOSCOW, November 15 (Sputnik) – Brazilian federal police have expanded the scope of the nation’s biggest political corruption scandal by arresting 27 people nationwide over allegations of their involvement in a multibillion-dollar illicit payoff system thriving in the state oil monopoly Petrobras.
Brazilian authorities suspect several Petrobras’ top managers of running a payoff corruption scheme which involved redistributing money obtained via multibillion contracts to benefit the ruling Workers Party and the non-affiliated political organizations’ political campaigning, Zeenews reports.
During the last two days, 30 police teams have arrested 27 people allegedly involved in the illicit scheme. Among them is former Petrobras director of engineering and services Renato Duque, who was arrested Friday. Several construction enterprises have been revealed to be involved in the scheme via contractual obligations with Petrobras. The quickly widening scandal has touched even the President of Brazil. The police have arrested top executives during raids in infrastructure developers OAS and Queiroz Galvao, the industrial engineering enterprise UTC and Iesa Oil and Gas. The investigators also seized plentiful documentation of the raided firms.
Brazil’s largest construction development firm, Odebrecht, also had its office searched and some documents related to Petrobras taken away as possible evidence.
Petrobras’ ex-director Paulo Roberto Costa previously said the oil company paid millions dollars in bribes to politicians, primarily of the ruling Workers Party, during 2004-2012 to expand its influence on the nation’s politics, which is a now-suspected conspiracy between the government and oil industry. Costa is speaking on a condition of a lighter sentence, held under a house arrest.
Another whistleblower in this case is Alberto Youssef, who is also testifying on a condition of plea agreement. The already convicted black-market money broker, Youssef, said recently reelected President Dilma Rousseff and her predecessor Luiz Inacio Lula da Silva either knew of the Petrobras corruption or even were involved in the scheme. They both deny such allegations. Supposedly, the ruling Workers Party was the primary initiator of the scheme which started back in 2003 as an extortion practice aimed at raising funds to solidify the Party’s political stance in an unconstitutional matter, according to an Associated Press report.
The main reason for the rife corruption in Petrobras is that it is too closely affiliated with the government while lacking transparency. The oil giant has prices dictated by the government and is obligated to pay for oil extraction, oil sales are also taxed. The decision-making in Petrobras is dominated by the government and the unions, while shareholders do not have a decisive say.
What makes things worse for the current President, who hardly won the recent election after a frustrating runoff, is that she was a board chair of Petrobras and then energy minister during the Lula da Silva administration, which puts Rousseff in an assailable position.
There is a huge public demand for a crackdown on corruption in Brazil, which means the Petrobras case, now dubbed ‘Operation Car Wash’, may well become a populist test case. During the last two years many Brazilians have taken part in street protests against corruption in the infrastructure sector and governmental enterprises, which allegedly consume too much money without providing services of corresponding quality. Petrobras, for instance, is a dramatically indebted company, which has failed to achieve the offshore oil fields’ development goals, and large part of Brazil’s oil reserves are still unavailable for commercial use. Petrobras has recently become the subject of a probe by the US investigators.
Brazilian authorities assume a total of $3.84 bn (10 bn reals) of illicit income was made as a result of the corruption scheme, now under probe. According to 24/7 Wall St. blog data, Petrobras’ American Depositary Shares (ADSs) depreciated 6% Friday to $9.60 compared to trading range of $10-$20 during the last year. To illustrate how bad things are for Petrobras, in 2008 its ADSs traded in New York at $60 to $70.
