Prison report: Lula in, Leopoldo out

While all kinds of terrible things are happening in South America and around the globe, that continent recently supplied us with a couple of pieces of very good news.

Lula

In Brazil, almost a year after socialist President Dilma Rousseff’s removal from office, her mentor, former President Luiz Inácio Lula da Silva, has been sentenced to nine years and six months in prison. Both were brought down by their roles in the Petrobras scandal, a.k.a. Operation Car Wash, the largest scandal ever in the history of that nation. Lula, a Worker’s Party politician who served two terms in Brazil’s highest office and who anointed Rousseff to succeed him, was found guilty of corruption and money-laundering. Lula plans to appeal the verdict; meanwhile, four – count them, four – other corruption trials lie ahead of him.

Dilma Rousseff

The specifics of Lula’s corruption are tawdry and rather dull: he was found guilty of taking a massive bribe – in the form of a luxury beachfront apartment – from a construction company, OAS. In addition to presenting Lula with the apartment, OAS also gave Lula’s party about $27 million in bribes in return for a suspiciously lucrative contracts with Petrobras. At the trial, Lula denied having anything to do with the apartment in question.

Protégé and mentor in happier times

It’s hard to explain just how staggering the conviction of Lula is in his home country. He’s not just a former president but a national icon. His admirers believe that his socialist policies helped boost the Brazilian economy, lifting millions out of poverty. As a result, he’s widely revered as a folk hero, the ultimate man of the people, the very personification of socialist largesse – so that the idea of him raiding the treasury on behalf of OAS in exchange for an apartment seems a particularly cheesy sort of betrayal.

Lula is actually eligible to run again for president, and, prior to his conviction, was leading the polls in the run-up to next year’s elections. But if his appeal fails, he won’t be allowed to be a candidate. In any case, his conviction has surely diminished him in the eyes of at least some of his fans.

Leopoldo López

So that’s the good news from Brazil. Meanwhile, the Supreme Court of Venezuela, which is basically a tool of President Nicolás Maduro, took an action that surprised the world: it ordered that Leopoldo López be removed from prison, where he has languished for more than three years, and placed instead under house arrest.

Nicolás Maduro

López, of course, is someone whose fortunes we’ve been following pretty closely on this site: as we wrote in March of last year, he is “the chavista regime’s most eloquent critic [and] the opposition’s most charismatic leader” and was plainly locked up “for no other reason than that he is …by far the most potent threat to the power of…Maduro.”

Hugo Chávez

This is a man who, as mayor of one of the five municipalities that make up Caracas, was recognized for his erudition and eloquence and showered with international awards for excellence and transparency in public service – making him the very antithesis of the crude caudillo Hugo Chávez and his lunkhead successor, Maduro. As we have put it previously:

López is so manifestly everything that Maduro is not, so completely the Gallant to his Goofus, that it seems almost too tidy a scenario; if this were a film script, the producer would almost certainly order the writer to make the villain at least somewhat less buffoonish and corrupt and the hero somewhat less noble and courageous.

Liliana Tintori at the White House in February with President Trump, Vice President Pence, and Senator Marco Rubio

Our most recent mention of López here was in March, when we noted that his wife, Liliana Tintori, had met with President Trump at the White House not long after the latter’s inauguration. At the time, Trump issued a call for López’s immediate release. It was more than President Obama had ever done for López, and it may well have made a difference.

In any event, López is out of jail, and that’s good news. But, like the rest of the people in his country, he’s not yet entirely free. We’ll continue to keep an eye on the course of Venezuela’s fortunes, and Leopoldo’s.

Enemies of reform in Brazil

Dilma Rousseff

Last August, the socialist president of Brazil, Dilma Rousseff, was removed from office for corruption. As we’ve noted on this site, fellow socialists came to Rousseff’s defense, with David Miranda (husband of notorious Edward Snowden helpmeet Glenn Greenwald) arguing in the Guardian that Rousseff was the victim of corporations and rich people who don’t like socialism.

But in the weeks leading up to Rousseff’s removal, millions of Brazilians took to the streets to protest her corrupt government and the deep and lingering economic recession over which she had presided, and to demand her departure from office. Ideologically, the protests were not unlike those currently rocking Venezuela (which, of course, is in far worse shape than Brazil): people were sick of having their freedom squelched and their economy mismanaged.

Michel Temer

Rousseff, a member of the Workers’ Party, was replaced by her vice president, Michel Temer, who belongs to the more conservative Brazilian Democratic Movement Party. Now, Temer is no saint. Like Rousseff before him (and like many others who still hold high positions in his government), he’s been implicated in the massive “Lava Jato” corruption case surrounding the federally owned oil company, Petrobras.

Here and below: some images from the General Strike

During his brief tenure, though, he has at least sought to rescue Brazil from the consequences of his predecessor’s socialist policies. Taking office in the midst of an economic crisis, he warned that Brazil’s economy faced a “meltdown” unless “severe fiscal discipline and belt tightening” were introduced.

Pronounced himself the head of a “national salvation government,” he began instituting the kind of reforms – including significant changes in public employment contracts and pension arrangements – which, although uncomfortable in the short term for many working-class Brazilians, sought to correct policies that simply could not be sustained in the long term without doing to Brazil something similar to what chavismo has done to Venezuela. Indeed, Temer’s reforms might well have helped Brazil, which has long been looked to as a nation of immense but unfulfilled economic promise, to finally develop, within a few years, a robust First World economy dominated by a large and prosperous middle class.

But many workers, unsurprisingly, weren’t happy with Temer’s new policies. The socialists felt threatened to their core. And the labor unions were outraged. On April 28, a new set of public protests began. This time, however, it wasn’t a matter of angry citizens taking spontaneously to the streets. This was a nationwide general strike, the first in Brazil since 1996, called by the labor unions. Schools were closed. So were most businesses. Public transport came to a near-total halt. The entrances to many airports were blocked. Media described the nation as “paralyzed.” There was widespread violence. Cars and trams and buses were burned. In the Sao Paulo neighborhood where Temer owns a house (he currently lives in the vice-presidential residence in Brasilia), protesters “broke up sidewalks and lobbed chunks of concrete at police.”

While socialist leaders celebrated the general strike as an effective pushback against Temer, others disagreed. Yahoo News, for example, quoted landscape architect Marcelo Faisal as saying that “reforms need to take place” and that the strike hadn’t (in Yahoo’s words) “lived up to the hype.” A shipping news website seconded this view, reporting with relief that the strike had “impacted the country’s ports, especially the largest port of Santos, less than originally feared.” Doubtless we haven’t heard the last of the enemies of reform in Brazil, but it may well be that despite their occasional noise-making, the necessary reform will, after all, be able to proceed. And in the end that will likely be good news for almost everyone in that huge and promising country.

Exit Rousseff

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Dilma Rousseff

Well, it’s over. On Wednesday, Brazilian president Dilma Rousseff was removed from office.

Back in January, we wrote about the increasing calls for Rousseff’s impeachment by ordinary Brazilians who had lost faith in her government’s disastrous socialist policies, who were disgusted by the massive scandal surrounding the government oil firm, Petrobras, and who – bottom line – were determined not to let her turn their country into another Venezuela.

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Olavo de Carvalho

Brazilians, commented Romanian-American political scientist Vladimir Tismaneanu, were turning out to be less susceptible to utopian promises than their neighbors in Venezuelan and Argentina. Philosopher Olavo de Carvalho observed that Brazilians weren’t just rejecting Rousseff – they were rejecting “the whole system of power that has been created by the Workers’ Party, which includes intellectuals and opinion-makers in the big media.”

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Dilma the terrorist: a mug shot

Today, on the other side of the Brexit vote and the GOP’s nomination of Donald Trump, it’s hard not to wonder whether the grassroots Brazilian effort to oust Rousseff is part of a spreading global thumbs-down for corrupt, supercilious socialist elites. If so, good show. 

As it happens, we spent that whole week in January on Rousseff, recounting her beginnings as a rich girl who joined a revolutionary terrorist group called COLINA; her entry into politics (a career in which, from the outset, she distinguished herself by her combination of administrative incompetence and genius for making and exploiting connections); and, finally, her increasingly disastrous tenure as president, capped by the Petrobras scandal, described by the Wall Street Journal as “the biggest corruption case ever in a country with a long history of scandals.”

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Kim Kataguiri addressing an anti-Rousseff rally

We also profiled one of the leaders of the anti-Rousseff movement, 20-year-old Kim Kataguiri, whose activism was spurred when one of his college teachers praised the socialist policies of the ruling Worker’s Party. Kataguiri responded by making a series of You Tube videos promoting free-market capitalism and founding the Free Brazil Movement, which has grown like kudzu.

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Rousseff with Lula

In March, we noted the arrest of a Rousseff sidekick, the imprisonment of two more of her cronies, and the resignation of her justice minister; in April, we reported on a government raid on the home of former president – and fallen saint – Luiz Inácio Lula da Silva. (We also noted Rousseff’s unsuccessful, and patently ludicrous, attempt to shield him from prosecution by naming him as her chief of staff.) Not long after, we reported that Marcelo Odebrecht, the CEO of Brazil’s biggest construction firm – and, naturally, a close associate of Rousseff’s – had sentenced to 19 years for bribing authorities in connection with Petrobras contracts.

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Glenn Greenwald and David Miranda

Later in April, we learned that notorious journalist Glenn Greenwald (of Edward Snowden scandal fame) and his husband, David Miranda, were on Team Rousseff, with Miranda signing his name to a Guardian op-ed accusing Rousseff’s opponents of seeking to engineer (what else?) a “right-wing coup.” In a July profile of callow, reliably far-left Salon columnist Ben Norton, we pointed out that he’d used the same exact words as Miranda, calling Rousseff the victim of a would-be “right-wing coup.”

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Evo Morales

And now – well – here we are. She’s out. Congratulations to the people of Brazil. Needless to say, this doesn’t mean an instant turnaround for their country –that’ll take serious, comprehensive reform – but it’s a necessary start. 

Oh, and then there’s this news. In reaction to the “right-wing coup” in Brasilia, three of Rousseff’s fellow socialist economy-destroyers – Rafael Correa of Ecuador, Nicolás Maduro of Venezuela, and Evo Morales of Bolivia – all recalled their ambassadors. Well, birds of a feather and all that. Let’s hope their days in power are numbered, too.

The callow Kirchnerite: Ben Norton

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Ben Norton

This week we’ve been perusing the writings of highly prolific Salon contributor Ben Norton, who in a career that is now barely three years old has established himself as a leading American champion of Islam and hard-core socialism and a major detractor of the U.S., Israel, and “neoliberalism.”

Before we say goodbye to Norton, let’s take a quick look at another frequent topic of his work – namely Latin America. Unsurprisingly, he’s heaped praise on socialist leaders – such as Nicolás Maduro in Venezuela and Cristina Kirchner in Argentina – who’ve damaged economies, arrested opponents, and suppressed civil liberties (after all, their hearts are in the right place!), while predictably demonizing “neoliberal” leaders who’ve brought their countries freedom and prosperity. Citing such far-left sources as Noam Chomsky and Glenn Greenwald, Norton has referred to the impeachment of Brazil’s leftist president, Dilma Rousseff, as a “right-wing coup.” In May, he attacked New York Times editorial-board member Ernesto Londoño, who in a recent article had done two things of which Norton disapproved.

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Glenn Greenwald

What two things? First, Londoño had committed the unpardonable act of “bashing Venezuela’s elected leader.” In fact, what Londoño had done was simply to criticize the human-rights violations committed by the government of President Maduro – who, as Londoño truthfully noted, had become “a petty dictator.” Second, Londoño had praised the man Norton referred to as “Argentina’s new right-wing [read: non-socialist] President Mauricio Macri,” whom Norton criticized for having “capitulated to vulture funds” and for “forcing through brutal neoliberal cuts.” In reality, Londoño, in commenting about Marci, had merely noted with obvious admiration Macri’s longstanding criticism of chavista human-rights abuses.

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Ernesto Londoño

What about those “vulture funds” – the Kirchner crowd’s disparaging term for the U.S. hedge funds to which Argentina owned billions of dollars, but that Cristina Kirchner refused to pay a single peso, preferring instead to vilify her creditors and let her country default on its sovereign debt for the second time in fourteen years? Londoño hadn’t said a word about those funds; but Norton apparently couldn’t forgive Macri for having decided to pay his country’s debts and move beyond Cristina’s disastrous default. As for those “brutal neoliberal cuts”? Londoño hadn’t mentioned them, either. Of course, to Norton, neoliberalism is a dirty word, and budget cuts are by definition brutal. But the plain fact is that Macri – who appears to understand economics a good deal better than Norton does (and better, for that matter, than Chávez or Maduro or Kirchner or Rousseff) – is simply trying to keep Argentina from heading down the same road that has led Venezuela to utter economic ruin.

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Mauricio Macri

But what does Ben Norton know or care about such realities and responsibilities? Or about the long-term impact of capitalist vs. socialist economics on the everyday lives of ordinary people? Or, again, about the reality of day-to-day life in free, democratic societies vs. day-to-day life under putatively progressive autocrats or Islamic totalitarians? Again and again, he has shown that the lessons of the twentieth century are lost on him. He seems to bang away at his articles in a child’s little corner of world, sheltered from the ugly, distant realities of theocracy and despotism and clueless about how fortunate he is to be living in a free, prosperous country that he’s been taught to regard as the planet’s chief purveyor of evil. In every word that he writes, in short, Ben Norton comes across as an utter naif – which is to say that he is every bit as callow about the way the great world operates as he appears to be in his photographs.

Defending Dilma: Greenwald and Miranda

In recent weeks we’ve watched the massive Petrobras scandal in Brazil spread wider and wider, taking down politicians and business figures, big and small, until it finally reached the most powerful person in the land: the country’s corrupt president, Dilma Rousseff. She is now facing impeachment.

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Brazilian Congressman Jean Wyllys

On April 20, Shannon Sims of Forbes reported on the novel responses by Rousseff’s stooges to the legislature’s vote to impeach her. Some of them are describing it as a “right-wing coup” – a ridiculous way to characterize a constitutionally legitimate action that is amply justified by Rousseff’s conduct in office. There are other, equally absurd takes on the impeachment: Congressman Jean Wyllys has called it “sexist,” an effort by anti-woman reactionaries to unseat Brazil’s first female head of state.

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Dilma Rousseff

Rousseff herself is one of those who have called the impeachment a coup. She’s responded in a characteristically authoritative way, threatening to have Brazil removed from Mercosur, the South American common market, if she’s removed from office. She’s accused her potential successor, Vice-President Michel Temer, of being a leader of the “coup” – a charge that he denied angrily, rejecting the notion that Brazil is “some minor republic where coups are carried out.”

David Miranda
David Miranda

Meanwhile one David Miranda contributed an article to the Guardian in which he purported to explain the “real reason Dilma Rousseff’s enemies want her impeached.” Never mind her corruption in office. Rousseff, insisted Miranda, was being targeted by “rich and powerful” conservatives and the major corporations they own, for no other reason than that they oppose her left-wing politics.

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Glenn Greenwald

Who is David Miranda? You may have run across his name while reading about the scandal surrounding Edward Snowden, the former contractor for the U.S. National Security Agency who stole sensitive secret papers and passed them on to journalist Glenn Greenwald, who in turn published them in the Guardian. At the height of the controversy, in August 2013, U.K. police detained Greenwald’s husband at Heathrow Airport on his way from Berlin to Rio de Janeiro and seized thumb drives containing tens of thousands of classified British Government documents. They’d been given by Snowden, who’d received asylum in Russia, to Laura Poitras, a partner in Snowden’s scheme, who’d then passed them on to Greenwald’s husband so that he could deliver them to Greenwald, with whom he lives in Rio.

The name of Greenwald’s husband? David Miranda.

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Miranda at the airport in Rio de Janeiro, after his detention at Heathrow

This past January, Britain’s Court of Appeal ruled Miranda’s detention at Heathrow legal. The editors of The Spectator approved, describing Miranda as “a mule for industrial-scale sabotage” and arguing that “the right to a free press [does not] extend to the indiscriminate release of secret documents which put agents’ lives in danger, or alert terrorists to the gaps in our capabilities.” Indeed, as The Spectator pointed out, many of Miranda’s staunchest champions in Britain, who invoked the freedom of the press in his defense, are not consistently fans of press freedom; on the contrary, their real reason for standing with Miranda was patently that his actions were potentially very harmful to the U.S. and Britain and very helpful to those countries’ jihadist enemies.

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An anti-Rousseff protest in Sao Paulo last December

It is no coincidence that Miranda, who in his capacity as Greenwald’s “mule” acted against the interests of the U.S. and Britain, is now standing shoulder to shoulder with the socialist regime of Brazil. His claim? That the massive, ever-growing street rallies against Rousseff’s corrupt regime are something of an artificial phenomenon – almost a mirage. The protests, he maintains, didn’t happen organically: they were incited by the anti-Rousseff media. Moreover, being “disproportionately white and wealthy,” the protesters themselves are “not remotely representative of Brazil’s population.” Miranda, as it happens, had already made much the same argument in an earlier article, published in March and written in collaboration with Greenwald and Andrew Fishman. 

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Anti-government protest in Venezuela: a picture from 2014

Attentive readers of this website may recall that supporters of the corrupt, authoritative governments of the late Hugo Chávez and his anointed successor, Nicolás Maduro, in Venezuela, have used much the same arguments (they’re rich, they’re white, they’ve been ginned up by the media) to discredit opponents of chavismo. The Tea Party movement in the U.S. has also been dismissed in similar terms. Somehow protesters aren’t authentic if they don’t fit the right demographic.

In this photo provided by Brazil's Presidency, Brazil's President Luiz Inacio Lula da Silva, left, and Brazil's newly elected leader Dilma Rousseff, make a sign of victory, at the Alvorada palace, in Brasilia, Brazil, Monday, Nov. 1, 2010. (AP Photo/Brazil's Presidency, Ricardo Stuckert) NO SALES
Dilma and Lula

It’s worth noting, by the way, that the chavistas in Caracas have longstanding ties to Rousseff and her predecessor, Luiz Inácio Lula da Silva, in Brasilia. And the ideological continuities are obvious. And just as the chavistas’ incompetent administration, socialist policies, and corrupt conduct have combined to drag Venezuela’s economy into the gutter, so it has become increasingly obvious that the exact same attributes on the part of Brazil’s rulers threaten to bring down its own economy, which not long ago seemed to be on the verge of First World-level prosperity.

In any case, whatever you may think of Greenwald’s other activities, it’s certainly interesting to see him and Miranda – who made their names trying to compromise American and British security, all the while seeking to paint themselves as principled – shamelessly carrying water for the socialist thugs who run Brazil. 

The bag man and the money mole

We’ve been looking at some of the more colorful Brazilian stooges whose careers have gone belly-up as a result of the massive corruption scandal surrounding Petrobras, the state-run oil giant. Here are three more. 

Brasil, Brasília, DF. 18/10/2005. O doleiro Alberto Youssef, operador do mercado financeiro que teria ligações com a corretora Bonus-Banval, depõe na sub-relatoria de Movimentação Financeira da Comissão Parlamentar Mista de Inquérito (CPMI) dos Correios, no Congresso Nacional, em Brasília (DF). - Crédito:JOEDSON ALVES/ESTADÃO CONTEÚDO/AE/Código imagem:161138
Alberto Youssef

Let’s start with Alberto “Beto” Youssef. A Bloomberg profile last year described him as “Brazil’s black-market central banker” – meaning that over the years he’s “smuggled cash for the rich and powerful” as part of a plethora of sleazy schemes. As a result of all this sordid activity, he’s been arrested nine times on a wide range of charges.

But his most recent role is definitely the role of a lifetime. Youssef was none other than the bagman in the Petrobras affair. Which means that when a blizzard of construction firms “bribed politicians and executives to look the other way as they inflated contracts” with Petrobras and other government-owned firms, Youssef played banker. He’s fessed up about all this to prosecutors – and, in the process, has also fingered other participants in the scheme, all the way up to President Dilma Rousseff herself, who ran the oil firm from 2003 to 2010. In return for his cooperation, his prison sentence of nine years and two months for money-laundering was reduced to three years. 

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Rafael Angulo Lopez

Working as Youssef’s “money mule” in the Petrobras affair was a guy named Rafael Angulo Lopez, who “flew around the world with shrink-wrapped bricks of cash strapped underneath his clothing.” Last August, the New York Times quoted his lawyer as saying that Lopez “took hundreds of trips…with portable fortunes cinched under his clothing.” On one occasion, he traveled with five hundred thousand euros in cash on his person. “He wore the sort of socks favored by soccer players,” reported the Times, and, when the haul was especially large, an orthopedic undershirt.”

The Independent provided even more details: Lopez would wrap “piles of bills in plastic wrap, pricking the packages and then squeezing them to get all the air out.” He then “stuck the packages to his legs, torso and arms and concealed them with elasticated clothing like Spanx and compression socks, underneath a baggy suit.” In this way, he managed to transport “up to $1.4 million to Europe on his body on commercial flights.” Quartz suggested that the story be turned into “a Brazilian version of Wolf of Wall Street, with middle-aged couriers in baggy suits and compression vests in place of Swiss misses in stilettos and bikinis.”

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Paulo Roberto Costa

Then there’s Paulo Roberto Costa, Petrobras’s former director of refining and supply, whose acceptance of a $78,000 Land Rover from Youssef marked the genesis of Operation Car Wash and whose confirmation of Youssef’s testimony – and implication of several dozen politicians in the scheme – helped widen the probe dramatically.

It also brought his sentence down to time served – a year in the can – plus another year’s house arrest. Without my tip-off, the probe would not have existed,” he bragged in November. He’s now writing a book about his experiences. Presumably he’ll make a nice little sum off of that.

The tarnishing of Brazil’s “golden boy”

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André Esteves

To an extraordinary extent, the Brazilian investment bank BTG Pactual – described by Dan Horchjan of the New York Times as one of the rare Latin American firms of its kind that rival the top Wall Street and European banks – owes its existence, and its years of spectacular success, to a single individual: its self-made founder and CEO, André Esteves. As people in his line of work go, he’s been an unusually prominent figure in Brazil. “More than any other financier,” Horchjan wrote recently, Esteves “was the face of Brazil’s global ambitions during the country’s recent, short-lived boom – in a hurry to grow and unafraid to compete against anyone, anywhere.” Esteves, whom Bloomberg has called the “golden boy” of Brazilian banking, used to say that the letters BTG in the name of his firm stood for “better than Goldman.”

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Huw Jenkins

To be sure, the company has had its share of controversies. In 2007, Esteves was convicted of insider trading. In 2013, BTG Pactual partner Charles Rosier was found guilty in the largest insider-trading case in French history. Other accusations of questionable conduct have been made by high-profile observers but not acted upon. In 2006, for example, Esteves sold BTG Pactual’s predecessor, named simply Pactual, to UBS, the Swiss financial-services company, for $2.6 billion (becoming Brazil’s youngest self-made billionaire), only to buy it back three years later for a smaller sum and combining it with his new firm, BTG, to create BTG Pactual. More recently, Esteves and a BTG Pactual director, Huw Jenkins, were sued in a Hong Kong court for $20 million for making “fraudulent misrepresentations” to secure a deal. Three times since 1999, BTG Pactual has been taken to court by Brazilian authorities for shifting money around to mask profits and thus shirk taxes.

Brasília - Senador Delcídio do Amaral coordena o 1º Fórum Nacional de Infraestrutura. Em debate, transporte, energia elétrica, combustíveis, mineração, telecomunicações, saneamento, entre outros(José Cruz/Agência Brasil)
Delcídio do Amaral

But all of this is now mere background – perhaps even just a series of footnotes. We talked yesterday about the arrest and conviction of Latin America’s #1 construction contractor, Marcelo Odebrecht, as part of Operation Car Wash, the massive probe into corruption surrounding Brazil’s state-owned oil firm, Petrobras. After his arrest last June, Odebracht tried to slip a note to his lawyers asking them to destroy e-mails that implicated Esteves. The note found its way into the wrong hands, so that Odebrecht inadvertently ended up fingering Esteves. Esteves’s name was also mentioned in a recorded conversation in which suspects in Operation Car Wash – notably Delcidio do Amaral, the top-ranking Senator in the Workers’ Party – discussed plans to pay a potentially unfriendly witness, Nestor Cervero, the former head of Petrobras’s international division, to leave the country. And police found a note suggesting that BTG Pactual had bribed a congressmen to the tune of millions of dollars. On November 25, Esteves was arrested – and so was Amaral, who became the first sitting legislator to be swept up as a result of the Petrobras probe.

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Marcelo Odebrecht

In a January report on his downfall, the Times‘s Horchjan highlighted “its apparent senselessness.” He quoted analyst Luis Miguel Santacreu as saying that BTG Pactual’s deals with Petrobras and the Brazilian government “were relatively small and had nothing to do with the bank’s core business, which was very profitable….They didn’t need any of these deals to keep on growing.” Felipe Monteiro, a French professor of strategy, made the same point in a comment to Bloomberg: “He epitomizes the idea of a private, successful, entrepreneurial generation of Brazilian bankers,” and so his involvement in “the most classic type of old politics is somehow strange.” It’s especially strange given that BTG Pactual actually lost money on its government deals even as it was turning tidy profits on its core, non-state-related business.

As Marcelo Odebrecht’s ruin sent the Brazilian construction sector tumbling, so the destruction of Esteves’s career shook the country’s financial sector to its roots. Now BTG Pactual’s shares are worth half of what they were. Its bonds are considered junk.

Marcelo’s way

The Odebrecht Group is one of those conglomerates whose international reach and level of diversification make one’s head spin. It’s the largest construction outfit in Latin America; Braskem, one of its innumerable subsidiaries, is Latin America’s biggest petrochemical producer.

“They are more than a company,” a Brasilia-based consultant, Thiago de Aragão, told the Wall Street Journal recently; “they are a symbol of modern Brazil.”

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American Airlines Arena

Indeed. It’s Odebrecht that is responsible for Miami’s $213-million American Airlines Arena, where the Miami Heat play. It’s Odebrecht that is Angola’s top private employer, with over 24,000 employees in that country alone. At this moment, among many other projects, Odebrecht is building a highway in Ghana that will connect the capital, Accra, to remote eastern regions of the country; it’s expanding and adding bridges to a highway that links Guatemala’s main ports with the Mexican border; it’s upgrading a major airport in Mozambique; it’s constructing an elaborate hydroelectric facility in Portugal; it’s installing “the world’s deepest and most complex sewage pump station” in Abu Dhabi. In 2014 the group celebrated its seventh decade in business.

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Marcelo Odebrecht

On March 8, the firm marked another milestone. That was the day on which its CEO, Marcelo Odebrecht, the grandson of the company’s founder, was sentenced to 19 years in prison after being convicted of paying $30 million in exchange for contracts and influence at Petrobras, the state-owned Brazilian oil firm that is at the center of the massive corruption probe known as Operation Car Wash. According to prosecutors, Marcelo’s firms “used Swiss bank accounts to launder nearly $270 million in bribes” between 2006 and 2014.

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Judge Sergio Moro

The presiding judge, Sergio Moro, said Marcelo Odebrecht was “directly involved” with this systematic bribery and money-laundering and “guided the work of others.” This intimate involvement was demonstrated by (among other things) incriminating messages stored on eight cellphones found at Marcelo’s home. While other construction executives nabbed in the probe have bought themselves shorter sentences by turning state’s evidence, Odebrecht refused to spill the beans, saying that he would punish his own kids more harshly for tattling than for cheating.

Marcelo Odebrecht in happier times, with Dilma Rousseff and Raúl Castro

Given the conglomerate’s dimensions and its importance to the Brazilian economy, the arrest and conviction of Marcelo – who took over the reins of the family firm in 2008, at age 40, and whose nickname is “Prince of the Contractors” – is of obvious significance. According to the Journal, Marcelo’s arrest in June of last year caused an economic earthquake, contributing to the onset of Brazil’s current recession. But what makes these developments even more momentousness is Marcelo’s intimate relationship with the Rousseff administration. When the president met with business leaders, Marcelo was invariably present. “Some of the other executives,” one São Paulo businessmen told the Journal, “were jealous that he always got invited and they had to fight for a seat at the table.”

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Lula

Marcelo is close not only to Dilma Rousseff but to her predecessor and mentor, former President Luiz Inacio Lula da Silva, who is himself being investigated for allegedly accepting illegal funds from Odebrecht.

One thing about having global reach is that when you get in trouble, the investigations, too, will have a global reach. Swiss and Portuguese authorities are now looking into charges of wrongdoing by Marcelo, and several other countries are considering similar probes.

Brazil: seeing the monster

Time for another quick trip down to Brazil.

We’ve reported earlier on the multibillion-dollar Petrobras scandal, which is making every American political scandal since Watergate – put together – look like a mere bagatelle. In recent months, as the investigation has widened, more and more top-level businessmen and politicians have been implicated in the kickback scheme centered on the country’s state-run oil firm.

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Dilma and Lula

And just as with Watergate, the net has reached ever higher. In just the past few weeks, authorities have raided the home of the beloved ex-president Luiz Inácio Lula da Silva (known popularly as Lula) and detained him for questioning, in response to which President Dilma Rousseff tried to name Lula as her chief of staff to protect him from prosecution – only to have the appointment blocked by a federal judge. Meanwhile, Rousseff herself has been drawn into the probe, leading to calls for her resignation or impeachment. In short, it’s looking very much these days like an endgame.

Brasil, Brasília, DF. 18/10/2005. O doleiro Alberto Youssef, operador do mercado financeiro que teria ligações com a corretora Bonus-Banval, depõe na sub-relatoria de Movimentação Financeira da Comissão Parlamentar Mista de Inquérito (CPMI) dos Correios, no Congresso Nacional, em Brasília (DF). - Crédito:JOEDSON ALVES/ESTADÃO CONTEÚDO/AE/Código imagem:161138
Alberto Youssef

Things have come a long way since March 2014, when, as David Segal of the New York Times reported in August, Alberto Youssef, described by Segal as “a convicted money launderer and former bon vivant,” sat in his jail cell and told two lawyers that about to reveal information to them that would bring down the Brazilian republic. As Youssef listed the names of the parties who, he claimed, had enriched themselves with Petrobras funds, the attorneys became increasingly aghast; one of them, Tracy Reinaldet, told Segal that “in Brazil, we know that corruption is a monster. But we never really see the monster. This was like seeing the monster.”

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João Vaccari Neto

In the case of Petrobras, the monster is many-headed one. So far over 100 indictments have been issued, several politicians arrested, and over a dozen companies sued. We’ve examined the cases of João Vaccari Neto, treasurer of the ruling Workers’ Party, and party hack Renato Duque, both of whom have been sentenced to long prison terms, the former for corruption and money-laundering, the latter for padding Petrobras contracts and transferring the excess take to party coffers.

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Joao Santana

We’ve discussed Joao Santana, Rousseff’s answer to Clinton campaign strategist James Carville, who was arrested for knowingly accepting payments from those illicit funds. And we’ve surveyed a number of others who’ve been nabbed for their roles in this massive scheme – among them, Paulo Roberto Costa, Petrobras’s former supplies director; Ricardo Pessoa, owner of UTC, a major construction company; and José Dirceu, Lula’s ex-chief of staff. Then there’s a couple of guys who turned state’s evidence: former Petrobras manager Pedro Barusco, who admitted he’d pocketed almost $100 million in dirty money, and businessmen Julio Camargo, who confessed to paying Petrobras $4.5 million in bribes.

But these names are just the tip of the iceberg. Several other big shots from both the public and private sector have also gone down, some of them since our previous look at this debacle. We’ll spend the rest of this week making their acquaintance.

A desperate move in Brazil

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Joao Santana

On February 23, as we noted yesterday, Joao Santana, the James Carville to Dilma Rousseff’s Bill Clinton, was unceremoniously arrested in connection with the massive police probe into price-fixing, bribery, and kickbacks at Petrobras, the Brazilian state petroleum firm. Only six days later, Brazil’s justice minister, Jose Eduardo Cardozo, resigned. Why? Because he, too, had been implicated the corruption? No – because members of the ruling Workers’ Party were furious at him for having failed to put an end to the corruption investigation, known as Operação Lava Jato (Operation Car Wash). Cardozo, a veteran member of the Workers’ Party who has previously served as congressman and mayor of São Paulo and who has long been counted as a “close and reliable friend to the president” and as one of her “most faithful champions,” was the second member of Rousseff’s cabinet to leave in recent months; the first was Joaquim Levy, who resigned in December from the position of Minister of Finance.

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Jose Eduardo Cardozo

Cardozo’s resignation came in the wake of news that the probe had broadened to included none other than Luíz Inácio Lula da Silva, Brazil’s widely revered ex-president, who was in office from 2003 to 2010. According to reports, courts were on the verge of subpoenaing Lula’s financial records. Cardozo’s refusal to interfere in police efforts – and thus keep the damage from spreading to more and more fellow Workers’ Party members – spelled the end of his tenure at the Ministry of Justice. Although Brazilian police are technically under the ministry’s authority, the Minister of Justice has no legal authority to interfere with their activities.

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Rousseff and Lula in happier times

Operation Car Wash has already taken down a long list of top business leaders and Workers’ Party politicians. But as the probe closed in on Lula, the panic in the circles surrounding Rousseff intensified – as did outrage at Cardozo for failing to rein in what loyalists insist on describing as a political witch hunt. Lula, who had already been confronted recently with questions from the police about his children’s shady financial activities, is now being scrutinized over renovations performed at two of his properties, a luxurious beach-front apartment and a rural estate. The renovations were performed by construction firms implicated in the Petrobras corruption; Lula insists, however, that the two properties don’t belong to him.

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Wellington Cesar

Is Cardozo totally out of the government? Far from it. In a neat twist (leave it to corrupt autocrats to come up with moves so rich in poetic irony), he’s been shifted to the job of Attorney General – a position in which he’ll be tasked with protecting Rousseff & co. from the very same investigators who’ve been allowed to proceed with their work under his authority. Meanwhile, Cardozo’s replacement at Justice, one Wellington Cesar Lima e Silva, is expected to lean on those investigators to lay off Lula – and, of course, the president herself. 

It’s looking likelier by the day, however, that any efforts to fend off the fuzz may be in vain. On March 1, the media reported on a plea bargain in which eleven officials of Andrade Gutierrez, Brazil’s second-largest engineering firm, admitted to having paid over $1.27 million under the table to suppliers for Rousseff’s 2010 campaign. As Reuters put it, this testimony represented “the first direct link between the widening ‘Operation Carwash’ investigation into bribes and political kickbacks at state-run oil company Petrobras and the election of Rousseff.”

The sands are shifting fast in Rousseff country. Stay tuned.