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 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.