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Petrobras Scandal Snares Brazil's Best-Known Leader

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By MarEx 2018-04-09 21:08:00

Former Brazilian president Luis Inácio Lula da Silva, a dominant fixture in Brazilian politics, has turned himself in to begin serving a 12-year prison sentence for charges related to the "Lava Jato" corruption investigation. He was the front-runner in this year's presidential campaign and could well have returned to office.  

Prosecutors charged that da Silva - popularly known as "Lula" - was involved in a wide-ranging kickback- and money-laundering scheme at state oil firm Petrobras. Executives at the giant company took bribes in exchange for inflated construction contracts for everything from refineries to drilling rigs, then passed the money to political parties for use in elections and payoffs. Leaders of Brazilian construction company Odebrect told prosecutors that as part of the complex scheme, they created a $12 million account for Lula and his government. Last July, Lula was convicted of personally accepting a seaside duplex apartment worth about $750,000 from the construction company OAS. 

The International Transport Workers' Federation, one of the largest unions representing dockers and seafarers, said Monday that Lula's detention was arbitrary and improper. "Lula has had his legal rights ignored," said ITF General Secretary Stephen Cotton. "Myself and the ITF stood in absolute solidarity with our Brazilian comrades against this flagrant dispute for due and legal process [sic]. Lula has been . .  a powerful figure for change, fighting against poverty and inequality in Brazil."

Sweeping impact

The scandal had a devastating effect on Petrobras - which dropped from fourth place to 22nd place in the rankings of world oil companies in the span of two years - and on Brazil's offshore oil industry. The long-running investigation into the scheme, called Lava Jato, has pulled back the blinds on a massive network of corruption: since 2014, nearly 200 people have been indicted in connection with the scheme. Dozens of Brazilian political leaders have been implicated, including Lula's successor Dilma Rousseff, who was chair of the board of Petrobas during the period in question. Rousseff's vice president, Michel Temer, was accused of awarding a Petrobras contract to Odebrecht in exchange for a $40 million campaign donation. Against the backdrop of graft allegations, Rousseff was impeached and removed from office. Temer, who took her place in office, narrowly avoided his own impeachment proceedings last fall.