Brazil graft scandal could top $5.3bn
October 11 2015 12:14 AM

AFP/Sau Paulo


Damage from the gargantuan corruption scandal centred on Brazilian state oil company Petrobras could amount to as much as 20bn reais ($5.3bn), a lead prosecutor has said.
Deltan Dallagnol, part of the team running Operation Car Wash, as the probe into the scandal is called, said that losses to Petrobras itself amounted to some 6.2bn reais, but that “this is only the tip of the iceberg.”
Prosecutors say that between 2004 and 2014 a network of corrupt officials, executives and politicians enriched themselves exchanging bribes for fake or padded-out contracts paid from oil company coffers. Related schemes spread into other government entities, such as the nuclear power company.
“Looking at projections, the cost probably goes beyond 20bn reais,” Dallagnol told Brazilian journalists while attending a congress in Rio de Janeiro.
Some of Brazil’s most senior political and private sector figures are among the dozens already implicated in the scandal.
President Dilma Rousseff chaired Petrobras during the main period of the kickbacks scheme, but she has not been directly linked to any crime.
President Dilma Rousseff’s opponents have a clearer path to impeach her after two court rulings against her this week but political hurdles still make her ouster unlikely anytime soon.
As many as a dozen impeachment petitions are already before Brazil’s Congress, presented by opposition lawmakers who allege, among other charges, that the leftist president broke laws related to government finances and abuse of power during her re-election campaign last year.
On Wednesday, a federal audit court found that her government violated accounting rules in the 2014 budget. Brazil’s top electoral court agreed on Tuesday to study charges, denied by Rousseff, that her campaign abused state media and other public instruments to get her re-elected.
Rousseff and her supporters have criticized efforts to force her from office as undemocratic posturing by sore losers who twice failed to defeat her at the ballot box.
But for those seeking impeachment, the decisions help provide legal cause to justify impeachment.
“It reinforces the demand for impeachment,” Carlos Sampaio, an opposition Congressman, said of the audit court’s ruling on Wednesday.
Some opposition lawmakers are wary of moving against a democratically-elected president without more convincing evidence that she broke the law, and business leaders argue that impeachment would prompt even further political and economic uncertainty, causing more problems than it fixes.
For now, Rousseff appears to have more than enough votes to defeat impeachment.
Complex procedural and political obstacles remain for any petition to succeed. For starters, backers of impeachment must build momentum with the notoriously fractious and unwieldy political blocs in Congress. Finding consensus among those jockeying for power in possible coalitions that would take shape in a new government could be even more difficult.
“It will not be easy to find the support you need to start the proceedings or map out a scenario for power beyond that,” says Rafael Cortez, a political analyst at Tendencias, a consulting firm in S?o Paulo.
Congress must still decide whether to act on the audit court’s decision, formally censuring Rousseff and rejecting the government’s 2014 books.
Senator Eunicio Oliveira, a leader of Brazil’s largest party, the PMDB, told Reuters that Congress would not get around to voting on whether Rousseff had broken the budget law before March. And the lower house speaker said a bicameral budget committee was unlikely to study the matter this year.
The impeachment efforts are driven largely by public anger as Latin America’s biggest country, now in recession after a commodities-fuelled economic boom fizzled, struggles to right itself.
Approval ratings for Rousseff, Brazil’s first female president, are in single digits and polls show that two-thirds of Brazilians would support impeachment.
Brazil is also roiling from a corruption scandal involving state-run companies including Petroleo Brasileiro SA, or Petrobras.
Rousseff has not been personally implicated in the scandal, though some of the corruption took place when she, as a former energy minister and presidential chief of staff, served as Petrobras’ chairwoman.
At present, Rousseff could still count on about 220 of the 513 members in the lower house of Congress, enough to block any vote needed to start impeachment proceedings, according to Brasilia consultants Barral M. Jorge Consultores Associados.
Under Brazil’s constitution, impeachment requests are weighed by the lower house of Congress, which must approve any petition with a two-thirds majority to launch a trial in the Senate. The Senate would have 180 days to conduct a trial, presided by the head of the Supreme Court, and would need a two-thirds majority to impeach.
The most viable impeachment request was filed by Helio Bicudo, a veteran human rights activist and a founder of the ruling Workers’ Party who is one of many former party faithful who no longer support it.
But the success of any petition depends on support from the centrist PSDB party,  Rousseff’s main opposition, and the PMDB, a centre-right party that is her main coalition partner, albeit an increasingly demanding and rebellious one.
They have both been unable to speak with a unified voice on the possibility of impeachment, primarily because rival blocs within each party are perceived to be angling as much against each other as they are against Rousseff.
Neither party relishes the idea of taking over a government in crisis or having to implement unpopular austerity measures that economists say are needed to restore public finances so shaky that ratings agency Standard & Poor’s last month downgraded Brazil’s debt to junk status.
“There is a lot of negotiating and strategising yet to be done,” said Andre Cesar, a consultant at Hold Legislative Advisors, a political advisory in Brasilia, the capital.
Rousseff supporters could still seek to thwart any trial through the courts, particularly by challenging technicalities.


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