Snapshot of Brazil's Web of Scandal
Source: nytimes.com
The former president of Brazil, Luiz Inácio Lula da Silva, was taken into custody by the Brazilian police on Friday for questioning as part of an investigation into a colossal graft scheme. The raid on Mr. da Silva’s house was the latest development in the expanding political and economic turmoil in Brazil.
Why is Brazil in such upheaval?
A struggling economy and discontent over the corruption scheme involving the national oil company, Petrobras, have affected nearly every level of government in Brazil, Latin America’s largest country. Political uncertainty has also grown as President Dilma Rousseff faces impeachment proceedings over her use of funds from state banks to cover budget gaps.
Why is Brazil’s economy in trouble?
The economy is grappling with a slowdown amid a global crash in oil prices. The latest 3.8 percent plunge in gross domestic product in 2015 was the worst decline in 25 years. Unemployment is surging, and a pension crisis has contributed to havoc on public finances. Social gains in the boom years of the previous decade have been eroded. Officials are now trying to gradually unwind policies in which a web of giant state banks and public energy companies promoted growth.
In the shadow of a deep recession, Brazil now ranks among the region’s worst-performing economies.
What is the corruption scheme about?
The corruption scandal started as an inquiry into bribes at Petrobras. It has mushroomed into a widespread investigation that has encircled high profile figures in Brazil’s government and private sector, including whether some companies profited from lucrative government contracts.
Who are some of the key figures?
Police officials have said they have found evidence that scores of politicians and business executives siphoned off funds from the government-controlled petroleum company, Petrobras, and some of its contractors.
Mr. da Silva served as president from 2003 through 2010, but he still ranks among Brazil’s most powerful figures. He has not been arrested or charged as part of Friday’s raid on his home, but prosecutors have been examining whether two major construction companies — OAS and Odebrecht — got special consideration for government contracts by renovating properties intended to be used by Mr. da Silva and his family.
The former chief executive of OAS has been sentenced in connection with a bribery plot involving Petrobras, and the Odebrecht chief has been charged and jailed pending trial.
The scandal has also ensnared João Santana — a former campaign strategist for Mr. da Silva and Ms. Rousseff — and his wife, who were accused by federal prosecutors of receiving payments of about $7.5 million in offshore accounts from key figures involved in the large corruption scheme.
Eduardo Cunha, the conservative speaker of Brazil’s lower house of Congress, is also facing a trial at the Supreme Court on charges of pocketing millions of dollars of bribes in the Petrobras scheme.
André Esteves, a billionaire investment banker, and Delcídio do Amaral, a senator in the governing Workers Party and an important ally of Ms. Rousseff, have also been swept up into the investigation.
Where does the investigation go from here?
The political future of Ms. Rousseff has been thrown into doubt throughout the months of turmoil over the Petrobras investigation and its widening dragnet. Her popularity has declined sharply since her last election.
Even as she faces impeachment proceedings and the challenges of restoring confidence amid the economic crisis, yet another headwind opened up this week: Mr. do Amaral was reported to be negotiating a plea deal in which he would claim that she had maneuvered to appoint a justice to one of Brazil’s highest courts in an attempt to release executives jailed in the Petrobras scandal.
Source: nytimes.com
