RIO DE JANEIRO, Brazil — At times this country seems like it's suffering one continuous eruption of corruption scandals.
Top politicians and executives keep getting arrested, accused of running an epic kickback scheme through Petrobras oil company. Glitzy World Cup soccer stadiums built in far-flung cities, where few spectators will visit again, are being investigated for fraud.
A controversial hydroelectric dam project faces major bribery accusations and is expected to go way over budget. And Rio de Janeiro waterways — some, venues of the 2016 Summer Olympics — are fouled with near-lethal levels of waste despite billion-dollar spending on cleanup projects.
Through all the corruption allegations, a strong pattern has emerged: Six of Brazil’s largest engineering conglomerates have popped up again and again as the scandals unfold. The same companies that built white elephant stadiums in the jungle are responsible for allegedly bilking Petrobras, failing to clean Rio’s water, and building the controversial Belo Monte Dam deep in the Amazon jungle.
Call them “the usual suspects.”
Five of the firms worked on projects connected to all four of Brazil’s recent colossal scandals, according to a GlobalPost analysis. A sixth was involved in three of the four scandals.
It’s hard to overstate just how big these companies are, or how intertwined they are with the country's political establishment.
Five of the companies combined donated more than 287 million Brazilian reais (then worth around $121 million) to political campaigns in 2014, according to Estadao Dados, a blog that tracks political spending in Brazil. The coziness between businesses and politicians helped drive the Supreme Court this year to bar political contributions from corporations.
That infrastructure projects ended up vastly over-budget or delayed, or became alleged vessels to funnel money to corrupt company executives and politicos, came as no surprise to Riordan Roett, director of the Latin American Studies Program at Johns Hopkins University.
“There’s a sense of impunity in the Brazilian business class,” Roett said. “These companies have been mired in scandal and kickbacks for decades.”
The six companies GlobalPost looked at are Odebrecht, OAS, Camargo Correa, Andrade Gutierrez, Queiroz Galvao and Mendes Junior.
Executives at all these firms have been charged in connection to the Petrobras scandal. Some have already gone to jail, others are awaiting trial, and others are cooperating with investigators.
The four scandals we examined are:
The Petrobras or “Car Wash” scandal: A group of companies allegedly partook in a huge kickback scheme, collaborating with officials to rig the bids for major projects like oil refineries, then charging the government far more than the projects cost. Prosecutors claim the extra money was skimmed off and shared among company executives, or funneled to political parties in contributions. Bribes totaling $3 billion were allegedly paid.
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World Cup stadiums: The scandal that seemingly rankled Brazilians the most is the billions of dollars spent on lavish stadiums in far-flung cities like Cuiaba, with no major sports team to fill the arena once the soccer World Cup was over. The stadiums were a flashpoint in large demonstrations in 2013 and other protests up to the opening day of the tournament. Earlier this year, investigators raided a stadium and the offices of Odebrecht and accused the company of overcharging the public $12 million for the arena. Similar accusations have been made against several other stadiums.
The Belo Monte Dam: Controversial for its environmental impact and a long string of cost overruns, Belo Monte in Brazil’s northeastern Para state is slated to be the world’s third-biggest hydroelectric dam. The dam is still being built, but experts estimate it will end up costing taxpayers more than three times the original quote. Five of the six companies named above are working on this project. A former top executive of one of the firms recently told prosecutors his company paid more than $5 million in bribes for a contract to build the dam.
The non-cleanup of Rio de Janeiro’s Guanabara Bay and lagoons in time for the Olympics: More than 20 years ago, the Rio state government pledged to clean up the once-crystalline Guanabara Bay. The state also more recently pledged to cleanse the waterways of Barra da Tijuca, where 2016 Olympic events will be held. Despite spending more than $1 billion, the bay and lagoons are still filthy. Many of the slated projects were half-built or mired in corruption and waste. This has prompted fears that Olympic athletes competing in sailing and other water-borne events will get sick at next year’s games.
Other Olympics-related projects could be next. Prosecutors on the Petrobras case now plan to investigate more than $10 billion of construction contracts for the 2016 Rio Games, Reuters reported Tuesday. Again, four of the six companies we looked at have been named as possible suspects.
Brazil experts said they’re hopeful the ongoing prosecutions of some of this country’s most wealthy and powerful businessmen send a warning shot to the corrupt segments of the economy. Until recently, Brazil had “little” anti-bribery enforcement, according to corruption watchdog Transparency International.
“If you had told me 10 years ago that Marcelo Odebrecht [CEO of Odebrecht] was in jail in Curitiba, I would’ve laughed,” Roett said. “This is a very important turning point.”
Douglas Linares Flinto, president of the Institute of Brazilian Business Ethics, agreed.
“I have no doubt that the “car wash” [Petrobras] scandal will be a watershed in Brazil,” Flinto wrote in an email. “What we are seeing these days will change Brazil's history forever!”
Shannon O’Neil, a senior fellow at the Council on Foreign Relations who specializes in Latin America, pointed out that the likes of Odebrecht and OAS are among a handful of companies in Brazil capable of large projects like building stadiums and oil rigs. Still, she said, the coziness of Brazil’s large contractors with the political system is clearly cause for concern.
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O’Neil said despite all the bad publicity, however, Brazil has been moving against corruption in a region long known for combining graft and government. The recent ban on corporate political contributions is a good example of progress, she added.
“I do think it’s quite positive, especially when you look around the region, whether it’s Chile or Mexico or Argentina or even Peru, places that also have had some similar scandals,” O’Neil said. “Brazil has gone much, much further in working to root this out and investigate, prosecute and convict.”