Brazil Corruption Probe an Inflection Point for Politicians and Society

It finally happened. The Supreme Court Justice heading up the largest corruption case Brazil, and possibly the world has ever seen, has released the names of 98 elected officials under formal investigation.

This marks an inflection point in the three-year-old “Operation Car Wash” due to the extraordinary legal protections enjoyed by nearly 20,000 Brazilian politicians.  This so-called “privileged forum”, is a quirk of the 1988 constitution guaranteeing that the investigation and judgement of criminal acts committed by sitting politicians are undertaken by the Supreme Court.  Such cases take on average 4 years, allowing many officials to continue in their roles despite strong evidence of wrongdoing. For example, Senator Renan Calheiros, named in yesterday’s announcement alongside his son, the governor of Alagoas state, is currently a defendant in 11 other cases before the Supreme Court dating back to 2007. Despite these serious charges, Renan was elected to serve as president of the senate until stepping down earlier this year.

In total, the Supreme Court named 8 ministers, 24 senators and 39 federal deputies from 16 parties as defendants stemming from plea bargain depositions of over 50 executives from Latin America’s largest construction company, Odebrecht.  Former presidents Dilma Rousseff, Lula da Silva, and Fernando Henrique Cardoso were also named, but referred to a lower court because they no longer hold office.

In a nutshell, the case details a sophisticated kickback scheme whereby Odebrecht funneled the proceeds of inflated infrastructure projects to politicians to fund electoral campaigns and lavish lifestyles.  The scope of the charges and the sheer number of implicated officials confirms what the Brazilian public had long suspected – that systemic corruption has been a break on the country’s economy and negatively impacted the quality of life for millions who rely on public services.

While yesterday’s news may mark the beginning of the final phase for this case, the process offers a moment for introspection for Brazilian society.  In the coming days, the Supreme Court will release the full contents of the Odebrecht depositions laying bare the tawdry relationship between big business and the political establishment.

This comes at a challenging time for the Temer Administration, which has been working to pass a raft of unpopular but necessary entitlement reforms in congress in response to 3 years of negative GDP growth, rising inflation and persistent unemployment.

This process calls into question the very legitimacy of the political parties makes it more difficult for democratic institutions to function.  Now it falls to the historically pragmatic public to respond.  Many have called for political reform to mandate district voting, ending privileged forum, revising campaign finance laws and limiting appeals to speed the judicial process, none of which will be swift.  On a positive note, increased scrutiny of interactions between big business and the government has rewritten the rules and fostered better corporate practices.

In the meantime, the “throw the bums out” mentality that has roiled Europe and the US could exacerbate uncertainty and halt the nascent economic recovery of recent months.  Operation Car Wash will continue to unfold as Brazil enters the 2018 campaign season and congress is expected to work diligently to right the economy to burnish its tarnished image and construct a positive narrative. It remains to be seen if an outsider candidate from either extreme of the political spectrum will capture the public’s imagination.