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Corruption scandal engulfs Brazil leaders, government on brink of collapse

More than three million protesters poured into the streets across Brazil this weekend, demanding the ouster of President Dilma Rousseff. Meanwhile, her Workers’ Party coalition partner said it may join opposition forces in a month to topple her government.

Brazil has sunk into its worst recession in a century while a corruption and kickback scandal at state-owned energy giant Petrobras keeps growing.

Rousseff was elected to a four-year term in 2014.

Her coalition partner — the Brazilian Democratic Movement Party (PMDB) — decided over the weekend to give the government one more month in office before it formally moves against the president.

The PMDB wants time to “to gauge the level of support in the country for the impeachment of Rousseff sought by opposition parties in Congress,” Reuters said Saturday.

The PMDB’s Michel Temer serves as Rousseff’s vice president.

Demonstrations Sunday spread to all 26 states in Brazil. The biggest was in São Paulo, with crowds estimated at 450,000, the Guardian said Sunday.

The Petrobras investigation is known as Operation Car Wash. It began in early 2014.

Several former Petrobras executives have already been jailed.

Former Brazil president Luiz Inacio Lula da Silva was detained for questioning earlier this month. Police raided his home and offices. Prosecutors allege that Lula da Silva received luxury real estate and big speaking fees from companies involved in the Petrobras scandal.

Last week, a Brazil federal court sentenced high-profile construction tycoon Marcelo Odebrecht to 19 years in prison.

Odebrecht, 47, paid more than $30 million in bribes to Petrobras officials in exchange for contracts, prosecutors said.

Some Petrobras officials have made plea deals with prosecutors and are giving evidence against government officials. Reports based on court documents describe massive bribes from contractors and huge kickbacks paid to secret accounts.

Switzerland has frozen about $400 million in accounts linked to the Car Wash investigation.

Petrobras took a $2 billion write down in April 2015 for “improperly capitalized additional spending” — meaning overcharges in contracts used to cover costs of the graft and kickbacks.

A Brazil prosecutor said those corruption losses appear to be “just the tip of the iceberg.”

Petrobras is the most indebted oil company in the world. Standard & Poor’s and Moody’s dropped the rating on its bonds to junk because of the corruption case and low oil prices.

Police sources in Brazil said 3.5 million people joined Sunday’s protests in 326 cites. More than 100,000 protesters came out in the federal capital, Brasilia, the Guardian said.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. Thanks for featuring our historical protests in Brazil. Just one correction. According to the Police, Sao Paulo crowds was 1.400.000. (1,4 million people) in the peak picture. According to the organization of the protests, there were around 2,5MM people coming and going around Paulista Avenue and surroundings during the entire period. Please note that the protest in Rio was also very large but the Police was not authorized to share the numbers. Organizers estimates that more than 6MM people participated in the March 13 protests during the entire period (and not only "at peak"). Should you want to get more details:

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