How politics awash in money bred unprecedented corruption in Brazil
Country: Brazil
The largest corruption scandal in the history of Latin America—and arguably the world—has its roots in unpoliced campaign funding and a political culture dominated by influence peddling and backroom favor-trading that looks remarkably like Washington, D.C.
Lessons:
As soon as institutional corruption and influence peddling become normalized, they can quickly spiral into far worse crimes and, eventually, to economic and political collapse.
The nexus between public contracting and campaign finance is the cornerstone of corruption and a significant obstacle to removing corrupt politicians from office. Open contracting/procurement experts and advocates should not ignore links to political finance.
Prosecutions without preventative structural reforms are not enough; eventually, anti-corruption enforcers may fall prey to--or at least become swept up in--political forces and motivations.
Many of the improper relationships between politicians and economic elites that crippled Brazil would, in a slightly different form, be explicitly legal (and constitutionally protected) in the United States.
In 2014, a routine criminal investigation in Curitiba, Brazil, opened a case against a black-market dealer laundering foreign currency through a gas station and car wash (lava jato in Portuguese).[1] Quickly, it became clear to investigators that the money laundering operation was just the tip of the iceberg of criminal activity.
Since then, the corruption probe dubbed Operacao Lava Jato has been extended more than 50 times, exposing scandals like Petrobras or Odebrecht that have since become familiar names around the world. In the process, the probe has revealed massive corruption at the very heart of the Brazilian state; secured convictions of more than 200 prominent business and political leaders in Brazil; and directly or indirectly brought about the impeachment, indictment, or conviction of 11 heads-of-state in 6 countries.
At the most basic level, the corruption exposed by Lava Jato involved politicians and public officials accepting bribes and kickbacks in exchange for approving heavily inflated public construction contracts. The result was several billion dollars essentially stolen from public coffers, a shortcoming that was exposed—and exacerbated—when Brazil’s economy plunged into a deep recession in 2015.[2] In 2016, President Dilma Rousseff was impeached for illegal budgetary maneuvers designed to stall and conceal the financial crisis during her re-election campaign. In 2018, the once-towering former president Luiz Inácio Lula da Silva was convicted of taking bribes, clearing the way for Jair Bolsonaro, a far-right populist with authoritarian leanings, to win the presidency later that year.[3]
While the corruption scandal was (and remains) a many-headed hydra, it has its origins in the nation’s political culture and the incestuous relationship between politicians and economic elites. Brazil is a fractious multi-party presidential democracy, which means the only clear way for a president to assemble a coalition in Congress is through patronage and clientelism.[4] This creates a political culture in which financial capital is quite literally political capital. (While the United States has only two parties, similar opportunities exist for money as a policy lubricant.)
Because Brazil’s campaign finance system was historically unregulated, private money first infected politics through shady campaign funding and party accounts before morphing to unabashed bribery and graft with millions of dollars funneled through offshore bank accounts, black market money launderers, and cash payments.[5]
Kevin Casas-Zamora, the Secretary General of the International Institute for Democracy and Electoral Assistance and an expert on political finance, describes money in politics as a root cause of much of Latin America’s corruption. This is true even as many countries—including Brazil—have tried to aggressively regulate campaign donations. Often, he says, “new rules hide the real problem of campaign finance in Latin America: the abyss that separates legislation from enforcement.”[1] [2] [3] [6]
As a result, even as scandals have come to light in Brazil, corrupt politicians often have continued to win elections. According to Ivan Chaves Jucá, et. al, “above a certain threshold of funding, Brazilian members of Congress become impervious to negative exposure, regardless of the severity of their ethical and/or criminal violations.”[7]
“New rules hide the real problem of campaign finance in Latin America: the abyss that separates legislation from enforcement.”
What’s more, in June 2019, leaked messages from within the Lava Jato investigations revealed a pattern of legally questionable maneuvers in the prosecutors’ high-stakes drive to combat impunity.[8] This included allegations of cooperation and deal-making between the probe’s then-supervisor, Judge Sergio Moro, and prosecutors in order to secure convictions.[9] Moro has since controversially accepted an offer to be Bolsonaro’s justice minister, which both puts him in place to drive reforms but potentially politicizes his legacy. This saga illustrates the catch-22 facing prosecutors around the world: without true structural change, corruption will re-emerge, but a single-minded drive to convict and reform at any cost can quickly lead to ethically murky decisions.
Put together, Brazil’s experience shows just how deep structural rot can run through governing institutions—and how difficult it is to expunge through prosecutions or any other form of business-as-usual. According to Matias Spektor, director of the Center for International Relations at Fundação Getúlio Vargas, “What Lava Jato—and indeed the more recent unravelling of Lava Jato—unveil is the degree to which corruption in political systems may be embedded in existing democracies.”[10] There is, in short, a powerful equilibrium insulating politics from true accountability, even when it seems like justice has been served. To Spektor, the only way to break the status quo is an “external shock” (mass protests, financial crisis, ascension to international legal standards, etc.) followed by swift action by anti-corruption “entrepreneurs” with “extensive links with transnational policy networks that train them and embolden them over time.”[11]
In all of this, Brasilia is not unlike Washington, D.C., perhaps with two exceptions:
In the United States, large sums of money in politics have been explicitly protected by the Supreme Court’s 2010 Citizens United case;[12] and
Outright bribery remains rare (although that, too, has been blessed by the SupremeCourt[13]).
That outright bribery remains rare in the United States should be no consolation, for Brazil shows that as soon as institutional corruption and influence-peddling become normalized, they can quickly spiral into far worse crimes and, eventually, to economic and political collapse.
The fact that many of the scandals in Brazil would not necessarily even be crimes in the United States should be cause for grave concern. After all, if a politician tacitly accepts $1 million dollars to help their re-election and, in exchange, either approves an inflated construction contract or ensures passage of a generous targeted corporate tax break for their patron, what’s really the difference?
Recommended Reading:
https://www.journalofdemocracy.org/articles/brazil-the-costs-of-multiparty-presidentialism/
https://www.transparency.org/files/content/feature/Clean_Contracting_Manifesto.pdf
End Notes:
[1] John Crabb, “PRIMER: Operation Car Wash/Lava Jato - ProQuest,” International Financial Law Review, March 7, 2019, https://search.proquest.com/openview/8274d087ff3d094341c770b67ecf12ae/1?cbl=36341&login=true&pq-origsite=gscholar.
[2] Paulo Sotero, “Petrobras Scandal | Summary, Explanation, & Operation Car Wash,” Encyclopedia Britannica, 2018, https://www.britannica.com/event/Petrobras-scandal.
[3] Gabriel Burin, “Political Uncertainty to Keep Clouding Outlook for Brazil Economy: Reuters Poll,” Reuters, July 15, 2019, https://finance.yahoo.com/news/political-uncertainty-keep-clouding-outlook-124838605.html.
[4] Matias Spektor and Eduardo Mello, “Brazil: The Costs of Multiparty Presidentialism,” Journal of Democracy, April 2018, https://www.journalofdemocracy.org/articles/brazil-the-costs-of-multiparty-presidentialism/.
[5] David Samuels, “Money, Elections, and Democracy in Brazil,” Latin American Politics and Society 43, no. 2 (2001): 27–48, https://doi.org/10.2307/3176970; “‘Odebrecht, Together With Its Co-Conspirators, Paid Approximately $788 Million in Bribes’ - The New York Times,” accessed September 4, 2019, https://www.nytimes.com/interactive/2016/12/21/business/dealbook/document-Information-in-Brazil-Bribery-Case.html.
[6] Kevin Casas-Zamora. Interview by Ben Raderstorf. Email. October 20, 2019.
[7] Ivan Chaves Jucá, Marcus André Melo, and Lucio Rennó, “The Political Cost of Corruption: Scandals, Campaign Finance, and Reelection in the Brazilian Chamber of Deputies,” Journal of Politics in Latin America 8, no. 2 (September 12, 2016): 3–36.
[8] Tom Phillips, “Brazil: Calls Grow for Bolsonaro Ally to Quit after ‘devastating’ Report on Leaks | World News | The Guardian,” The Guardian, July 5, 2019, https://www.theguardian.com/world/2019/jul/05/brazil-sergio-moro-jair-bolsonaro-justice-minister.
[9] Matthew Stephenson, “A Group of International Jurists and Scholars Condemns the Conviction of Former Brazilian President Lula as Unfair and Politically Motivated. A Group of Brazilian Prosecutors Defend Their Conduct, and the Conviction. Read Their Dueling Open Letters Here!,” GAB | The Global Anticorruption Blog (blog), September 12, 2019, https://globalanticorruptionblog.com/2019/09/12/a-group-of-international-jurists-and-scholars-condemns-the-conviction-of-former-brazilian-president-lula-as-unfair-and-politically-motivated-a-group-of-brazilian-prosecutors-defend-their-conduct-and/.
[10] Matias Spektor. Interview by Ben Raderstorf. Email. July 31, 2019.
[11] Matias Spektor. Interview by Ben Raderstorf. Email. July 31, 2019.
[12] “Citizens United v. Federal Election Commission,” Oyez, accessed October 20, 2019, https://www.oyez.org/cases/2008/08-205.
[13] Amy Davidson Sorkin, “The Supreme Court’s Bribery-Blessing McDonnell Decision,” June 27, 2016, https://www.newyorker.com/news/amy-davidson/the-supreme-courts-bribery-blessing-mcdonnell-decision.
