HomeNewsBriefTop Brazil Businessman Sentenced in Deepening Petrobras Scandal
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Top Brazil Businessman Sentenced in Deepening Petrobras Scandal

BRAZIL / 9 MAR 2016 BY MIMI YAGOUB EN

One of Brazil's richest and most powerful businessmen has been sentenced to 19 years in prison as part of a corruption scandal that has deeply shaken the country, and that now threatens more than ever to take down the presidency.

On March 8, Marcelo Odebrecht -- the former CEO of South America's biggest construction firm Odebrecht SA -- was convicted of corruption, money laundering, and organized crime, The Wall Street Journal reported.

Prosecutors accuse Odebrecht SA of being at the center of a bribery and kickback scandal involving contracts at Brazil's state-owned oil giant Petrobras. Odebrecht himself was arrested in June 2015 as part of Petrobras investigations, dubbed "Operation Car Wash," and stepped down from his position in December. Marcelo Odebrecht and his family were ninth on the list of Brazil's wealthiest billionaires published by Forbes Brazil in 2015, with an estimated fortune of $3.5 billion.

SEE ALSO: InDepth: Elites and Organized Crime

According to Bloomberg, Odebrecht was convicted of 11 counts of active corruption -- involving $64 million in bribes to Petrobras agents -- 50 counts of money laundering, and for the crime of criminal association. The former CEO's defense team called the 19-year prison sentence "unjust" and said it would appeal.

Odebrecht SA and other major construction firms allegedly skimmed billions of dollars' worth of profits from inflated contracts, funneling some of the money into the incumbent Worker's Party (Partido dos Trabalhadores - PT) so that it would turn a blind eye.

Along with Odebrecht, former Petrobras directors Renato Duque, Pedro Barusco, and Paulo Roberto Costa, as well as businessman Alberto Yousseff, were also sentenced on corruption charges. According to Folha de São Paulo, the former directors will reduce their sentences by plea bargaining. It is unclear if Odebrecht will do the same.

InSight Crime Analysis

While numerous Brazilian political and economic elites have been implicated in the ever-widening "Operation Car Wash" investigations, Odebrecht is the most high-profile figure yet to be convicted of charges (there have been 84 convictions as of March 4).

But the net continues to tighten around Brazil's leading politicians. Former president Luiz Inácio Lula da Silva has been suspected of receiving bribes from Petrobras, and was recently brought in for questioning. Update: On March 9, prosecutors filed charges against Lula in a money laundering probe linked to the Petrobras scandal. 

His protégé and current president Dilma Rousseff was chairwoman of Petrobras from 2003 to 2010 -- when much of the corruption in question occurred -- and her top political strategist was recently arrested on suspicion of accepting bribes from Odebrecht SA to help secure contracts with Petrobras.

That Odebrecht and convicted ex-Petrobras directors might accept plea bargains, exchanging information for reduced prison terms, could potentially bring damning evidence against Rousseff. In 2014, Petrobras' former supply director's own plea bargain implicated numerous high-ranking government officials.

SEE ALSOBrazil News and Profiles

Nevertheless, it remains difficult to ensnare political leaders in Brazil, even as close associates are brought down.

"The percentage of Brazil's elite (both business and political) who have been jailed [for] fraud or corruption has been historically low," analyst Daniel Caplin of the consulting firm S-RM told InSight Crime.

In one example, former President Fernando Collor -- also implicated in Operation Car Wash -- was prosecuted for corruption by the Senate after stepping down from the presidency in 1992, but was later acquitted of criminal charges.

Yet recent convictions suggest this history of elite impunity may be changing. Indeed, for Brazil's judiciary to prosecute someone of Odebrecht's status -- and in such a relatively short period of time -- is "completely unprecedented," Caplin explained, and "represents a new chapter in Brazilian law enforcement."

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