Operation Car Wash

Operação Lava Jato
Country:	Brazil
Since:	March 17, 2014
Judge:	Sérgio Moro
Number of Arrested Persons:	160[1][2]
Number of Indicted Persons:	179[2]
Number of Convicted Persons:	93[2]
Number of Companies Involved:	16[3]
Number of Investigated Persons:	232[2]
Reimbursement request:	R$14.5 Billion[2] (approximately 3.6 bln USD)
Amount of Misappropriated Funds:	R$2.1 Billion[2] (approximately 500 mln USD)
Last updated: April 2016.

Operation Car Wash (Portuguese: Operação Lava Jato) is an investigation being carried out by the Federal Police of Brazil, Curitiba Branch, and judicially commanded by Judge Sérgio Moro since March 17, 2014. Initially a money laundering investigation, it has expanded to cover allegations of corruption at the state-controlled oil company Petrobras, where it is alleged that executives accepted bribes in return for awarding contracts to construction firms at inflated prices. This criminal "system" is known as "Petrolão - Operation Car Wash".^[4] The operation has included the enforcement of more than a hundred warrants for search and seizure, temporary and preventive detention and coercive measures, with the aim of ascertaining a money laundering scheme suspected of moving more than 10 billion Brazilian reais (approx. USD 2.8 billion @ 3.58 BRL / 1 USD, as of April 4, 2016).

Synopsis

The operation was named as such because the alleged ring used a currency exchange and money transfer service at the Posto da Torre (Tower Gas Station) in Brasilia to move the money acquired by illicit means.^[5] The initial accusation came from businessman Hermes Magnus in 2008, when the accused group attempted to launder money through his company, Dunel Indústria e Comércio, a manufacturer of electronic components. Investigations followed, which culminated in the identification of four large criminal rings, headed by Carlos Habib Chater, Alberto Youssef, Nelma Mitsue Penasso Kodama and Raul Henrique Srour.

As the investigation went on, it was discovered that the "doleiro" (black market dealer) Alberto Youssef had acquired a Land Rover Evoque for Paulo Roberto Costa, ex-director of Petrobras. Initial evidence was gathered pointing to improper payments to Alberto Youssef, made by companies that won RNEST (Abreu & Lima Refinery) contracts.

Main informants

Costa and Youssef entered a plea bargain deal with prosecutors and the scope of the investigation was subsequently widened to nine major Brazilian construction firms—Camargo Correa, OAS, UTC, Odebrecht, Mendes Junior, Engevix, Queiroz Galvao, Iesa and Galvao Engenharia—as well as politicians involved with Petrobras. Brazilian President Dilma Rousseff, who had chaired the board of Petrobras from 2003 to 2010, denied knowledge of any wrongdoing.^[6] The Brazilian Supreme Court authorized the investigation of 48 current and former legislators, including former President Luíz Inácio Lula da Silva, in March 2016.^[4]

Impact on Petrobras

Petrobras delayed its reporting of annual financial results for 2014, and disclosed in April 2015 that it would book almost $17 billion in write-downs due to graft and overvalued assets, which the company characterized as a "conservative" estimate of the actual impact. Had the report been delayed by another week, Petrobras bondholders would have had the right to demand early repayment. Petrobras also suspended its dividend payments for 2015. Due in part to the impact of the scandal, and also its high debt burden and the low price of oil, Petrobras was also forced to cut capital expenditures and announce a sale of $13.7 billion of assets over the next two years.^[7]

Impact on politics

• The Treasurer of the Workers' Party, João Vaccari Neto, was arrested for receiving "irregular donations."^[8]
• The former Chief of Staff for President Lula, José Dirceu, was arrested for orchestrating a large part of the scandal.^[9]
• The Speaker of the Chamber of Deputies (lower house of the Congress of Brazil), Eduardo Cunha (PMDB-RJ), is being investigated for receiving more than USD$40 million in kickbacks and bribes.^[10]
• The former Minister of Mines and Energy, Edison Lobão is being investigated for taking more than USD$50 million from Petrobras.
• Former President and current Senator Fernando Collor de Mello of the center-right Brazilian Labour Party has been charged with corruption.^[11]
• Ramón Fonseca Mora, president of Panama's Panameñista Party, was dismissed in March 2016 due to his involvement in the scandal.^[12]

In February 2016, during the Peruvian Presidential election, a report from the Brazilian Federal Police implicated Peruvian President Ollanta Humala as recipient of bribes from Odebrecht in exchange for public works contracts. President Humala rejected the implication and has avoided any confrontation with the media on that matter.^[13][14]

On 4 March 2016, former Brazilian President Luiz Inácio Lula da Silva was detained and questioned for three hours as part of a huge fraud inquiry into the state oil company Petrobras. The former president's house was raided by federal police agents and he was brought in for questioning. Lula, who left office in 2011, has denied allegations of corruption.

The long-running inquiry, known as Operation Car Wash, is probing accusations of corruption and money laundering at Petrobras. Dozens of executives and politicians have been arrested or are under investigation on suspicion of overcharging contracts with Petrobras and using part of the money to pay for bribes and electoral campaigns. Police said they had evidence that Lula, 70, received illicit benefits from the kickback scheme. Lula's institute said in a statement the "violence" against the former president was "arbitrary, illegal and unjustifiable", as he had been co-operating with the investigations. ^[15]

On 8 March 2016, Marcelo Odebrecht, CEO of Odebrecht was sentenced to 19 years in prison, after being convicted of paying more than $30 million in bribes to Petrobras executives.^[16][17]

See also

• Sérgio Moro

References

1. "Operação Lava Jato".
2. Ministério Público Federal. "Resultados da Operação Lava Jato". Retrieved 21 February 2015.
3. Ministério Público Federal. "Brazilian Federal Police". Retrieved 21 February 2015.
4. Connors, Will (6 April 2015). "How Brazil’s ‘Nine Horsemen’ Cracked a Bribery Scandal". The Wall Street Journal. Retrieved 12 May 2015.
5. Connors, Will (21 June 2015). "Brazil ‘Carwash’ Shrugs Off Notoriety Tied to Petrobras Scandal". The Wall Street Journal. Retrieved 22 June 2015.
6. Costas, Ruth (21 November 2014). "Petrobras scandal: Brazil's energy giant under pressure". BBC. Retrieved 12 May 2015.
7. Kiernan, Paul (22 April 2015). "Brazil’s Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges". The Wall Street Journal. Retrieved 12 May 2015.
8. Jelmayer, Rogerio (2015-04-15). "Brazil Police Arrest Workers’ Party Treasurer Joao Vaccari Neto". Wall Street Journal. Retrieved 27 August 2015.
9. MAGALHAES, LUCIANA (3 July 2015). "Brazilian Police Arrest José Dirceu, Ex-Chief of Staff, in Petrobras Probe". WSJ. Retrieved 9 September 2015.
10. Romero, Simon (2015-08-21). "Expanding Web of Scandal in Brazil Threatens Further Upheaval". New York Times. Retrieved 9 September 2015.
11. Former Brazilian President Collor charged in Petrobras corruption
13. Leahy, Joe. "Peru president rejects link to Petrobras scandal". FT.com. Financial Times. Retrieved 24 February 2016.
14. Post, Colin. "Peru: Ollanta Humala implicated in Brazil’s Carwash scandal". www.perureports.com. Retrieved 23 February 2016.
15. BBC News Brazil Petrobras scandal: Former president Lula questioned
16. Fonseca, Pedro (8 March 2016). "Former Odebrecht CEO sentenced in Brazil kickback case". Reuters. Retrieved 8 March 2016.
17. "Brazil Petrobras scandal: Tycoon Marcelo Odebrecht jailed". BBC. 8 March 2016. Retrieved 8 March 2016.