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Autor: AMETHYST | Publicado: 2014-10-03T20:23:00-07:00




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August 10, 2014
7:27 pm

Brazil’s
Petrobras: Tarred by corruption

By Joe Leahy
and Samantha Pearson

An investigation into the state oil company
has tarnished political reputations





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<v:shape id="Imagem_x0020_2" o:spid="_x0000_i1027" type="#_x0000_t75"
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<![endif]--><!--[if !vml]--><!--[endif]-->©Reuters

After years of
allegedly secret dealings, the men at the centre of what is potentially
Brazil’s biggest corruption case made a careless mistake.

In May 2013,
convicted black market money dealer Alberto Youssef bought through third
parties a luxury car for his friend and alleged accomplice, Paulo Roberto
Costa, a former executive at state-oil company&nbsp;Petrobras.

But while
negotiating the purchase of the R$250,000 ($110,000) Range Rover Evoque in São
Paulo, they put their names together on a seemingly harm­less document: a proof
of ad­dress. It was the only occasion in the mountains of police investigation
documents seen by the Financial Times they voluntarily appeared together.

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from Petrobras

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Federal police swooped. They raided the home of Mr Costa, confiscating
the Evoque and more than half a million dollars of cash. Prosecutors allege
that the wider extent of corruption that affects Petrobras, including bribes
and underhand political donations, amounts to more than R$1bn in&nbsp;inflated contracts. In the process, the police helped throw
open Brazil’s October election, turning it from what looked like a one-horse
race for President&nbsp;Dilma Rousseff&nbsp;to the closest contest in recent
history. As the former chairwoman of&nbsp;Petrobras, the claims threaten Ms Rousseff’s
reputation as a capable technocrat. Prosecutors allege the company was used for
extensive political donations.

A task force of federal public prosecutors in the state of Paraná, which
is leading the probe, said: “The suspects . . . converted R$250,000 ex­tracted from corruption and abuse of public
office at Petrobras into a legitimate asset through the purchase of the Land
Rover.”

Mr Youssef’s lawyers said the vehicle purchase was not illegal and Mr
Costa’s lawyers added that the vehicle was payment for bona fide consultancy
services provided to Mr Youssef. Both men are in custody facing charges of
money laundering, corruption and abuse of public office.

Brazilians are appalled at accusations that criminals had infiltrated
Petrobras, their country’s biggest company, a national icon and a global leader
in ultra deepwater oil exploration. The company reported net profit last year
of R$23.6bn with production of 2.54m barrels of oil equivalent a day. Petrobras
is seen as so important that both the lower house and the Senate have launched
inquiries.

“This scandal has contributed greatly to the fall in the popularity of
the president,” says Senator Álvaro Dias, of the opposition PSDB, who is
participating in one of the congressional inquiries into the case. The
president’s approval rating has fallen from above 60 per cent early last year
to less than 40 per cent. But&nbsp;Ms Rousseff’s ruling
Workers’ party&nbsp;(PT) dismisses claims that Petrobras’s problems have damaged her
chances of winning a second term, saying the president has been cleared of any
wrongdoing in the scandals.

Beyond party politics, however, the controversy has highlighted what
analysts say is a dangerous flaw in Brazil’s national institutions: the ease
with which politicians are able to use state companies as a source of illicit
campaign funds. “The truth is most parties try to use state-owned enterprises
for their benefit,” said Sérgio Lazzarini, a professor at business school,
Insper, in São Paulo.

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The Petrobras project at the centre of the scandal involving Mr Costa
and Mr Youssef is a refinery near Abreu e Lima in north-eastern Brazil.

A square in the small town features two statues, one honouring José
Inácio de Abreu e Lima, a revolutionary who left Recife and fought for
independence in Venezuela and Colombia. The other is of the Venezuelan general
Simón Bolívar, his comrade and another of the continent’s independence heroes.
“I guess one must be Abreu and the other is Lima,” says Francisco de Oliveira,
a 21-year-old bricklayer, leaning on the monument.

But if the town’s residents seem oblivious to the Brazilian freedom
fighter, the Petrobras refinery project has also done little to honour his
memory. Envisioned as a partnership between Brazil and Venezuela, the project
has become the focus of a police investigation into money laundering, known as&nbsp;Lava
Jato, or “Jumbo Wash”, in which Mr Youssef and Mr Costa have been
implicated.

In 2006, when the project began construction, former president Luiz
Inácio Lula da Silva, Ms Rousseff’s predecessor and mentor, was pictured with
the late Venezuelan president Hugo Chávez shaking hands at the site. The
refinery was meant to be a business joint venture that would process
Venezuela’s heavy crude. But Caracas never put a cent into it: even the
anti-capitalist Chávez was put off by its escalating costs, former Petrobras
executives joke.

From an original budget of $2.5bn, the cost of the 230,000 barrels-a-day
refinery soared to $20bn, or $87,000 per barrel of refining capacity. This
makes it one of the most expensive ever built, analysts say. The international
average cost is between $13,000 and $39,000, according to an estimate from
Credit Suisse.

Although a listed company, Petrobras has always been politicised. But
oil executives say Mr Lula da Silva and his allies deepened the practice,
assigning a larger number of senior positions to political appointees, from the
former chief executive José Sergio Gabrielli, a PT member, to Mr Costa,
regarded as a representative of the pro-government Progressive party.

“The PT saw . . . that Petrobras could be a great instrument to
preserve power,” says Adriano Pires, founder of the Brazilian
Centre of Infrastructure, a research company.

The PT rejects such arguments, saying it is just opposition
electioneering that irresponsibly taints the reputation of Petrobras. Mr
Costa’s lawyer said while he might have had political support, he was a career
Petrobras engineer appointed on merit.

It was also from around 2006 that Petrobras embarked on a series of
transactions that are now the subject of corruption investigations. These
include accusations that it overpaid for a refinery in Pasadena in the US,
paying a sum 28 times greater than the original owner, Belgian company Astra,
paid for it. Brazil’s TCU – or federal accounts watchdog – ordered the former
board of Petrobras to return $792.3m to the company that it calculated as the
losses from the $1.18bn Pasadena transaction.

But by far the biggest concern is the Abreu e Lima refinery. According
to the prosecutors, the&nbsp;Lavo Jato&nbsp;investigation began as a
probe into suspected money laundering by the late José Mohamed Janene, a PP
politician. In the process, police discovered fraudulent transactions committed
between 2009 and 2013, allegedly by Mr Youssef and Petrobras’s Mr Costa.

Police suspect Mr Youssef to be “the biggest&nbsp;doleiro&nbsp;in
national history”, according to an investigation dossier, using the Portuguese
term for black market money dealer. He was convicted for financial crimes in
2004.

Mr Costa was appointed Petrobras’ director of fuel supply in 2004 and
became the executive responsible for refineries in 2008. Prosecution documents
allege Mr Youssef, Mr Costa and conspirators hatched myriad shell company
schemes to skim money from Petrobras and then “wash” it by sending it offshore.

“We have indications that Paulo Roberto [Mr Costa] transferred more than
$400m offshore through foreign exchange contracts,” says public prosecutor
Carlos Fernando Santos Lima.

The prosecution cites, as one example, findings by TCU that contracts
awarded to one builder, identified as Consórcio Nacional Camargo Corrêa, were
inflated in value by as much as R$446m. This company had in turn contracted two
others, Sanko Sider and Sanko Serviços, to supply materials and services,
paying them R$113m over four years.

These two, in turn, paid R$26m to an alleged shell company, MO
Consultoria, controlled by Mr Youssef, and other undisclosed sums to another of
his alleged shells, GFD. This money then allegedly made its way offshore.

CNCC told the FT in response to the allegations that it won its
contracts through legitimate public tenders. It said it was co-operating with
investigators. A spokesman for the Sanko companies said all transactions were
legitimate and made through the conventional banking system. He added that the
companies were assisting the investigation.

Prosecutors allege evidence seized from Mr Costa indicated he negotiated
with Petrobras’s contractors to make political donations. They point to a
document in which he wrote the names of six big Petrobras contractors that
donated a total of R$35.3m to parties in the governing coalition during the
2010 election. Prosecutors allege the document could be “treated as a
spreadsheet for possible campaign donations, in which Mr Costa acted as an
intermediary for these contributions with companies that had contracts with
Petrobras”.

Mr Costa’s lawyers said the prosecutors’ accusations against him are
baseless “assumptions”. They also said there was no evidence of inflating of
contracts. “The criteria adopted by the prosecution are contestable and this
will become clear as the case progresses.” Mr Youseff also denies the
allegations, his lawyers said.

PT politicians also said it was too early to draw conclusions about
political donations. They said Petrobras’s problem is its commercial
independence and ability to award contracts without the open tenders that would
be required of a public ministry.

Congressman Marco Maia, who is leading a lower house congressional
inquiry, said lawmakers would review Petrobras’s procurement processes to make
them more accountable. “We will change the legislation and democratise the
procurement and information-sharing process of Petrobras.”

At the Abreu e Lima refinery, rain clouds are clearing and workers
trudge back through the thick red mud of the construction site. A cleaner says
many workers “vanish as soon as it rains”, explaining the delays in the project.

Like the refinery project, mud from the Abreu e Lima scandal has
splattered Ms Rousseff’s election campaign, damaging her reputation as a
competent manager.

But analysts doubt that much of it will stick to her. She was recently
cleared by the TCU of wrongdoing in the Pasadena scandal. She has also
installed career Petrobras engineer, Maria das Graças Foster, as CEO, who has
“cleaned out” most of the political appointees, former Petrobras executives
say.

“Petrobras will continue to be a negative source of news for her during
the election but the key risk factor for her is a weakening economy,” says João
Augusto de Castro Neves of Eurasia Group, a consultancy.

More worrying for Brazil is the apparent propensity of state-owned
companies to be used by politicians intent on financing their campaigns.
Furnas, the federal power company, has also been embroiled in corruption
allegations linked to the 2002 elections which the former managers of the
company have previously denied.

A tougher anti-corruption law could help but enforcement will be vital.
Brazil’s convoluted legal system often allows those with good lawyers to avoid
jail. “This new law is a good thing but our track record of punishment is not
very bright,” said Mr Lazzarini of Insper.

One man who seemed to understand the problem of endemic corruption was
Mr Costa. In a notebook seized by police from his home, he jotted down a quote
from Millôr Fernandes, the Brazilian writer, that captured the cynicism many
feel about the country’s politics.

“Rooting out corruption is the ultimate goal of those who have not yet
come to power,” he scrawled.

Additional reporting by Thalita Carrico

The killer fish adding to a port’s woes

Making small talk in Brazil typically involves discussing football or
the traffic but in the northeastern city of Recife, shark attack anecdotes are
a popular icebreaker,writes Samantha Pearson.

There is the tale of the surfer whose wife divorced him after a shark
bit off both his arms or the teenage girl who had four heart attacks when her foot
was left hanging by a thread.

From shop workers to hotel concierges, everyone has a story to tell
about the killer fish that have been responsible for gruesome injuries and at
least one death a year for the past two decades.

“I’m not scared – I still swim here all the time,” boasts one man on
Recife’s main beach, ignoring placards advising bathers not to enter the water,
especially when they are drunk, wearing shiny objects or during a full moon.

But Recife has not always resembled the setting of one of&nbsp;Gabriel García Márquez’s magic realism novels. Researchers say the shark attacks began in
the early 1990s after the construction of the nearby&nbsp;Suape&nbsp;port, the 13,500-hectare industrial
complex that is home to Petrobras’s Abreu e Lima refinery.

“The intensification of maritime traffic and the impact of the port’s
construction on the ecosystem have been identified as the main causes of this
outbreak of attacks,” says Fábio Hazin, a professor at the Federal Rural
University of Pernambuco.

Sharks like to follow the ships, probably because many vessels discard
waste food into the sea. They are then pulled by the current towards Recife’s
main beach, where they mistake humans for prey, says Professor Hazin.

For critics of Petrobras’s Abreu e Lima refinery, which is embroiled in
corruption allegations, the shark attacks and environmental concerns over Suape
have been yet another reason to object to the state-controlled oil company’s
project.

“Sustainability is not a concept that was central to [Suape],” according
to the non-profit organisation, Instituto Ethos. “Now we have to compensate for
and fix the consequences of the measures that were taken.”

-------------------------------------------

Letter in
response to this article:

It’s
no mistake, sharks eat humans / From Mr Richard Maudslay
















































































































































































































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