What is the Lava Jato investigation?
In the run-up to the 2014 presidential elections, a task force of prosecutors and federal police began investigating corruption at Petrobras, Brazil’s state-owned oil company. While on the trail of a money launderer who laundered ill-got gains through a car wash (in Portuguese, a high pressure wash is known as a “lava jato”), they found an unexplained gift of a Land Rover to a Petrobras executive.
The ensuing investigation uncovered millions of dollars of theft by white-collar criminals. More importantly, the investigation also turned up evidence of significant off-the-books kickbacks by Brazil’s largest construction firms to politicians and political parties, including the governing Workers’ Party (PT) and its allies in the PMDB and PP, political parties that are part of the ruling coalition.
Why is Lava Jato significant?
The Lava Jato investigation could be the single largest corruption investigation ever undertaken, anywhere. At this stage, Lava Jato is on target to surpass Italy’s Mani Pulite investigation in terms of the total volume of money allegedly stolen.
The task force has already recovered $700 million, and they are seeking a further $3.6 billion. Petrobras has marked down its value by $17 billion – $2 billion of that total was from corruption.
Prosecutors have signed more than 40 plea agreements, filed more than 1,000 charges against 180 individuals, and obtained convictions against 84. Most impressive is the jailing of Brazil’s long prison-immune elite: Top executives from the country’s leading construction firms, lawyers, bankers, party treasurers, a former presidential chief of staff, and a sitting senator have all seen the inside of a jail cell.
Together with other ongoing investigations, these prosecutions have struck fear throughout the capital Brasília, threatening former president Lula, his successor Dilma Rousseff, the president of the lower chamber, and a score of influential lawmakers.
Why was Lula arrested?
Trick question: Lula wasn’t arrested. He was brought in by the police for questioning under “coercive conduction,” which is when police compel a witness to testify by taking them to a precinct under police custody. Prosecutors presumably used coercive conduction because they feared Lula might not otherwise testify.
We do not yet know the content of Lula’s testimony, but the urgency of it may be associated with new developments in the case of a prominent PT senator, Delcidio Amaral, who is reported to have reached a plea bargain with prosecutors. Press reports suggest that Amaral’s new revelations may tie President Rousseff to Petrobras corruption and provide evidence that illegal contributions were made to her 2010 election campaign. Press reports also point to new signs of personal enrichment by Lula, who had earlier been accused of receiving a beachfront apartment and country home from corrupt construction firms.
What does this mean for Brazilian democracy?
There are two interpretations. Many social scientists (including Melo and Pereira and Praça and Taylor) have noted the significant improvements in accountability since Brazil’s return to democracy in 1985. Accountability agencies have gained autonomy, capacity, funding, and high-level political support (including, ironically, from Workers’ Party presidents).
New laws on plea bargaining, racketeering, and money laundering passed in the last 10 years are partly responsible for the Lava Jato task force’s effectiveness. Likewise, many of the task force members belong to a generation raised since the 1985 transition to democracy, and have worked together and learned from the failures of past corruption cases. Finally, popular support – including massive demonstrations against corruption – has provided public backing for the investigations, making it harder for politicians to sweep wrongdoing under the rug, as they often did in the past. In short, the Lava Jato investigation is emblematic of significant improvement in accountability in Brazil.
The less positive spin on this is that Brazil has returned to where it was before the commodity boom in the early 2000s, when the U.S. Commerce Department caused a minor diplomatic snafu by writing that corruption was “endemic.” Social scientists such as Lazzarini and Musacchio and Latif and Lisboa have noted that Brazilian state capitalism is particularly attentive to special interests and has been plagued by rent-seeking. It is no coincidence that the country’s five leading construction firms were among the top 10 largest campaign contributors in the 2014 elections, retaining the oversized influence they have wielded since the 1950s. Partly as a consequence of interest group pressures, as Montero and Hochstetler and I have found in our research, there has not been much reform of the Brazilian state capitalist system, even under the so-called reformist governments of the 1990s.
Furthermore, the hugely congested, delay-ridden, and procedurally formalistic court system throws a wrench in the works. The result, as Tim Power and I have argued, is that scandals often play out with a depressing script, with bombastic revelations followed by glacial court cases that all too often result in impunity.
Will Lava Jato be any different?
So far, the case seems to be leading to important revelations and the incarceration of powerful elites. But it is likely to trigger important partisan confrontation in coming months. Lula’s first response after he police released him Friday was to hold a combative meeting at the Workers’ Party headquarters in São Paulo, casting aspersions on the neutrality of the judge and prosecutors at the heart of the case. Rousseff has replaced her justice minister, reportedly because he did too little to control the Federal Police under his command.
Brazil is deeply polarized, which may contribute to considerable volatility: Lula called Friday for the Workers’ Party to take to the streets, a few days before anti-government protests scheduled for March 13. The new evidence in Lava Jato has resurrected discussion of an impeachment motion against Rousseff. Brazil’s democratic institutions are strong, but passions are running high.