The Washington PostDemocracy Dies in Darkness

Brazil’s huge corruption scandal is spreading to the rest of Latin America

Union workers protest corruption outside the Public Ministry in Panama City on Feb. 10, 2017. Panama's attorney general's office ordered a search of offices belonging to law firm Mossack Fonseca in connection with a growing corruption scandal involving a Brazilian construction giant, Odebrecht. The Panamanian law firm denies any wrongdoing. (Arnulfo Franco/AP)

LIMA, Peru — For more than two years the “Car Wash” corruption mega-scandal engulfing Odebrecht, Latin America’s largest construction company, has roiled Brazil.

It contributed to the drive to impeach President Dilma Rousseff, landed numerous powerful people behind bars, helped stall the world’s ninth-largest economy, and led to a $3.5 billion corporate fine — a world record in a graft case.

Now the scandal is metastasizing across Latin America, where Odebrecht had numerous contracts to build huge public infrastructure projects in 10 countries from Argentina to Mexico.

On Thursday, Peruvian authorities issued an international arrest warrant for Alejandro Toledo, president from 2001 to 2006, even offering a 100,000 sol (roughly $30,000) reward for information leading to his capture.

Toledo is alleged to have received $20 million in kickbacks in return for green-lighting Odebrecht’s bid to build sections of the Interoceanic Highway, which now links Brazil with Peru’s Pacific ports. Toledo, who is thought to be in San Francisco or Israel, has denied wrongdoing.

Yet Toledo’s plight may mark a new stage in the Odebrecht scandal, as indicted executives reveal the complex dealings of the group’s “Division of Structured Operations” — effectively a bribes department, which oversaw $788 million in illegal payments, according to the accusations.

This past week has also seen allegations that Colombian President Juan Manuel Santos's electoral campaign received $1 million in potentially illicit contributions from Odebrecht, as well as a police raid on Mossack Fonseca, the Panama City-based law firm at the heart of the “Panama Papers” leaks. Santos has said he is innocent and called for a thorough investigation, and Mossack Fonseca has denied any connection with Odebrecht.

Meanwhile, Gustavo Arribas, Argentina’s top spy and a close ally of President Mauricio Macri, is under investigation, as is former Panamanian president Ricardo Martinelli. Both deny any malfeasance. Other corruption investigations involving Odebrecht are also moving forward at a snail’s pace in Ecuador and Venezuela, two nations where critics allege the judiciary is, to varying degrees, under the thumb of strongmen presidents.

The scandal, first named for a Brasilia service station used to launder bribes, is causing a huge outcry in Peru, where Odebrecht has won dozens of government contracts worth an estimated $25 billion since the 1990s.

According to the economy minister, the shock waves — including the need to find a new contractor to complete a $7 billion gas pipeline abandoned by the stricken Brazilian giant — could knock as much as 1 percent from Peru’s 2017 growth.

In addition to Toledo, three other previous presidents of Peru have fallen under suspicion. The most prominent is Alan García, whose 2006-2011 second presidency saw Odebrecht win a record number of contracts in the Andean nation.

It also culminated in the company's donating $800,000 to build a controversial 120-foot-high polyester resin imitation of Rio’s Christ the Redeemer statue, overlooking the Pacific, as a public “thank you” to García. He described the project as the fulfillment of a “personal dream.”

García’s deputy minister of communications and several others connected to his APRA party have been arrested on charges of receiving bribes related to the pipeline.

Julio Arbizu, the former anti-corruption prosecutor who first launched the probe into Toledo’s finances, told The Washington Post: “How could it be that these middle-ranking functionaries were the only ones taking money when García had such a high-profile relationship with Odebrecht?”

García, who strongly denies the accusations, responded to the news of the legal troubles of Toledo, a longtime bitter rival, by tweeting: “Pharisees. Hypocrites. They talked so much about corruption and it turned out to be them who are the real mega-corrupt [people].”

Despite it all, some see the sprawling scandal as a positive sign, revealing the increased scrutiny now coming from prosecutors, citizens and the news media.

“This actually shows that there is less and less tolerance for corruption,” Andrés Hernández, head of the Colombia chapter of the anti-graft group Transparency International, said in an interview. “Latin America’s democratic institutions are still young, but citizens are fed up, and the fact that these crimes are coming to light shows that we are progressing.”