by John Fitzpatrick

Corruption is an integral part of the Brazilian political scene and the chances of it disappearing in the near future are remote. Twenty years of democracy have done nothing to reduce its harmful effects and may, in fact, have made things worse since more people can now get their fingers in the pie. Corruption affects all aspects of society. The main beneficiaries are politicians and their associates, public employees, including the security forces, criminals and lawyers. The main losers are ordinary people and society as a whole since the resources which were destined for public service end up in offshore bank accounts or in the form of luxury apartments and fast cars.  

Once elected, politicians can use various means to exploit their power and ensure that public money ends up in their personal bank accounts or, on occasion, party funds. The simplest and most traditional way is to demand bribes in return for services, such as awarding contracts for public works. A contractor pays a bribe into a bank account which a third party holds in the politician´s name and, in turn, the company wins a contract. This could be a big undertaking like a new highway or a more modest run-of-the-mill transaction, such as providing cleaning or catering services for a school. Another way is to set up a company, using the politician´s relatives or third parties as a front, which tenders for official contracts. The company wins the contract and the profits go into the politician´s pockets. As well as making an “honest” profit, the company may well inflate the prices and increase its profits beyond reasonable levels.

Another way of gaining more money is to carry out the contract using inferior materials. That is one of the reasons why roads across Brazil are full of potholes and many of the litter boxes in São Paulo are literally crumbling to bits. Throw a scrap of paper into one of these bins and it will fall onto the ground because the base no longer exists.

Some of these companies are openly owned by the politician who often runs radio stations and newspapers which gain revenues from public entities and provide a mouthpiece for the politician´s views dressed up as genuine news coverage.

There are also internal scams which allow politicians to provide and create “jobs” for relatives and cronies for which little work is done but salaries and benefits paid. This can be taken further by creating phantom jobs and pocketing the “wages” of these non-existent workers. Pension and other social benefit funds also provide another option for plunder. These are common and relatively simple ways for corrupt politicians to enrich themselves. The corruption can occur before the politician is even elected when he accepts donations from individuals or companies in return for future favors. It can even extend after the politician´s mandate if he has set up a solid internal organization or if he appoints a puppet to replace him. In some places politicians are powerful enough to do this.

It is not only elected representatives who benefit from corruption. Officials can use their permanent tenure and inside knowledge to work throughout various mandates and steal money from the public purse or demand payment for favors done. These people are often clever but, unfortunately, they do not use their intellectual abilities for the good of the country. Whether the morality of what they are doing ever occurs to them is not known. Many are careless and vulgar, spending their gains on flashy, foreign cars, yachts and country estates. Living on the brink like this must be nerve wracking but the big fish know that the chances of them going to jail if caught are slim so the risks outweigh the benefits.    

There are three cases dominating the headlines at the moment – a scam in the health ministry, the ongoing investigation into the finances of former São Paulo mayor and state governor Paulo Maluf, and the arrest of a Chinese-born naturalized Brazilian businessman accused of trying to bribe a politician to prevent his affairs being investigated by a congressional committee.

The first case could cause real damage to the administration of President Luiz Inacio Lula da Silva. It involves a ring of crooked public officials, businessmen and lobbyists who are accused of falsifying tender bids for the Health Ministry and making large profits. The affair was aptly dubbed “Operation Vampire” by the police since one of the areas exploited concerned blood transfusions. Almost 20 of those involved have been arrested. At least one of them was a close advisor to the health minister, Humberto Costa. It was Costa himself who gave the go ahead for the investigation and there are no indications that he has been involved in the scheme. So far Lula has stood by his minister but if it turns out that Costa was either involved or negligent then Lula will have no choice but to fire him. Should this happen then the spotlight will once again focus on Lula´s chief of staff, Jose Dirceu, who also had a close advisor found to be involved in corrupt activities. This advisor, Waldemiro Diniz, was filmed seeking bribes from the leader of an illegal gambling racket ahead of the presidential elections in 2002. Dirceu summarily fired him and denied any knowledge of the affair. However, the mud is still sticking and Dirceu who has lost much of the power and prestige he enjoyed until the scandal broke at the beginning of this year.

If Costa goes then Dirceu´s position would become even weaker. If Dirceu goes then Lula´s position would also become weaker. The president is already having problems controlling not only his allied partners but some members of his own Workers Party (PT), particularly over his minimum wage proposals. Lula knows he cannot afford to lose any more credibility, ahead of the upcoming mayoral elections which are likely to be seen as a litmus terst for his government´s popularity.

The justice minister, Marcio Thomaz Bastos, went on television this week and said that corruption would be investigated as never before. In a fine piece of rhetoric he said: “All the government´s efforts will be made so that ...the word “corruption” will no longer be synonymous with “impunity” but will mean investigation and prison for the guilty ones.” He also pointed out to several high-profile investigations which had busted corruption rings and led to arrests. However whether these investigations will lead to those involved ending up in a jail is doubtful, based on past experiences. Maluf, for example, has been dogged by allegations of misconduct and corruption for years and has never been convicted of anything. It will also be interesting to see if these investigations make any progress into the unresolved murder of a leading PT mayor, Celso Daniel, two years ago. If Bastos is serious about getting to the bottom of corruption then this is a case which deserves priority treatment.   

May 16, 2004

(c) John Fitzpatrick 2004