Petrobras Scandal: Signs of Progress Amidst Corruption?

The protests in Brazil tell the story: people are fed up with wide-scale corruption in the world’s fifth-largest nation. Massive crowds packed the capitol on Sunday, demanding the impeachment of Brazil’s President Delma Rousseff and calling for the prosecution of corrupt officials at all levels of government.

While such sentiment has been building, simmering, for years, the latest flashpoint is the Petrobras corruption scandal. Petrobras, the sixth-largest energy company in the world, is a mainstay in Brazilian business and its global reach includes exploration, production, refining and sale of oil and gas. Two major factors help frame Petrobras in terms of the scandal:

·         It is backed by government funds

·         It has close links with government officials and agencies

·         Until recently, it held a monopoly over the country’s oil industry

So, when it was revealed that the company was involved in bribes-for-contracts, skimming, illegal gifts, bid-rigging and other alleged corruption, it was, for many Brazilians, only shocking in terms of scale. The energy giant’s close ties with the government only fueled the perception of corruption and has helped lead to the massive protests we are seeing today. 

In an interesting angle on the alleged fraud, a writer at the Financial Times notes that there is actually some good news reflected in the way the story has developed. In “Petrobras shows corruption is now a high-stakes game in Brazil,” Samantha Pearson argues that the massive network of fraudulent actions alleged with Petrobras indicates, among other things, the lengths to which the conspirators went to hide their actions:

·         Cash was allegedly siphoned through more than 300 Swiss bank accounts

·         Money was laundered through everything from petrol stations to art works

Pearson explains that until recently, payments of bribes and other corrupt acts occurred much more out in the open. Hiding illicit payments was often no more than a matter of concealing cash under one’s coat.

The fallout from the Petrobras scandal might demonstrate how much has changed. It has embroiled other companie, including Rolls Royce, who have made public statements about the need to take action toward compliance. People are marching, and demanding government officials’ resignations.

Could Petrobras be a sign of a sea change for corruption in Brazil?