Corruption

Public Ministry indicts Lula, son for influence peddling and money laundering

The Federal Public Ministry (MPF) indicted former President Lula da Silva and his son Luiz Cláudio Lula da Silva on charges of influence peddling, money laundering, and criminal organization on 9 December 2016 (Globo G1). The MPF made the announcement after investigations pointed to the involvement of Lula, his son, and the owners of a consulting firm in irregular transactions made by the federal government to purchase 36 Gripen military jets. According to the MPF, the crimes were committed between 2013 and 2015, after Lula’s mandate as president. The MPF suspects that Lula promised to use his influence in the federal government to benefit automotive clients of consulting firm M&M by way of government purchases. In return, Mauro Marcondes and Cristina Mautoni, owners of M&M, agreed to pay US$747,836 to Lula's son’s business, LFT Marketing Esportivo (Folha de S. Paulo). The indictment was made as a part of Operação Zelotes, a probe into corruption in federal, state, and municipal governments.

Odebrecht executive cites Temer, dozens of other politicians for bribery and illicit campaign funds in plea deal

Cláudio Melo Filho, former Vice President of Investor Relations at Odebrecht, the embattled construction firm under investigation for its involvement in bribery and cartel activity in Operação Lava Jato, cited dozens of politicians in a testimony as a part of a plea deal on 9 December 2016 (Folha de S. Paulo, Valor). Melo Filho said the company paid politicians to influence the passage of a bill that would provide tax concessions to producers of ethanol and the chemicals industry, allowing Odebrecht to save on taxes. The list of politicians includes President Michel Temer, to whom Melo Filho said the firm paid nearly US$3 million in bribes and illicit campaign funds, Chief of Staff Eliseu Padilha (US$1.2 million), Geddel Vieira Lima (minister under both Temer and Lula, US$1.75 million), former President of the Chamber of Deputies Eduardo Cunha (US$3.4 million), current Chamber President Rodrigo Maia (US$178,000), Senate President Renan Calheiros (US$1.8 million), Senator and leader of Temer’s government in Congress Romero Jucá (US$5.7 million), and Jaques Wagner (minister under Dilma Rousseff, US$6.1 million). Melo Filho stated Romero Jucá may be considered the front man for the solicitations. Many of the politicians have denied the accusations, including Temer (Valor). 

The accusations will have significant consequences for the Temer administration, which took power after the opening of the impeachment process of Dilma Rousseff in May 2016, finalized in August 2016. The Temer administration began with low public support, and polls from 7 December show a sharp decrease in support for the new administration. Datafolha, Folha de S. Paulo’s polling service, revealed that 63 percent of Brazilians want Temer to resign so the country may hold a direct presidential election. Temer would need to resign by 31 December 2016 for this to be possible under Brazilian law. Datafolha reported that 51 percent disapprove of the administration, up from 31 percent in July 2016. The testimony also comes as new economic data from the Brazilian Central Bank has continued to revise down growth projections given at the start of the new administration’s mandate. With low support and mounting evidence of corruption, on top of weak economic growth and fragmented support in Congress, the administration’s mandate has become even more complicated.

Sentencing in Honduran Social Security corruption case

The Unidad Nacional de Apoyo Fiscal (UNAF) announced on 6 December 2016 that Ilsa Vanessa Molina Aguirre received a twelve year sentence for asset laundering from the Honduran Social Security Institute (IHSS) (La Prensa). Molina pled guilty to embezzlement of more than US$400,000 through Inversiones y Suministros Médicos (Insumedic), a business she created (La Tribuna). Molina was the former partner of former IHSS administrator José Zelaya, currently a fugitive from justice. Zelaya is considered to be the mastermind behind the theft of almost US$300 million from Social Security funds, with more people implicated (La Tribuna). According to the Public Ministry (MP), they had thousands of files with evidence against Molina (La Prensa).

Andrade Gutierrez admits to cartel behavior in World Cup stadium construction

Governmental antitrust organization Cade announced a leniency deal with construction firm Andrade Gutierrez Engenharia S.A., along with executives and former executives, on 6 December 2016 (Valor, Globo G1). Through the deal, the firm and other signees have admitted to participation in cartel activity in the construction of stadiums for the 2014 World Cup, hosted by Brazil. The deal, closed in October 2016 in conjunction with the Federal Public Ministry of Rio de Janeiro, is another part of the Operação Lava Jato, an investigation into corruption related to contracts at state oil firm Petrobras. Cade believes at least five bidding processes were the targets of the cartel, including bids for Arena Pernambuco, in Recife, and the renovation of Maracanã in Rio de Janeiro. It suspects the involvement of major firms OAS, Camargo Corrêa, Queiroz Galvão, and Odebrecht as well. Andrade Gutierrez has recently signed leniency deals with Cade related to other cartel behavior linked to PAC Favelas in Rio de Janeiro and the bidding process for the Usina Hidrelétrica de Belo Monte.

Senate President Renan Calheiros to face Supreme Court for corruption

The Brazilian Supreme Court voted on 1 December 2016 to review the corruption case of Senate President Renan Calheiros (PMDB-AL) (Folha de S. Paulo, Globo G1). Calheiros initially stood accused of illegally allocating pension public funds between 2004 and 2006 to a daughter he had with journalist Mônica Veloso, when he served as Chief of Staff under the Lula administration. The Supreme Court ministers also investigated a 2013 claim that Calheiros presented falsified documents to the Senate in 2007 to pay into his daughter's pension fund. However, the Court discarded this claim. According to Brazil's General Attorney's Office, Calheiros also used half of his monthly cabinet stipend between January and July 2005 to pay a car rental shop that subsequently made larger loans to the Senator. Calheiros could face two to twelve years in prison if convicted on the remaining corruption charges. 

Lava Jato coordinator criticizes "intimidation law" approved by Chamber of Deputies

Federal attorney Deltan Dallagnol, who coordinates the Operação Lava Jato task force investigating the Petrobras corruption scandal, criticized on 30 November 2016 the Chamber of Deputies' decision to include a provision for judges and members of the Public Ministry to face crimes of responsibility in their new packet of anti-corruption laws (Valor, Estadão). The approved amendment holds that judges and Public Ministry members may answer for abuse of authority if they begin proceedings without any indication of a crime having been committed. Dallagnol called the amendment a "law of intimidation." Judges may already answer for crimes in at least eight situations, among them expressing an opinion about a pending judgment, with penalties ranging from six months to two years in prison and fines.

Prosecutors requested the freezing of assets from Máximo and Florencia Kirchner

Prosecutors Gerardo Pollicita and Ignacio Mahiques on 29 November 2016 requested the freezing of assets held by Máximo and Florencia Kirchner, the children of former presidents Néstor and Cristina Kirchner. The assets under examination were transferred by Néstor Kirchner to Cristina Kirchner, who later transferred the assets to her two children on 10 March 2016 (Clarín). The freezing of the assets is part of an ongoing investigation into a money laundering case involving Cristina Kirchner (Terra).

Federal police arrest ex-Rio de Janeiro Governor Sérgio Cabral on corruption charges

On 17 November 2016, Brazilian federal police arrested the former Governor of the State of Rio de Janeiro, Sérgio Cabral (PMDB) (Folha de S. Paulo, Globo G1). As a part of Operação Calicute, an operation occurring in concurrence with the Operação Lava Jato investigating corruption at Petrobras, investigators are attempting to account for US$64 million embezzled from state government projects during terms. Among the projects being investigated is the renovation of Maracanã for the 2014 World Cup. The Federal Public Ministry of Rio, involved in the investigation, suspects Cabral of masterminding corruption, money laundering, and cartelization, in addition to receiving over US$800,000 from construction firms, such as Andrade Gutierrez, during his tenure as Governor. The State of Rio de Janeiro, currently undergoing a fiscal crisis, had ~US$50 million blocked by the federal government for failing to pay interest charges. Cabral is currently being held in Bangu prison outside of the city of Rio.

Former Venezuelan FIFA official pleads guilty to corruption charges

Former President of the Federación Venezolana de Fútbol (FVF) Rafael Esquivel on 10 November 2016 pleaded guilty to seven corruption charges related to the FIFA corruption investigation. Esquivel admitted to engaging in illegal bank transfers and money laundering to make bribes in exchange for television contracts to air the Copa América and the Copa Libertadores (Efecto Cocuyo). The charges carry a maximum sentence of twenty years in prison, and Esquivel committed to handing over US$16 million to reduce his sentence and collaborate with the investigation carried out by a New York federal court. Esquivel was arrested in Switzerland and extradited to the U.S. in May 2015 for accepting millions of dollars in bribes found in several personal bank accounts held in the U.S. (Tal Cual).

Former Mexican governor facing corruption accusations turns himself in

Former PAN Governor of Sonora Guillermo Padrés came out of hiding and turned himself in to Mexican authorities to face corruption accusations on 10 November 2016 (Aristegui). Padrés, who had been wanted since August 2016, when the Mexican Attorney General’s Office (PRG) ordered his arrest for suspicion of money laundering, appeared before a 12th District Court judge at the Reclusorio Oriente prison to face charges (Aristegui and Economía Hoy). Padres will remain at Reclusorio Oriente until 16 November 2016 while his legal situation is resolved (24 Horas). Before turning himself in, Padrés told Radio Fórmula that he has been a victim of political persecution but was prepared to face the accusations and would demonstrate his innocence (Aristegui). The PRG also arrested the former governor’s son, Guillermo Padrés Dagnino, who is also facing accusations related to corruption (Economía Hoy).

Bolivian Prosecutors demand Doria Medina's arrest

Bolivia’s Public Minister has requested the detention of businessman and National Unity Party (UN) Leader Samuel Doria Medina. The charges are for breach of duties with Focas, to be explained in a public hearing on 3 November 2016. Focas, a loan system from the U.S. to Bolivia, was canceled and became a private foundation per request of the U.S. (La Prensa). Medina, along with nine other former politicians, diverted public funds from Focas for unauthorized use. The Prosecutor General presented a formal charge against the accused on 13 October 2016 (La Razon).

Venezuelan legislature: PDVSA embezzled US$11 billion

An investigation by the Comptroller Committee in Venezuela's Asamblea Nacional (AN) released on 19 October 2016 found that during the administration of former Petróleos de Venezuela (PDVSA) President Rafael Ramírez between 2004 and 2014, US$11 billion were embezzled from the state oil company. The 105-page report states funds for pensions, equipment maintenance, and various financial transactions were misappropriated, and links the suspected corruption to current PDVSA President Eulogio del Pino, who was on PDVSA's Board of Directors in 2008 (Efecto Cocuyo). According to Comptroller Committee President Freddy Guevara, the investigation into the largest corruption case in Venezuela's history drew mainly on internal documents from PDVSA, documents from PDVSA's auditing firm KPMG, criminal investigations from other countries, and documents from the AN archives (Tal Cual). Ramírez is currently serving as Venezuela's ambassador to the United Nations.