The Red Flag Group®

Car washing corruption out of a country

Car washing corruption out of a country

The Brazilian Lava Jato, or car wash, scandal seems to be rising in profile even more than when it originally appeared. While it began with the national energy behemoth Petrobras, it has since extended to the very top levels of Brazilian business, politics and society. Indeed, the Financial Times wrote a lead editorial, entitled All of Brazil must go through the car wash, where the paper advocated for a full cleaning of Brazilian society.

While the scandal only indirectly caused the impeachment of (now) former President Dilma Rousseff, the FT reported that last month ‘federal prosecutors accused former president Luiz Inácio Lula de Silva of being the ringmaster of a ‘bribocracy’ at Petrobras’. Lest you think that Brazilian prosecutors are only going after the leaders and ex-leaders of the Workers’ party, there was also the vote to expel Eduardo Cunha from the Brazilian Congress. He was the engineer of Rousseff’s impeachment.

There has also been the news that the former head of Grupo Odebrecht SA, chief executive Marcelo Odebrecht, is now cooperating with prosecutors. The company is also reportedly nearing a settlement for its outstanding corruption charges. This company was one of the largest construction companies in South America, and its admissions and corruption claim resolutions will help to begin the process of establishing a modicum of legal contracting across the continent.

The FT editorial board ended their piece by stating that Operation Car Wash ‘holds out the promise of a country that suffers from far less gross corruption. It has demonstrated that nobody in Brazil is above the law, and that the judicial system has much to teach other countries, especially in the emerging world’. The example that Brazil may provide to the rest of the developed and developing world is that corruption can and indeed must be stopped. Brazilian prosecutors have the backing of the Brazilian citizenry, and it can only be hoped that similarly situated countries are not only sitting up and taking notice but may well follow the Brazilian playbook.