Petrobras Crime Busters Fight to Keep Graft Case Spanning Brazil

(Bloomberg) -- The group behind Brazil’s biggest-ever corruption probe has tracked the $1.5 billion bribery scheme that started with Petroleo Brasileiro SA across four continents. Now, the team of prosecutors, police and one dogged judge may be facing their biggest challenge yet: hanging on to the investigation.

Defense attorneys are trying to chip away at the judge’s jurisdiction, arguing that the sprawling case that has crippled Brazil’s economy and paralyzed its government should be spread across courts. While some members of the group themselves acknowledge that it’s become too big for one unit after more than 300 raids, 100 arrests and 30 convictions, they are in no mood to give up a single piece of it.

“If this case gets broken up,” warns federal prosecutor Carlos Lima, whatever gets sent to other states "will be buried in a mass grave.”

If Lima sounds like a doomsayer, he’s got good reason. There’s a long history of corruption in Latin America’s biggest economy, but it wasn’t until the group of 11 prosecutors -- they call themselves the Workforce -- along with Judge Sergio Moro and federal police, began uncovering and punishing wrongdoers that it became apparent just how widespread graft is. Scatter the investigation across cities and states, Lima said, and it will be all too easy to sweep under the rug.

Mapping a Scandal

On a recent afternoon in an office building in South Brazil, Lima, a Cornell-trained lawyer in his 50s, sat and drew a map of the colossal scandal on a sheet of notebook paper. At the center of the map was Petrobras, whose executives were accused of taking bribes in exchange for awarding lucrative contracts. But in the 18 months since federal police first linked a notorious money launderer to a senior executive, the scandal has spread far beyond the state oil giant to builders, service providers and politicians. Using a red pen, Lima illustrated each of the offshoots with a line and a bubble until he ran out of paper.

“It’s all one big criminal organization,” he said. “We expect the investigation to still take years.”

Petrobras has said it knew nothing about the bid rigging and is collaborating with authorities.

Now, defense attorneys for executives accused of paying bribes and the politicians who allegedly took those kickbacks are petitioning to send their cases to jurisdictions outside of Curitiba, the city in South Brazil that’s ground zero for the investigation known as Operation Carwash. It follows a Supreme Court ruling this month that sets the precedent for splitting up the case.

In Brazil’s justice system, a judge is responsible for formally charging a defendant, approving major steps in the investigation by police and prosecutors, hearing the evidence, and then deciding whether the defendant is guilty or innocent.

‘No One Sleeps’

As he spearheads Carwash, Judge Sergio Moro, a soft-spoken 43-year-old with jet-black hair, has become a Brazilian folk hero for handing out some of the harshest sentences since the country returned to democracy in 1985. The members of the Workforce, mostly in their 30s and 40s, are financial crime specialists with post-graduate degrees from schools such as Harvard University or the London School of Economics and Political Science. Along with a police task force that’s assisting in the investigation, the entire group is close-knit and iron-willed, but not without a sense of humor. Phases of their investigation have been dubbed “No One Sleeps’’ and “Final Judgment.”

In some ways, they’re falling victim to their own success. In addition to the 30-plus convictions, police have seized millions of dollars of art and luxury cars.

Outgrowing Curitiba

It’s an impressive track record, but one that’s bolstering defense attorneys’ central argument: Carwash has outgrown Curitiba.

Last week, judges at the nation’s top court agreed. In a Sept. 23 ruling, the Supreme Court sent part of a parallel case to Sao Paulo, arguing that Moro should not control all of the investigation’s offshoots. The majority of judges ruled that it wasn’t directly related to the Petrobras investigation even if the evidence arose under Carwash.

“This takes steam out of the investigation,” Joao Augusto de Castro Neves, Latin America director of political risk consulting firm Eurasia Group. “The more judges and prosecutors involved, the harder it is to see clear coordination.”


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Copyright 2016 Bloomberg News.


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