Billionaires in the Dock

On​ 6 April 2018, members of the Brazilian federal police hovered uneasily around a crowd of supporters of Luiz Inácio da Silva, known to all as Lula. The previous day, Brazil’s Supreme Court had ruled that Lula – president between 2003 and 2010, and running again in the 2018 elections – must surrender himself to the police to serve a prison sentence for corruption. An investigation codenamed Operação Lava Jato – Car Wash – had linked him to a massive kickbacks scheme.

Lula had defied the 24-hour deadline, holing up in the headquarters of the metal workers’ union in São Bernardo do Campo, the ‘B’ in the ‘ABC’ industrial region surrounding São Paulo and the place where he rose to prominence, challenging the military dictatorship by leading strikes and helping to found the PT – the Workers’ Party. His supporters, wearing the party’s red T-shirts, had unfurled a huge banner reading ‘Elections without Lula Are Fraud’ and physically prevented him from turning himself in. The police decided not to try to extract him. The next day, the crowd allowed Lula out. ‘I do not forgive them for creating the impression that I am a thief,’ Lula told his supporters, before disappearing into a police car and spending nineteen months in prison.

The corruption allegations against Lula may have been hazy, but those against his party were well-founded and damning. This fact is often lost in a soup of accusations and counter-accusations, and the general controversy around the PT’s dramatic loss of power since 2016. Did it lose power because it was corrupt? Or because there was what Hillary Clinton in another country at a simpler time called a ‘vast right-wing conspiracy’? Or – as the evidence suggests – both?

Some of the accusations, especially those against Lula’s protégée and successor as president, Dilma Rousseff, were invented or exaggerated: her worst proven misstep was political, not criminal – trying to protect Lula from prosecution by making him her chief of staff, a move blocked by a Supreme Court justice. Dilma herself – Brazilian politicians are referred to by their first names or nicknames – was impeached on trumped-up charges in 2016 in a move that was technically legal but looked and smelled like a coup. In 2018, Lula tried to continue his presidential campaign from jail, but this was disallowed under Brazil’s Lei de Ficha Limpa (Clean Slate Law). An alternative candidate hastily put forward by the PT lost to Jair Bolsonaro, a man who regretted out loud that the military had tortured people rather than killing them outright during the dictatorship, told a female colleague that he wouldn’t rape her because she was ‘not worthy’, and once said: ‘It’s a shame that the Brazilian cavalry was not as efficient as the Americans who exterminated the Indians.’ In November 2020, Bolsonaro called on Brazil to ‘stop being a country of faggots’ and to follow his example by not worrying about the pandemic. The country lost 660,000 people to Covid, second only to the US.

The next presidential election is in October, and Lula – who has been cleared to run after a Supreme Court judgment annulling his conviction – is for now the favourite, though Bolsonaro is gaining in the polls, currently 16 points behind Lula if it went to a runoff. ‘We want to come back so that no one ever dares to challenge democracy again,’ Lula has said. ‘And to return fascism to the sewer of history, from which it should never have escaped.’ Not to mention that, in his mission to increase the commercial development of the Amazon, Bolsonaro has overseen the highest levels of deforestation in fifteen years, resulting in rampaging wildfires. Scientists warn that if his policies continue, large portions of the canopied rainforest will be turned into savannah.

Bolsonaro’s victory in 2018 was a result in part of a feeling that all the major parties were corrupt. A Datafolha survey published last year by the newspaper Folha de São found that 57 per cent of Brazilians think Lula’s conviction was fair. Car Wash wasn’t the PT’s first time at the rodeo. In 2005, a major vote-buying scandal erupted, which went as high up as Lula’s chief of staff, although there was never solid evidence that Lula himself knew about or directed the payments. Car Wash was on a much larger scale, and, as Lula himself acknowledged, the fallout left the ‘impression that I am a thief’. So, is he?

Operation Car Wash, by Jorge Pontes and Márcio Anselmo, two senior investigators (delegados, a federal police rank somewhere between detective and police chief) in several of the highest-profile investigations, was published in Portuguese in 2019 under the title Crime.gov. The subtitle of this new English translation – ‘Brazil’s Institutionalised Crime and the Inside Story of the Biggest Corruption Scandal in History’ – may seem an exaggeration, but there is a good case for it. Car Wash eventually uncovered at least $5 billion in bribes and kickbacks to businessmen and political parties, and dragged billionaires and presidents through the courts.

It began in 2012, when federal police investigating money laundering looked into Carlos Habib Chater, the owner of the Torre petrol station in Brasília. There had once been a car wash there – hence the codename. Wiretaps on Chater’s phone led them to Alberto Youssef, a well-known doleiro. The word was used to mean a black-market currency dealer – it’s a coinage from dolár or ‘dollar’ (verdureiro means ‘greengrocer’) – back in the 1980s, when Brazil had a closed economy and inflation was so high it was someone’s job in every grocery shop to do laps with a sticker machine, continuously upping the prices. During the transition from dictatorship to democracy, the doleiros expanded their business, becoming the people you called to launder, hide or spirit cash out of the country to tax havens or foreign banks.

Youssef laundered so much cash that he used an armoured car for deliveries. He had already turned state witness several times as part of plea bargains, but, incredibly, he still got calls from people who wanted to move money. He was, apparently, charming and terrific at his job. In 2014 police found an email linking him to corruption at Petrobras, the state-owned oil company, founded in 1953 with the slogan ‘The Oil Is Ours’. Youssef again agreed to turn witness for the state as part of a plea bargain, but this time he warned: ‘If I speak, the republic falls.’ The lawyers who interviewed him told the New York Times they thought he was just being melodramatic, but after he started writing names on a piece of paper one of them asked: ‘Are you serious?’

The Petrobras part of the scandal – just one of many corruption schemes ranging from the building of World Cup stadiums to highway construction – was unusual in size, but not in operation: it was a fairly simple kickback scheme. Prosecutors alleged that, starting in 2004, Petrobras officials had colluded with companies to overcharge the government and pocket the difference, funnelling some of the money back to top politicians and the campaign funds of all the major political parties to ensure the constant flow of contracts with no questions asked.

Pontes and Anselmo describe corruption, or ‘institutionalised crime’, as old news in Brazil. ‘Political parties in Brazil function as mafias’ and have done since at least the 1980s. But, as they got deeper into the Car Wash investigation, even they were shocked by what they found. ‘The system was like a huge whale that breaks the surface only every now and then, fleetingly, perhaps flashing a ridge of its enormous back, or the tip of a fin, or maybe just a jet from its blowhole. You could see something was disturbing the surface, but not its shape, full girth, or length.’

The most satisfying passage in the book describes the arrest of Marcelo Odebrecht, CEO of Latin America’s largest construction company, who led a price-fixing cartel and paid eye-popping sums in bribes. At six a.m. on 19 June 2015, Pontes and Anselmo showed up at his gated community in São Paulo in an armoured vehicle, arrest warrant in hand. Odebrecht was cool and commanding. An agent tried to call Anselmo’s attention to a document he had found in the house search, saying: ‘Boss!’ Odebrecht answered him: ‘Yes?’ Odebrecht’s wife asked Anselmo ‘if his imprisonment would be the five-day job or “the real deal”’. It was the real deal. Thanks to the testimony of a former secretary, investigators learned that the company had a Department of Structured Operations, which the Brazilian press took to calling the Bribery Department. It had a ‘cash flow, director, organisational chart with lines of report, an in-house coded communication system, list of telephone extensions, and its very own database. A director would request a sum, another would sign off on it, and the department paid out.’ Odebrecht was sentenced to nineteen years for paying more than $30 million in bribes; by 2017, 77 Odebrecht executives had signed plea deals implicating hundreds in crimes. Even Eike Batista, once listed by Forbes in one of those masculinity-measuring contests as the world’s seventh richest man, was sentenced to thirty years in jail.

Documents filed as part of a 2016 plea agreement with the US Justice Department showed that at least $439 million in bribes were paid outside Brazil. ‘Odebrecht’ is now another word for corruption all over Latin America. Car Wash led to investigations into nine former presidents from five countries, and implicated politicians in Argentina, Mexico, Panama, Venezuela, Chile, Colombia, Cuba, El Salvador, Ecuador, Guatemala and Peru, as well as Angola and Mozambique. Beyond Brazil, the damage has been worst in Peru, where Odebrecht allegedly bribed three separate presidents. One of them, Alejandro Toledo, is currently in the US fighting extradition, and in 2019 another – the charismatic Alan García – locked himself in his bedroom and shot himself in the head after finding out that he was about to be arrested.

Odebrecht turned informant to reduce his sentence, and admitted in depositions that his family company had been bribing officials since the 1940s. In 1993 a congressional investigation had found evidence of corruption involving the company and members of government, but the police officers who were keen to investigate the case were moved by their superiors. Pontes, who trained at Quantico in the 1990s, recalls his FBI colleagues saying: ‘big cases, big problems’. Everyone knew about the corruption, but no one wanted to prove it. The irony is that the PT helped build the tools that would be used against them. ‘Before Lula took power we were toothless,’ Luis Humberto of the federal police union told Jonathan Watts of the Guardian. ‘The Workers’ Party increased our budget, upgraded our equipment and gave us more authority. It is ironic. They lost power because they did the right thing.’

Car Wash has become intensely politicised in Brazil, making it easy to lose sight of which allegations of corruption were justified and which exaggerated or even invented – and removing it from the context of the widespread corruption that predated the founding of the PT. It is clear, though, that illicit cash from kickbacks paid for lavish campaigns for all political parties, including the PT. Dilma and Lula both benefited politically, and Lula – although he denies it – may have benefited personally. In such a polarised political environment, it is striking that Anselmo recalls ‘the day myself and my colleagues went out into the streets to celebrate his [Lula’s] victory … At the time, you could feel the hope in the air, the sense that the country was finally going to shed its old skin.’

Lula has been a fixture of world politics for almost two decades, and it can be hard to remember just how remarkable a figure he is. There is no other leader of a country of comparable size and importance – Brazil is the world’s fifth largest country by landmass, and has the ninth largest economy – who grew up not just working-class but poor. His biographer John French points out that Lula learned to read when he was ten, didn’t always have enough to eat, left school at twelve, and came from the impoverished, stigmatised north-east of the country, with the accent to prove it. Class and regional identification were key to his political success. The north-east has the highest percentage of Brazilians who identify as preto or pardo, Black or brown, and Lula has always spoken of the country’s ‘debt’ to Black people. Once in power, the PT raised the minimum wage every year, ultimately increasing it by 60 per cent, and established a programme called Bolsa Família, which provided cash to poor families who could prove they were sending their kids to school and keeping their vaccinations up to date – one element of the programme was called Fome Zero, ‘zero hunger’. Bolsa Família helped eleven million families and greatly reduced inequality. It has been replicated all over the world, and is popular with the Brazilian electorate – helping to secure Lula’s reputation despite the corruption allegations.

The Car Wash investigations into Lula initially centred on the millions of reais in speaking fees he had received from companies in the construction cartel, then on his use of a country house in Atibaia, and of a triplex penthouse with an ocean view in Guarujá, provided by a construction company. The Brazilian press ran wild with these allegations, which were relatively modest in the pantheon of Brazilian corruption. Pontes and Anselmo rightly criticise Dilma’s attempt to win Lula legal impunity by appointing him chief of staff: the police discovered her plan when she called to tell him – they had wiretapped her phone. After receiving permission from a Car Wash judge, Sérgio Moro, the police released the audio recording. Scandal. It was ‘like a bomb going off’, the authors write, but the dubiously legal release of the wiretap helped make the boom as loud as possible.

Despite their early sympathy for Lula, Pontes and Anselmo believe his prison sentence was deserved. They claim that corruption became more ‘sophisticated’ and centralised after he came to power, with dodgy construction contracts in Latin America and Africa, channelled through Odebrecht’s company. They don’t deal with the extensive corruption on the right. Michel Temer, Dilma’s vice president, who led the charge against her and replaced her when she was impeached, gets little space in this book, but he was indicted for money-laundering and paid for his daughter’s home renovations (which ran into seven figures in reais), with money from bribes. Many of those who ousted Dilma were openly corrupt. In Temer’s first month as president, two of his ministers were forced to resign after recordings surfaced of them talking about impeachment as a means of halting Car Wash. ‘Got to settle this shit,’ one said. ‘Got to change the government to be able to stop the bleeding.’

It​ was in part allegations of corruption against those around him that caused Brazil’s most important leader before Lula, the dictator turned elected president Getúlio Vargas, to shoot himself in the heart in 1954. But there is no ‘culture of corruption’ in Brazil or Latin America more generally, as outsiders sometimes claim – what would that even mean? It is impunity that makes those who can, steal, and others shrug. ‘Rouba, mas faz’ (‘he steals, but gets things done’) is one expression, and Brazilians have another for what usually happens when a rich or powerful person is investigated or arrested: ‘acaba em pizza’ – it ends up with a pizza, it all comes to nothing. The shocking thing about Car Wash is that anyone went to jail at all. After his 2014 arrest, Renato Duque, a former director at Petrobras, asked his lawyer: ‘What do they think they’re doing? What sort of country is this?’

The PT strengthened the federal police, making Car Wash possible, but only after pressure from mass protests in 2013, the biggest in the country since the 1990s. Like many mass movements in Latin America over the past ten years, the protests were set off by a small hike in public transport fares. They were fanned by outrage over corruption, then further outrage at police suppression of the protests and violence against demonstrators. Dilma fast-tracked laws including one that, for the first time, permitted plea-bargaining in return for information crucial to the investigations.

Corruption comes from the Latin corrumpere, which means ‘to bribe’ but also ‘to destroy’ or ‘to deface’. It can trigger mass protests, or feed violent movements. The journalist Sarah Chayes, who briefly ran an NGO in Afghanistan with Hamid Karzai’s brother and knows what she’s talking about, showed in Thieves of State: Why Corruption Threatens Global Security (2015) how quickly people can be radicalised by being bled for bribes and kickbacks. There is no armed insurgency in Brazil, but outrage over corruption is fuelling a stand-off serious enough that, as in the US, the words ‘civil war’ are being bandied about. Petra Costa’s Oscar-nominated documentary Edge of Democracy (2019) gives a sense of the dry-tinder atmosphere created by the imprisonment of Lula and the ousting of Dilma, and the desperation and paranoia of those who support, as well as oppose, the PT.

The police have a curious role in all this. I spent the summer of 2014 in Rio de Janeiro. There were no longer the massive marches of the previous year, but there were still people out on the streets protesting against the orgy of corruption involved in building and renovating stadiums for that year’s World Cup and the 2016 Olympics. A twenty-something teacher I met pointed out that with a left-wing government in power – Dilma was president – the priority should be hospitals and schools. More than half of the stadiums built or renovated while I was there were later investigated for fraudulent financing. The teacher had met his girlfriend at the 2013 protests, and was still out protesting with her the next summer, but now against corruption and police violence. ‘The same police that repress in the street kill in the favela,’ the placards said.

As soon as I opened this book, I wondered what kind of police chiefs wrote it. The ones on a murderous rampage in the favelas are from a different division. Elite Squad, a 2007 movie based on a book by a sociologist and two police captains, chronicled the ‘adventures’ of the Batalhāo de Operações Policiais Especiais (BOPE), the equivalent of a SWAT team. Depending on who you asked, BOPE officers were badass heroes who caught bandits – or out-of-control bandits themselves. A 2009 cable released by WikiLeaks showed that BOPE training was modelled on US counterinsurgency techniques in Afghanistan. When I was in Rio, BOPE was running so-called pacification campaigns in favelas to ‘take them back’ from drug traffickers ahead of the World Cup – entering, guns drawn, on black tanks called caveirões (‘big skulls’), and killing poor and usually Black people with impunity.

Anselmo and Pontes claim similarities between the federal police and the FBI – they seem to view this as an entirely positive thing – and are vehement that the ‘pacification’ campaigns were an ‘utter failure’. They say they were brought together by their agreement on one thing: ‘the damage done to the federal police by its long-standing prioritisation of the war on drugs’. They argue that clamping down on the sale of illegal narcotics ‘has enormous public appeal and for decades on end proved the perfect pretext for keeping federal police attention at a safe distance from corruption networks … It’s the juiciest, bloodiest steak with which to keep the guard dogs entertained.’

When they were training to be police officers, Anselmo and Pontes write, anyone who didn’t work on drug busts was considered a ‘wuss’. They both spent a fair amount of time fighting the war on drugs, but now regret it. ‘While we’re out there playing hide-and-seek with small-time, readily replaceable hoods, we should be following capital trails, dismantling money-laundering schemes, and recovering the vast sums stolen from the taxpayer by corrupt politicians and top-brass civil servants.’ They note that Brazil’s prison population is the third largest in the world, and that 28 per cent of the inmates are there for drug-related offences. Only 0.2 per cent are in for corruption. Although a major focus of the 2013 protests was police brutality, many Brazilians praised the federal police for Car Wash, with samba tribute songs written for several senior officers. At points, Anselmo and Pontes sound a bit like the teacher I met in Rio: ‘If we stop paying three times more than necessary to build each bridge or road and reduce the chronic burden of fraud on public tenders, there would be more than enough money to invest in social projects.’

‘As someone who has worked at both fronts,’ Anselmo writes, ‘I can safely say dismantling a corruption ring is way more gratifying, and generates a far stronger adrenaline buzz, than seizing five hundred kilos of cannabis and busting hoods who’ll be replaced the very next day.’ ‘No mafia,’ he goes on, ‘can compare with a criminal organisation that occupies the nation’s institutions and wields the power to create taxes, draft budgets, appoint authorities and approve laws.’ The pair write about drugs and corruption as if they are separate issues, but it isn’t only legitimate companies that funnel dirty money into Brazilian politics. Having outflanked Rio’s Comando Vermelho (Red Command), once the largest organised crime group in South America, the São Paulo-based Primeiro Comando da Capital (First Capital Command) has allied with ’Ndrangheta in Europe and is deeply involved in money laundering. It uses the cash to buy up police as well as judges and local prosecutors, according to reports by the Financial Times and the magazine Piauí. Brazil is not yet like Mexico, or Honduras, or Colombia in the 1990s – but the risk is there. A joint investigation by American University and InSight Crime found that the PCC has started using doleiros too. More immediately concerning, however, are the milícias, paramilitary groups run by active and retired police officers that control and extort money from favela communities. These groups have been connected to the Bolsonaro government, and notably to the murder of Marielle Franco, a charismatic Afro-Brazilian gay activist turned Rio city council member. Bolsonaro defends these groups, claiming there is ‘no violence’ in the areas they run.

Anselmo and Pontes can be amusing – take Pontes’s description of a drug bust in the Amazon. After a high-speed boat chase, he and his team threw back a tarp to find not cocaine but ‘a bunch of turtles!’ Those turtles kept nagging at Pontes – they were endangered but being smuggled – and he has dedicated a large part of his career to environmental protection. There are a few other extremely Brazilian moments, as when Pontes recalls bonding with another police chief over their ‘two things in common: a love of sunbathing and Rio’s eternal Flamengo’, the country’s biggest football club.

The book​ reads like a victory lap around Operation Car Wash, which is fine as far as it goes. But there is a serious flaw: there’s no update on one crucial figure, Judge Sérgio Moro. As the two police chiefs have it, Moro is a crusading hero. This was fine in 2015 or 2016, when – because of his willingness to investigate the country’s leaders – people would tie yellow and green ribbons round the trees outside his courthouse, and rise to applaud him when he entered a restaurant. In Brazil, judges are powerful not just because of the sentences they hand down, but because they can determine the scope of cases. Moro was daring, he went big, and he was beloved – despite growing criticism that he seemed to be authorising investigations of the left much more frequently than of the right.

When Bolsonaro invited Moro to join his cabinet as minister of justice and public security, Moro – very controversially – accepted. Brian Winter, editor in chief of Americas Quarterly, who knows Moro and used to give foreign journalists admiring soundbites about him, pointed out the obvious: ‘It does irretrievably rewrite the history of Car Wash and gives tremendous ammunition to people who believed it was a partisan crusade all along.’ Meanwhile, Noam Chomsky visited Lula in jail, and described him as a political prisoner. Then, in June 2019, Glenn Greenwald caused a political explosion in Brazil by publishing leaked messages from the chat service Telegram. The messages, verified as authentic by Veja and Folha de São Paulo, were between Moro and the Car Wash prosecutors – already a no-no. They gave the strong impression that the judge had plotted to secure Lula’s imprisonment to ensure he would be out of the way for the 2018 election. The Supreme Court threw out Lula’s corruption convictions.

Moro quit Bolsonaro’s cabinet in April 2020, accusing the president of interfering with the federal police. Conscious of his celebrity – according to Datafolha, 94 per cent of Brazilians know his name – he launched a campaign for the presidency, then called it off in March after polling at less than 8 per cent. Ana Clara Costa, reporting in Piauí, called his presidential run an ‘anti-phenomenon’, writing that he was ‘detested on the left, largely for his commitment to denouncing PT members and arresting Lula, and excoriated by the extreme right for having broken with Bolsonaro’. If there was space for a third candidate, it wasn’t going to be Moro. He did serious damage by pressing the courts into the service of a political attack. Who will now believe the judges as they investigate the probably much more egregious corruption under Bolsonaro?

Did Car Wash end up with a pizza after all? Certainly not. There were hundreds of other convictions. But the operation’s long-term consequences remain uncertain. Very few countries have ever managed to root out corruption so widespread that it threatens the political system itself. Lula is an infinitely better and safer choice as president than Bolsonaro, and many Brazilians will vote for him even if they believe he was guilty of corruption. But after the immediate danger of Bolsonaro’s rule passes, the PT’s most urgent challenge is to remake the political system so it can operate without kickbacks. French wrote in his biography that Lula ‘was a man out of place being put back in his place, expelled from among the high and mighty, where, they now claimed, he had never rightly belonged’. This time, Lula could show he doesn’t belong by remaining squeaky clean – and trying to bring his party along with him.