Preventing Systemic Corruption in Brazil

Sérgio Fernando Moro

Abstract: This essay describes the Brazilian anticorruption operation known as Operação Lava Jato (“Operation Car Wash”), its findings, and its results based on cases tried up to March 2018. Told from the perspective of the federal judge of the Thirteenth Federal Criminal Court of Curitiba, in whose court Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 most of the Lava Jato cases have been prosecuted, this massive criminal case offers lessons that may be useful to other anticorruption efforts. Preventing systemic corruption is a challenge, but it is a necessary step for the improvement of democracy.

What began as an investigation of an isolated in- stance of corruption within a Brazilian oil compa- ny expanded into an immense anticorruption oper- ation known as Operação Lava Jato (“Operation Car Wash”). This investigative operation has penetrat- ed deep within Brazil’s government and corporate elite to root out systemic state-sanctioned corrup- tion. Its criminal cases also appear to be instating new legal norms for how corruption cases are han- dled in Brazil, giving citizens hope that Lava Jato’s impact will be felt far into the future. How Brazilian prosecutors and courts dealt with this immense anti- corruption effort may provide important lessons for the battle against systemic corruption both in Bra- zil and elsewhere. This essay provides a comprehen- sive account of Lava Jato and its significance for Bra- zil going forward. It is important to note from the beginning that Lava sÉrgio fernando moro is Jato is not a single criminal case but several, in which a Federal Judge of the Thirteenth federal prosecutors have decided to pursue separate Federal Criminal Court of Curi- charges against many defendants. So far, more than tiba, Brazil. He is also Professor sixty criminal cases have been brought against about of Procedure Criminal Law at the 1 Unicuritiba–Centro Universitário 289 defendants in Brazilian federal courts. About Curitiba. He presided over the trial thirty-three of those cases have already been tried, of many bribery cases in Operação resulting in convictions of bribery and money laun- Lava Jato. dering for about 157 people. The reflections I offer in

© 2018 by the American Academy of Arts & Sciences doi:10.1162/DAED_ a_00508

157 Preventing this essay are based on the cases that have by powerful politicians or businessmen. Systemic been tried at the time of writing. I do not an- There are likely two main reasons for this. Corruption in Brazil alyze or comment upon cases that have yet The first is the slow pace at which the to be tried or that are awaiting sentences. judicial process progresses in Brazil. Un- At the core of the Lava Jato cases are til recently, the enforcement of a criminal crimes connected to contracts with Petroleo conviction was possible only after the case Brasileiro s/a (Petrobras). Petrobras is a reached a final decision that could no longer semipublic, majority state-owned Brazil- be appealed. Enforcement of a criminal sen- ian company engaged primarily in oil and tence depended on the judgment of the last gas exploration, refining, and transporta- appeal. Only then would the case be seen as tion. It is Brazil’s largest company and one transitado em julgado, or tried with no possi- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 of the world’s major oil and gas companies. bility of appeal. Years might pass between It was founded in 1953 to explore Brazilian an initial judgment and the final sentence. oil and gas fields with the goal of transform- This rule emerged from a 2008 Supreme ing Brazil into a self-sufficient producer of Court decision regarding a controversial petroleum products. interpretation of the presumption of inno- As the cases already tried reveal, multi- cence in Brazil’s Constitution.3 Theoretical- ple bribes were paid in contracts between ly, enforcing this rule would not be a prob- Petrobras and its suppliers; these bribes lem, but because of a generous system of were used for the criminal enrichment of appeals and the heavy caseload of Brazilian Petrobras executives and politicians, as Superior Courts, powerful defendants used well as to finance electoral campaigns. Be- it to manipulate the judicial process, initi- fore describing what prompted the inves- ating endless appeal proceedings to prevent tigation and how it unfolded, however, it their cases from ever reaching a conclusion is important to provide some context, in- and effectively avoiding accountability.4 cluding some details concerning Brazilian Until recently, it was very common for criminal justice.2 no final decision to ever be reached in complex criminal cases involving power- White-collar crimes like bribery and ful individuals. Even cases with strong evi- money laundering represent a challenge dence of criminal behavior or cases involv- for law-enforcement agencies all over the ing very serious crimes never reach con- world. They are often difficult to discover, clusions in Brazil. As a rule, wealthy and to prove, and to punish. Such crimes are well-connected defendants in these cas- usually committed in secret, by powerful es never go to prison, despite compelling people, and with some degree of sophistica- evidence of their guilt. However, this rule tion. And police, prosecutors, and the judi- changed recently, as I will explain below. ciary are often not well prepared for the in- The second main reason for criminal im- vestigation, prosecution, and judgment of punity among the powerful is the fact that these highly sophisticated crimes. Some- the Supreme Court of Brazil has original times powerful defendants also exploit the jurisdiction over criminal charges against gaps in the criminal law and of the judicial high federal official authorities, including system to prevent effective accountability. the president, vice president, cabinet min- Some countries are more successful than isters, and members of the federal Con- others in enforcing the law against these gress. This is ensured by a controversial kinds of crimes. Brazil, at least prior to Lava provision in Brazilian law stating that high Jato, did not have a strong tradition of en- politicians and authorities in criminal cas- forcing the law against crimes committed es must have foro privilegiado (“privileged

158 Dædalus, the Journal of the American Academy of Arts & Sciences forum”). So if, for example, a criminal in- The charges were presented before the Sérgio vestigation in a lower court produces evi- Supreme Court in 2006, though it took un- Fernando Moro dence of criminal conduct by a federal con- til 2012 for the case to go to trial. There was a gressman, the judge must immediately send great deal of skepticism about the Supreme the case to the Supreme Court. However, as Court’s judgment, especially about wheth- mentioned, the Brazilian Supreme Court’s er it would try the case in a reasonable time heavy caseload (its docket contained over and convict the defendants. But in the end, fifty-five thousand cases in the last year the Supreme Court issued a guilty verdict alone) makes it very difficult to adjudicate for most of the defendants, including sev- criminal charges in a timely fashion. Conse- eral powerful politicians. Of course, Bra- quently, cases involving crimes committed zilian courts had produced some convic- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 by powerful defendants sometimes literal- tions for white-collar criminals in the past. ly never end. In practice, the special juris- But these were the exception, not the rule, diction of the Supreme Court over crimi- and none of them was as important or rel- nal charges involving high-ranking official evant as the decision in Criminal Case 470. authorities worked as a shield against ac- These verdicts marked a clear break with countability. the norm of weak enforcement of the law These are two primary structural reasons against white-collar or financial crimes. A (though there are others) why law enforce- Supreme Court decision has great influence ment is so weak on crimes committed by across the whole judicial system. Beyond powerful defendants in Brazil. The weak en- the importance of the criminal cases’ direct forcement of the law against white-collar consequences, they worked as an example crimes is one of the likely reasons for the for all Brazilian law enforcement agencies development of systemic corruption in Bra- and judges, showing that the shield against zil. However, legal procedures have recent- effective accountability for powerful defen- ly changed the system for the better, at least dants could be broken. in part. Lava Jato is not alone, but rather is part of this broader effort. Two years after the judgment in Crimi- nal Case 470, Operação Lava Jato began. Criminal Case 470, decided by the Brazil- As usually happens with criminal investi- ian Supreme Court in 2012, began to change gations, Lava Jato started small. The fed- the norm of weak enforcement of the law eral police opened an investigation tar- against white-collar crimes in Brazil. geting four individuals involved in what In this case, also known as Mensalão seemed at the time to be a money-laun- (“monthly,” because the case involved dering scheme involving black-market monthly bribes to some congressmen), money exchanges. One of these individu- the Supreme Court convicted several highly als, professional money launderer Alberto placed politicians, including a powerful for- Youssef, was connected to a former direc- mer minister of the federal government and tor of Petrobras, Paulo Roberto Costa. The several congressmen, political leaders, po- investigation revealed that Youssef had litical party operatives, and bank directors, bought a luxury car for Costa, concealing of bribery and money laundering.5 In this the origin of the resources used. case, it was proven that the chief minister of This evidence led the federal police, the Brazilian federal government between working with judicial search-and-seizure 2002 and 2005 organized a bribery scheme warrants, to raid the offices and houses of to obtain political support from congress- Youssef and Costa in March 2014. During men for federal legislative initiatives. this process, Costa tried to destroy and hide

147 (3) Summer 2018 159 Preventing paper evidence and consequently was placed win each bidding process, and the chosen Systemic into pretrial detention. Youssef was also ar- company could then offer a price proposi- Corruption in Brazil rested on a pretrial detention order due to tion without real competition. They called his status as a recidivist career criminal. themselves “The Club.” Looking at the banking records of Yous- The investigations continued to produce sef’s front companies, police and prosecu- new evidence based in part on plea agree- tors discovered that his accounts had re- ments with other cooperating criminals. Of ceived millions of reais in credits from some course, everything a cooperating criminal of the biggest Brazilian construction com- says has to be supported by additional evi- panies, which also happened to be some of dence. For this reason, many investigations

Petrobras’s major suppliers. In another line are still ongoing. But it has been possible Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 of the investigation, it was discovered with in some cases thus far to obtain evidence the assistance of Swiss authorities that Costa that corroborates information revealed by had hidden millions of dollars in offshore cooperating criminals. There have been accounts. Facing long prison terms, Alberto about twenty-eight criminal convictions Youssef and Paulo Costa agreed in the sec- and sentences specifically related to brib- ond half of 2014 to conclude plea agree- ery in Petrobras contracts as a result of the ments with the prosecutors. Lava Jato cases tried up to March 2018. Con- Youssef and Costa revealed that, as a rule, victions reached top executives of the big- every contract Petrobras signed with the gest Brazilian construction companies act- major Brazilian construction companies ing as corruptors; top executives of Petro- included kickbacks of 1 or 2 percent of the bras acting as facilitators and beneficiaries total value of the contract to the Petrobras of bribes or kickbacks; and intermediaries officials who approved it. Youssef’s role was between these two groups. to organize the money laundering scheme. So far, four former directors of Petrobras Costa received a share of the bribes to work have been convicted and sentenced to pris- for the interests of the construction com- on terms. Two of them decided, after serv- panies. Another share of the money went ing part of their prison sentences, to coop- to politicians, including federal legislators erate with authorities. The police and pros- of the Progressive Party (Partido Progres- ecutors discovered that all four had millions sista), which was part of the ruling coali- of dollars or euros in bribes hidden in off- tion and was in practice responsible for shore accounts in countries such as Switzer- the nomination of Costa for his position at land, Monaco, and Luxembourg. A Petro- Petrobras. bras ceo was also convicted for taking Youssef and Costa testified that other bribes and money laundering. Petrobras officials had received bribes and At least six trials ended in convictions had worked with intermediaries and politi- for former federal legislators who had re- cians from other parties in the governing co- ceived bribes in the Petrobras scandal. In alition, such as the Workers’ Party (Partido four other cases, the Court found that mon- dos Trabalhadores) and the Party of the Bra- ey from bribes had been directed to finance zilian Democratic Movement (Partido do illicitly a political party. Two of the former Movimento Democrático Brasileiro). They lawmakers convicted in the Lava Jato cas- also revealed that the Brazilian construc- es had also been involved in Criminal Case tion companies who paid the bribes were 470 (Mensalão). Amazingly, they contin- fixing Petrobras’s bidding-process out- ued to accept illegal payments from Petro- comes. Petrobras’s major suppliers decid- bras even as the Mensalão trial was under ed in advance which among them would way in the Brazilian Supreme Court.

160 Dædalus, the Journal of the American Academy of Arts & Sciences These behaviors, which may appear ab- of the largest companies–Camargo Cor- Sérgio surd, are indicative of the impunity many rea, Andrade Gutierrez, and Odebrecht– Fernando Moro corrupt officials enjoyed. In another exam- reached leniency deals with the prosecu- ple, in 2014, Congress created a special in- tors. In exchange for lighter punishments, vestigation commission for the Petrobras they agreed to reveal illicit acts, abandon scandal. A senator was nominated as vice criminal practices, implement efficient president of the commission. Instead of do- systems of compliance, and compensate ing the investigation, he took the opportu- public coffers by returning billions of nity to request bribes from top executives reais. One of them also revealed that it of the biggest construction firms then un- paid bribes for public employees abroad, in der investigation so that they might avoid countries like Peru, Argentina, and Mexico, Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 scrutiny. For this, the senator was eventual- among others. ly convicted of taking bribes himself. The cases already tried reveal that the Even a former Speaker of the House of payment of bribes on Petrobras’s contracts Representatives was implicated in the scan- was not an exception but, rather, the rule. dal and was convicted. Again with the as- Some of the cooperating criminals used sistance of Swiss authorities, it was discov- that very word, describing the crimes they ered that he had received about $1.5 million committed as simply “a rule of the game in bribes, which were deposited in offshore in contracts of the public sector.” Some al- accounts in a Swiss Bank. A former gover- leged that this illicit practice went beyond nor of the state of Rio de Janeiro, a former Petrobras and was used by other state- secretary of finance of the federal govern- owned companies and in other branches ment, and even a former president of Bra- of the federal government. zil were also convicted for receiving a share Investigations are ongoing not only in of bribes in Petrobras’s contracts.6 So far, the Federal Criminal Court of Curitiba, dozens of executives from eleven of Brazil’s where the investigation started, but in largest construction companies have been other Brazilian federal courts that were as- convicted as bribe givers. signed responsibility for trying certain Lava To illustrate the magnitude of these cor- Jato cases. Because of foro privilegiado, doz- rupt practices, a manager at Petrobras, after ens of highly placed politicians, especial- reaching a plea agreement with the author- ly congressmen, are being investigated by ities, agreed to return nearly $97 million in the chief federal prosecutor before the Su- bribes that he had received from Petrobras preme Court. In spite of the Court’s heavy contracts and kept in secret bank accounts caseload, some of these high-profile defen- abroad. In the beginning of the investiga- dants have been charged already. tion, Petrobras assumed a posture of gen- eral denial, refusing to admit any problem The cases already sentenced suggest that of governance publicly. As the investigation an environment of systemic corruption was developed, however, the company gradual- uncovered by the investigation. The pay- ly began to admit that crimes were commit- ment of bribes was taken for granted in ted, culminating in an official recognition Petrobras’s contracts; participants knew in Petrobras’s 2015 annual report to share- even before signing contracts that bribes holders of losses from corruption of nearly would be paid, just like the construction 6 billion reais (about $1.9 billion). companies knew in advance whose “turn” It took time, but some of the construc- it was to win the contract, irrespective of tion companies involved in the scheme the formal bidding process. They also knew also began to admit responsibility. Three that the bribes would be shared between

147 (3) Summer 2018 161 Preventing Petrobras executives and the federal pol- with receiving kickbacks than doing their Systemic iticians who gave them political support. job in the company’s best interests. Corruption in Brazil There were even fixed rules to calculate the Another detrimental effect of systemic amount of the bribes: generally 1 or 2 per- corruption is that it chases away local and cent of the total value of the contract. foreign investors. If the market is not clean Corruption, as an isolated crime, exists and transparent and if bribes and cheat- all around the world. But systemic corrup- ing are the rule, responsible investors will tion–the payment of bribes as a rule of the not have the confidence to put their money game–is not as common, and represents a into that market. But above all, systemic cor- severe degeneration in the functioning of ruption is damaging because it undermines

the public and private spheres, especially confidence in the rule of law and in democ- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 in democratic nations.7 The costs of sys- racy. If the law does not apply to everyone temic corruption are enormous. First, the and if crime and cheating are the norm, trust cost of the bribes is usually added by the in democracy will progressively erode. offending company to their contracts with state-owned companies or with the govern- Faced with the revelation of systemic cor- ment, affecting public budgets. If the pay- ruption, what should be done? First, the ju- ment of such bribes is not an isolated prac- dicial system must work. Crimes that are tice but a general rule, the management of uncovered and proven through due legal public resources is severely affected. More- process must be punished. Justice works over, the need to generate funds for bribes when the innocent defendant goes home in systemic corruption schemes can affect and the guilty defendant goes to prison, ir- investment decisions by public and private respective of their economic or political entities. status. There is still much to be done to ad- Some of Petrobras’s bad investments may vance this concept in Brazil, yet Criminal not be simply explained as a result of a bad Case 470 and Lava Jato, like other recent cas- judgment or unlucky bet, but instead as a es in Brazil, reveal that much can be done deliberate choice by the corrupt directors of even within the current legal system, as long Brazil’s largest enterprise to generate bribes as allegations are dealt with seriously.9 Jus- rather than to make the best decision from tice must be more than actors playing their an economic point of view. One example is parts in cases that never end with perpetra- the construction of the new Abreu e Lima tors who are never punished. refinery.8 Initially, Petrobras estimated the The adequate functioning of the crimi- cost of the project at $2.4 billion. Howev- nal justice system is a necessary, though in- er, by 2015, Petrobras had already wasted sufficient condition for the elimination of $18.5 billion on the construction of the re- systemic corruption. It is imperative that finery, and it was only partially complete. other public institutions, like the executive Even if the refinery operated with full ef- and legislative branches of government, ficiency for the rest of its planned life, it adopt public policies aimed at preventing would incur a loss of $3.2 billion. Lava Jato and combating corruption as well. System- cases have shown that bribes were paid in ic corruption is not and cannot be a prob- some construction contracts for the refin- lem only for the judicial branch. ery. But the difference between $2.4 billion The government is the principal actor re- and $18.5 billion cannot be explained only sponsible for creating a political and eco- by the additional costs of the bribes. Bad nomic environment free of systemic cor- investment decisions were made because ruption. Through its visibility and power, Petrobras executives were more concerned the government can lead by example. Better

162 Dædalus, the Journal of the American Academy of Arts & Sciences laws can improve the efficiency of the crim- or demands for bribes, as well as imple- Sérgio inal justice system and increase the trans- menting mechanisms of internal control Fernando Moro parency and predictability of relations be- and accountability that make it difficult tween the public and private sectors, reduc- or impossible to pay or receive them. It is ing incentives and opportunities for corrupt also important for private-sector actors practices. to work collectively so that companies in- Another important step would be the sig- volved in corrupt practices are identified nificant reduction of party patronage in the and isolated from the market and not al- civil service. The influence of party politi- lowed to assume a preeminent position. cians in the recruitment of executives in An outstanding example of this kind of state-owned companies, and other high private-sector responsibility can be found Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 positions in the state bureaucracy, is what in Sicily, where businesses have joined to- made the criminal scheme at Petrobras pos- gether in associations like Addiopizzo, or sible. Based on cases tried and sentenced “goodbye pizzo,” to collectively refuse to thus far, it seems that Petrobras executives pay mafia money (pizzo).10 Acting togeth- were appointed with a mission: to obtain fi- er, they have more power to refuse to pay nancial resources from suppliers for the il- extortion money and to avoid retaliation licit enrichment of politicians or the illegal from organized crime. Their slogan is “a financing of electoral campaigns. Reducing whole people who pays pizzo is a people political influence in state-owned compa- without dignity.” Collective mobilization nies would help to prevent this evil. on the part of private companies could be Freedom of the press and access to in- used to good effect in Brazil, with some sit- formation are also essential. For citizens uation-specific modifications. to have meaningful checks on those who It is also important to keep in mind that govern, they must be well informed about systemic corruption is a product of insti- the management of public life. tutional and cultural weaknesses. System- Everything to do with the Lava Jato cases, ic corruption is not a natural phenomenon, from the prosecution, evidence, and hear- and no country is destined to live with it. ing of witnesses to the judgment and sen- Even if discovering and exposing corrup- tencing, has been conducted openly and in tion generates new challenges and painful the light of day. The Brazilian Constitution resistance in the short run, these effects requires that the judicial process be open are part of the cure. Once systemic cor- to public scrutiny. There is no possibility ruption is discovered, necessary public pol- of having cases prosecuted and tried in se- icies should be adopted and implemented cret. This rule of transparency was very im- to overcome it. The problem cannot be re- portant for the Lava Jato cases. Making ev- solved by sweeping it under the rug. ery piece of evidence public was crucial for gaining the popular support necessary for Because of the dimension of the crimes the enforcement of the law, and helped pre- that have been uncovered, Lava Jato perhaps empt attempts by powerful defendants to more than any other case provides Brazil obstruct justice. with a golden opportunity to take the neces- In fighting systemic corruption, the pri- sary steps to overcome this shameful prac- vate sector also plays a part. Corruption tice. It is difficult to predict at this stage involves those who make illicit payments whether that will happen, whether cor- and those who receive them. Both parties ruption will be contained and reduced to are guilty. Companies must therefore do more reasonable proportions, or whether their homework, denouncing requests Brazil will return to the pre–Lava Jato lev-

147 (3) Summer 2018 163 Preventing els of corruption. Some backlash and crit- dant will flee or obstruct justice. There are Systemic icism against Lava Jato has arisen (espe- similar laws in the United States: the U.S. Corruption in Brazil cially from politicians and corporations Criminal Code allows a judge to deny bail involved), much of it driven by miscon- if the defendant is potentially dangerous or ceptions about the nature of the enterprise. a flight risk.11 The U.S. Supreme Court case Some critics have complained that the U.S. v. Salerno affirmed that this statute was Lava Jato operation is not impartial and constitutional.12 has been used to “play politics.” But this is In the Lava Jato cases, pretrial detentions not so. Of course, crimes involving bribes were ordered only when evidence against paid to politicians will inevitably have po- the defendant was particularly strong;

litical consequences. But they arise outside when there was a risk that the defendant Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 the court and beyond the judges’ control. would flee or obstruct justice; or to pre- Others have said that Lava Jato represents vent the defendant from committing new the “criminalization of politics.” The blame crimes while awaiting trial. It is impor- should not, however, be aimed at the judi- tant to understand that the crimes of the cial process, but rather at the politicians Petrobras cases were committed in a pro- who committed the crimes. The judicial fessional and serial manner in a context process is just a reaction against corruption, of systemic corruption. For example, one as the justice system cannot turn a blind eye of the companies involved in this crim- to crime. inal network devoted a specific depart- Some critics say that the judiciary has not ment solely to paying bribes, which was respected due process in these cases. How- in operation for several years, even during ever, every aspect of the judicial process the investigation. Operations ceased only has been conducted in open court with re- when the company’s top executives were spect for the rights of the defendants, and served with pretrial detention orders. Giv- has been based on extensive evidence ob- en the presumption of innocence, pretri- tained, processed, and publicized in accor- al detentions should be exceptional; but dance with the law and the Brazilian con- the extraordinary nature of systemic cor- stitution. Lava Jato is not a witch hunt. In- ruption demands strong and urgent mea- vestigators simply followed the leads from sures by criminal justice to break the vi- case to case, uncovering a widespread prob- cious circle.13 lem that mandated numerous convictions Other critics have complained about the and detentions. Therefore, nobody is be- extensive use of plea agreements in the Lava ing charged or convicted based on political Jato investigation, arguing that prosecutors opinion. When there is evidence of illegal and judges are still not being tough enough conduct, the accused are being charged and on white-collar criminals. However, crimes convicted because of the bribery and mon- like corruption are committed in secret and ey laundering crimes they committed, not usually only the criminals themselves are because of their political allegiances. witness to their wrongdoing. Therefore, it Finally, there has been concern about the is sometimes necessary to make a deal with use of pretrial detention in the Lava Jato cas- a criminal to get evidence to build a case on es. Pretrial detentions should, of course, be more central players. As U.S. Federal Appel- the exception and not the rule in any judi- late Judge Stephen Trott has stated, some- cial system. However, a judge in Brazil can times such bargains are necessary, because order a pretrial detention if the defendant without them “the big fish go free and all presents a danger to other individuals or to you get are the minnows.”14 It makes sense society, or if there is a risk that the defen- to offer a plea agreement, for example, to a

164 Dædalus, the Journal of the American Academy of Arts & Sciences criminal responsible for a money launder- Unfortunately, it seems that as of this Sérgio ing scheme in order to get evidence against writing, the executive and legislative Fernando Moro bribe takers or bribe givers who are respon- branches of government have made no such sible for the national environment of sys- significant contribution to Brazil’s efforts temic corruption. against corruption. For example, they could do so by proposing and approving better Until now, the police, prosecutors, and the anticorruption laws. One necessary step judiciary have been the main protagonists would be to change Brazilian electoral law in Brazil’s fight against systemic corruption. along the lines of the Supreme Court deci- It is important also to acknowledge the Bra- sion I describe above. Congress should dis- zilian Supreme Court, which has handed cuss proper and strict regulations for elec- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 down new precedents that strengthen some toral contributions from companies. For anticorruption rules. In a possible collateral example, it could forbid any electoral con- effect of the investigation of the Petrobras tributions from companies with govern- scandal, Brazil’s Supreme Court overruled ment contracts and establish low limits for the harmful provision I discussed above, other corporate donations. which allowed wealthy defendants to post- Unfortunately, there are some signs of pone indefinitely, through endless appeals, reaction against Lava Jato from Congress the execution of a prison sentence.15 In 2016, itself. In 2016, federal prosecutors present- the Supreme Court ruled that the enforce- ed a bill to improve anticorruption laws. ment of a criminal conviction is permitted Despite major popular support for the immediately after a sentence is affirmed by measures, the House rejected most of the a court of appeal; it is no longer necessary reforms, and it is still uncertain whether to wait several years for a final decision at the bill will be approved. More disturbing the highest level of appeal. was an attempt in the House to approve This precedent represents a kind of judi- an amnesty bill for illegal electoral dona- cial revolution in the enforcement of crim- tions, up to and including bribes. In anoth- inal law in complex cases in Brazil. Its im- er controversial act, the Senate drafted a pact is already visible in several other cas- new bill about abuses of power committed es involving corruption. With this new by judges, prosecutors, and police officers. ruling, Brazil’s Supreme Court has clear- Of course, official authorities who abuse ly demonstrated that it fully understands their powers should be held accountable; the connection between systemic corrup- this, also, is central to a working system of tion and impunity.16 justice. But the text of the bill was written In another important case, Brazil’s Su- such that it could have a cooling effect on preme Court ruled against the legality of the independence of the judiciary and the electoral contributions from companies.17 autonomy of the prosecutors and the po- Brazilian electoral law previously lacked lice to pursue criminal corruption as they proper limits on large corporate contribu- see fit. As of this writing, the future of this tions to elections. In light of endemic cor- bill is also uncertain. ruption, the Supreme Court understood that without safeguards, there would be It is possible to garner some lessons from a great danger of improper relations be- Brazil’s situation. Decades of weak law en- tween companies and politicians via quid forcement against crimes committed by pro quo donations. So it ruled such con- high politicians and powerful business- tributions void until proper regulations men have generated a breeding ground for could be approved. bribery, kickbacks, and corruption. Weak

147 (3) Summer 2018 165 Preventing law enforcement may not be the first cause tions would prevent new crimes from Systemic of this virulent corruption, but it certain- being committed. Corruption in Brazil ly does not help to constrain it. However, · The use of plea agreements to disrupt new realities have presented Brazil with an complicity and secrecy between crim- opportunity to face systemic corruption, to inals and to advance investigations. confront past failures and set a new course · Extensive international cooperation and for the future. The systemic corruption un- support from Switzerland and other covered in Brazil is shameful. But there is countries. another way to look at this picture. The ef- · Trying cases under public scrutiny, from forts of many individual Brazilians to fight evidence and arguments to judgments. the problem of corruption have brought · Speedy criminal procedures and trials. Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 these crimes to light. The police, the pros- · Strong public backing to prevent at- ecutors, and the judiciary are now dealing tempts by powerful defendants to ob- seriously with them. struct justice. There is no shame in the enforcement of the law.18 Lava Jato provides a measurement All of these factors have contributed to of the extent of Brazil’s corruption, but also progress in enforcing the rule of law in a measurement of Brazilians’ dedication to Brazil. anticorruption efforts. The Lava Jato oper- ation is still ongoing, but it is already with- Much more must be done in the fight out precedent. Corruption scandals are not against corruption, and it is too soon to new to Brazil’s history, but never before say whether Brazil will exchange its cur- were top executives of the country’s biggest rent system for one fully committed to ef- construction companies arrested, tried, and fective accountability for crimes commit- convicted. Never before Lava Jato had a sin- ted by powerful politicians and business- gle director of Petrobras been charged with people. a crime. Today, four of them and a ceo are Even so, it is important to highlight that serving prison terms. Eight powerful poli- since 2015, millions of Brazilians have ticians have been convicted and some ar- protested against corruption. For exam- rested, including the former speaker of the ple, in March 2016, more than three mil- House. Several congressmen are being in- lion people occupied the streets in sever- vestigated and prosecuted before the Su- al state capitals and major cities in peace- preme Court for bribery and money laun- ful demonstrations. It is true that these dering (and not because of their political demonstrations were also motivated by opinions). other causes, such as dissatisfaction with Several measures have been essential the state of the economy and with the for- to the success of Operação Lava Jato, in- mer government. But the Lava Jato oper- cluding: ation was a common cause that united demonstrators. The fight against corrup- · The creation of task forces by the po- tion has definitively entered Brazil’s pub- lice and federal prosecutors to concen- lic policy agenda and will influence polit- trate effort and resources on the investi- ical debates for years to come. gation and to prosecute serious bribery Hopefully, it will be possible to look back and money laundering crimes. some years from now and say that Lava Jato · The use of pretrial detentions only in made the national economy, the rule of law, cases in which there was strong evi- and democracy stronger in Brazil. Maybe dence of the crimes or in which deten- it will be possible to say systemic corrup-

166 Dædalus, the Journal of the American Academy of Arts & Sciences tion was overcome and that it became a sad like Criminal Case 470, represent a clear Sérgio memory from Brazil’s past. We cannot take break with a past of impunity and with tol- Fernando Moro this result for granted, but there is some erance for systemic corruption. hope. At the very least, the Lava Jato cases,

endnotes 1 Basic information about Operação Lava Jato is available at Ministerio Publico Federal, “Caso Lava Jato,” http://www.mpf.mp.br/para-o-cidadao/caso-lava-jato (accessed March 10, 2018). 2 I am a federal trial judge in Brazil working in a role analogous to that of a district federal judge Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021 in the United States. Criminal cases are normally tried and sentenced in Brazil by a trial judge sitting alone, while jury trials are only used in murder cases. Federal judges in Brazil also have other responsibilities, such as ordering pretrial detentions and authorizing investigative mea- sures such as wiretaps or searches and seizures. My court in Curitiba is responsible for try- ing most of the Lava Jato cases. 3 hc 84.078, Supremo Tribunal Federal, February 5, 2009. All Brazilian Supreme Court decisions are available at Supremo Tribunal Federal, http://www.stf.jus.br. 4 The Brazilian Supreme Court received 56,257 new cases in 2017. These statistics are available at Supremo Tribunal Federal, “Movimento Processual,” http://portal.stf.jus.br/textos/verTexto .asp?servico=estatistica&pagina=movimentoProcessual. 5 Ação Penal 470, Supremo Tribunal Federal, December 17, 2012. The opinion for the Court was delivered by Justice Joaquim Barbosa. 6 It is important to note that there are pending appeals against several of these convictions that could overrule them. 7 The Mani Pulite operation also revealed systemic corruption in contracts of the public sector in Italy. For a description, see Alberto Vannucci, “The Controversial Legacy of Mani Pulite: A Critical Analysis of Italian Corruption and Anti-Corruption Policies,” Bulletin of Italian Politics 1 (2) (2009): 246. 8 Regarding the cost of the Abreu e Lima Refinery, see Raquel Landim, “Refinaria Abreu e Lima dará prejuízo de us$ 3,2 bi,” Folha de S. Paulo, December 18, 2015, http://www1.folha.uol.com.br/ poder/2015/01/1576627-refinaria-de-abreu-e-lima-dara-prejuizo-de-us-32-bi.shtml. 9 For example, the “Calcutta Operation” (Operação Calicute) was inspired by Lava Jato and result- ed in several criminal convictions against corrupt officials of the State of Rio de Janeiro. Some information about the Calcutta Operation is available at https://pt.wikipedia.org/wiki/Opera %C3%A7%C3%A3o_Calicute (in Portuguese, accessed March 20, 2018). 10 See Addiopizzo, http://www.addiopizzo.org. 11 Title 18, Section § 3142. 12 United States v. Salerno, U.S. 739, 107 (1987). 13 About ninety-seven pretrial detentions were ordered in Operação Lava Jato; however, most of them were later followed by criminal convictions. At the time of this writing, there were only six defendants in pretrial detention who had still not been tried. 14 Stephen S. Trott, “The Use of a Criminal as a Witness: A Special Problem,” Hastings Law Journal 47 (5/6) (1996). 15 hc 126.292, Supremo Tribunal Federal, February 17, 2016; and adcs 43 and 44, Supremo Tri- bunal Federal, tried on October 5, 2016. These judgments overruled hc 84.078, Supremo Tri- bunal Federal, tried on February 5, 2009.

147 (3) Summer 2018 167 Preventing 16 Unfortunately, in August 2017, information emerged that some justices were again consider- Systemic ing changing their votes about the rule. Corruption 17 in Brazil adi 4.650, Supremo Tribunal Federal, September 17, 2015. 18 President Theodore Roosevelt, in a speech before the U.S. Congress in 1903: “The exposure and punishment of public corruption is an honor to a nation, not a disgrace. The shame lies in toleration, not in correction. No city or state, still less the nation, can be injured by the enforcement of law.” Theodore Roosevelt, “Third Annual Message, December 7, 1903,” The American Presidency Project, http://www.presidency.ucsb.edu/ws/?pid=29544. Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/157/1831120/daed_a_00508.pdf by guest on 30 September 2021

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