Finance, Government and Policy News, Latin America

Corruption probe into Belo Monte hydro contract continues with new warrants

The Brazilian Federal Police have launched the 49th phase of what they are calling Operation Lava Jato (Car Wash) or Operation Buona Fortuna (the new stage), by carrying out nine search and seizure warrants.

The goal of this operation is “to investigate the payment of undue advantages to public and political agents by a consortium of contractors directly interested in contracts for the construction of the Belo Monte Hydroelectric Power Plant.”

The warrants were carried out in the states of Parana and Sao Paulo.

In a press briefing held March 9, police said Antonio Delfim Netto, former finance minister and federal deputy, is a target of the 49th phase. He is suspected of receiving 10% of the bribe paid by the builders of the 11.2-MW Belo Monte hydro plant. Lava Jato estimates payments to Delfim could reach BRL$15 million (US$4.6 million).

To date, payments have been identified in excess of BRL$4 million (US$1.2 million) involving Camargo Correa, Andrade Gutierrez, Odebrecht, OES and J. Malucelli, all members of the consortium, federal police said.

Police allege that “the Norte Energia SA consortium of companies made illegal payments to government officials and politicians to win the contract to build the dam,” Reuters reports.

The operation is based on indications that the consortium of contractors was favored by agents of the fedral government to win the auction for the construction of Belo Monte, which took place in 2010.

Belo Monte is on the Xingu River in Para State in northern Brazil. The facility has been under construction since 2011, and as of April 2017 total operating capacity was 3.2 GW. At that time, the plant was expected to become fully operational in January 2019.

The details on Lava Jato

This operation was launched in March 2014 to unify four investigations into “the practice of financial crimes and misuse of public resources.”

Lava Jato refers to a network of laundries and a gas station in Brasilia that was used by one of the criminal organizations initially investigated to move illicit money, the police say.

During the course of this investigation, analysis of materials seized in various searches “showed the political indication of public agents that promoted and facilitated the fraudulent contracting of goods and services with surcharge.” In addition, cartels were formed in several economic sectors, causing financial loss to public contracting companies. “Frauds in bidding processes were carried out to allow the conclusion of contracts of contractors involved in the scheme, criminals with several sectors of Petrobras,” federal police say.

Numbers from the Brazilian Federal Police website indicate that as of August 2017, 844 search and seizure warrants were carried out, more than 4,200 police were involved in the enforcement of judicial measures, and the amounts analyzed in investigated financial transactions totaled R$12,500,000,000,000 (US$3.8 trillion).

Police say that, “a vast scheme of corruption and misappropriation of public resources without parallel in Brazilian history was revealed.”