Massive Corruption Scandal Implicates Dam Builders

Massive Corruption Scandal Implicates Brazil's Amazon Dam Builders

Testimony from jailed operators of Petrobras scandal point to similar corruption scheme involving politicians and major construction firms

Brasilia, Brazil – This week, imprisoned executives from one of Brazil's largest construction firms, who are implicated in an unprecedented corruption scandal involving the parastatal oil company Petrobras, promised to expose a parallel scheme of massive fraud surrounding hydroelectric dams in the Amazon. In a plea deal with the Federal Public Prosecutors' Office (MPF), top executives at Camargo Corrêa – a principal contractor for Petrobras and the federal government's Amazon dam-building program – vowed to provide details of systematic corruption in the construction of the costly Belo Monte and Jirau mega-dams.

Detained over 100 days for their involvement in the Petrobras scandal, Camargo Corrêa's president, Dalton dos Santos Avancini and Vice-President Eduardo Leite agreed to explain how a ‘cartel' of major construction companies, influential politicians, and high-level government bureaucrats operated a scheme of bid rigging, bribery and kickbacks in the Belo Monte and Jirau projects. Alongside Public Prosecutors, Federal Police are spearheading a criminal probe dubbed "Operation Lava Jato," investigating a group of firms that reads much like a who's who of Brazil's powerful dam industry.

Last December, Paulo Roberto Costa, ex-director of Petrobras and one of the first high-level officials to be implicated in the Lava Jato operation, testified in Brazilian Congress that similar corruption schemes exist in other sectors. "With highways, trains, ports, airports and hydroelectric dams, this happens all over Brazil. All you have to do is investigate, because it happens," he said.

In addition to Lava Jato, Brazil's Central Accounting Office (Tribunal de Contas da União) has initiated an audit of BRL 22.5 billion (US$7.5 billion) in subsidized loans approved by Brazil's National Development Bank (BNDES) for the Belo Monte dam consortium Norte Energia, S.A. (NESA), covering some 80% of project costs.

"These revelations confirm what we've suspected all along: that projects like Belo Monte are not only an enormous source of corruption, but actually exist because of corruption," said Christian Poirier of Amazon Watch. "It's high time that Belo Monte's backers be held to task for deceiving Brazilian taxpayers while looting public coffers."

"The federal government's obsession with costly mega-dam projects is largely explained by corruption schemes and has been a disaster for Brazilian society as a whole," noted Brent Millikan of International Rivers. "Taxpayer funds that could be invested in truly sustainable energy solutions such as upscaling solar and wind power, have instead been diverted into wasteful and destructive projects such as Belo Monte."

This week, tensions in the Brazilian Congress peaked after Chief Federal Public Prosecutor Rodrigo Janot delivered 28 requests to the Supreme Court for criminal indictments of 54 individuals in connection with corruption schemes uncovered by Operation Lava Jato, including a reported 45 politicians. While names have yet to be disclosed, leaks to the press indicate that the list includes the President of the Senate, Renan Calheiros, and the Chamber of Deputies, Eduardo Cunha. Both politicians are members of the PMDB, one of Brazil's most powerful political parties and part of Dilma Rousseff's ruling coalition.

This news deals a fresh setback to Dilma Rousseff's administration, which is already plummeting in popularity due to public perception of her role in the Petrobras scandal, as well as rising energy bills, water shortages, unemployment and other woes of a stagnating economy. Massive corruption schemes underlying the much-publicized Accelerated Growth Program (PAC) of President Rousseff and her predecessor Luís Inacio Lula da Silva have seriously undermined the credibility of their Worker's Party, which came into power in 2003 on a platform of restoring ethics to government.

Camargo Corrêa is one of 10 companies that make up the consortium responsible for building Belo Monte. The consortium is comprised of some of Brazil's principal construction firms, including: Andrade Gutierrez, Norberto Odebrecht, OAS Ltda, Queiroz Galvão, Contern, Galvão Engenharia, Serveng-Civilsan, Cetenco and J. Malucelli.

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