Global Corruption Champions: Petrobras, Martinelli

Transparency survey votes three Latin America cases among nine worst worldwide.

BY LATINVEX STAFF

Brazil's state oil giant Petrobras (Latin America's largest company on the Latinvex 500), Panama's former president Ricardo Martinelli and a Dominican senator are among nine cases that Transparency International ranks as the most symbolic cases of grand corruption worldwide. 

Transparency launched its Unmask the Corrupt initiative in October, allowing for the public to nominate the worst cases. In December, it opened for voting on the nominated cases and on February 10 it revealed the results.

There were 383 nominations and the top nine cases garnered nearly 48,000 votes.

However, only four of the cases dominated the ranking, accounting for 45,062 votes.

Ukraine’s ex-President Viktor Yanukovych (who was ousted amidst popular protests two years ago) garnered the most votes -- 13,210.

Petrobras got the second-most votes - 11,900, followed by Martinelli, with 10, 166. Meanwhile, Dominican Senator Felix Bautista garnered 9,786 votes.

These four cases accounted for 94 percent of the total votes of the top nine cases.

Three of the cases barely received votes. They include the Akhmad Kadyrov Foundation of Chechnya, former Tunisian president Zine Al Abidine Ben Ali and the State of Delaware (by far the lowest vote-getter). Combined these three only had 453 votes.

In between were the International Federation of Association Football (FIFA) and Lebanon (its government, authorities and institutions). FIFA received a surprising low number of votes (only 1,844) in light of its massive corruption scandal that has hit all levels (from the top at its headquarters in Switzerland to soccer federations in Latin America, North America and Africa).

Here is a closer look at the Latin America cases, which combined garnered 31,852 votes (or 66 percent of the total votes of the top nine cases), according to Transparency data:

PETROBRAS

Brazil's state-controlled oil giant Petrobras is at the center of the country's largest ever corruption scandal. Involving bribery, kickbacks and money laundering reportedly worth over US$2 billion, the revelations have shaken Brazil's political leadership and plunged the country into a major political crisis.

More than 50 sitting politicians and 18 companies linked to the scandal face investigations, including Brazilian construction companies that allegedly paid bribes to secure Petrobras business, some of them also known for exporting corrupt practices to other countries. As of September 2015, 50 individuals had been convicted for corruption, money laundering or related crimes in relation to Operation Car Wash - a wider investigation into allegedly corrupt contracting practices in Brazil.

UK engineering group Rolls-Royce is also being investigated over allegations that it paid Petrobras executives bribes in exchange for contracts.

Executives from over 20 other engineering firms are thought to have inflated the value of service contracts to Petrobras, channelling funds into the accounts of Petrobras executives and those of political parties, including the ruling Worker's Party and the Brazilian Democratic Movement Party, the powerful centrist party which has anchored the governing coalition.

Earlier this year Brazilian prosecutors filed lawsuits against some of these firms, seeking over US$1 billion in damages for bribery, contract-fixing and political kickbacks.

The former treasurer of Brazil's governing Workers party João Vaccari has been sentenced to 15 years in prison for his role in the scandal, while Petrobras's former head of corporate services Renato Duque received a 20-year sentence for corruption.

Prosecutors have accused the speaker of Brazil's lower house of Congress Eduardo Cunha with corruption and money laundering, while former Brazil president Fernando Collor de Mello, who was impeached in 1992 but is now a senator, has also been accused of corruption for his alleged involvement.

The scandal is taking its toll on the country's job market and tens of thousands of jobs have already been shed - most of them low-skilled ones. It's believed that more losses will follow16 as the economy contracts and Petrobras's profits shrink.

People are furious at the political elite and big business for allowing such a culture of corruption to grow. Over a million people have taken to the streets to protest this. What the public needs now is accountability and assurance that all those responsible for this massive scandal are brought to justice for any crimes committed.

RICARDO MARTINELLI

In his five years as president of Panama from 2009 to 2014, Ricardo Martinelli and his inner circle allegedly diverted millions of dollars in public funds into their own pockets.

There are now more than 200 investigations ongoing into allegedly corrupt deals that took place during his tenure, with Martinelli himself at the center of a probe by the Panamanian Supreme Court. He faces allegations ranging from insider trading, bribery, misappropriation of public funds, abuse of power, and illegal wiretapping.

Among other schemes, Martinelli and his cronies are accused of manipulating the allocation of resources to Panama’s largest social welfare scheme, the National Aid Program, through rigged tenders and use of shell companies.

According to a summary of available audit reports, more than US$100 million in public funds could have been lost due to corruption. This money was allegedly used to buy up luxury mansions and yachts.

This country is perceived as among the most unequal in the world, where more than 26 percent of the population lived on less than US$4 per day in 2012. If this alleged indiscriminate looting occurred on such a wide scale, it would have denied hundreds of thousands of children and disadvantaged adults of their right to basic services.

Ongoing investigations in Italy have also implicated Martinelli in a corruption scandal involving a military contractor there from whom the former Panamanian president and other public officials allegedly received more than US$20 million in bribes to secure a US$250 million contract.

Despite the raft of potentially damning allegations, Martinelli has so far avoided a trial in Panama and is reportedly in hiding, possibly in a luxury residence in Miami, and makes extensive use of Twitter to respond to accusations.

Several former cabinet ministers and public officials are also under investigation for involvement in corruption schemes during Martinelli’s term, with some currently responding to accusations from prison.

As a member of the Central American Parliament (PARLACEN) and president of the political party Cambio Democratico, Martinelli also enjoys legal privileges and immunities that could delay further investigation and eventual prosecution, which could only be possible if he returns to Panama – the country does not allow prosecution in absentia.  (…)

There are also concerns regarding the judiciary’s independence in Panama. The judiciary has been consistently found to be prone to corruption and inefficient. The Global Competitiveness Report 2013-2014 states that the independence of Panama’s judiciary is among the weakest in Latin America.

FELIX BAUTISTA

Money laundering, abuse of power, prevarication and illicit enrichment amounting to millions of dollars: Senator Felix Bautista of the Dominican Republic has been accused of them all. He is well-connected politically. Efforts to prosecute him have come to naught so far.

It all began in the 1990s in his pre-senator days when he was appointed to various government positions related to public works, ultimately rising to become Head of the Office of Supervision Engineers of Public Works a decade later – a position he held until 2010.

When prosecutors compared what he reported in his asset declarations and what landed up in his bank accounts during this time, it became clear that Bautista was amassing wealth that far outweighed his modest salary of US$ 1,245.20 per month received as a public official.

According to a well-documented investigation carried out by the country’s Public Prosecutor’s Office and referred to the Supreme Court in October 2014, Bautista established a network of more than 35 companies that were all ultimately controlled by him. He, with the support of close associates, used these companies to gain access to public contracts awarded by the public works office he headed at the time.

In one instance, Bautista awarded a series of public works projects worth more than US$130 million to a foreign company, but some of the funds and the responsibility for delivering some of the work initially contracted were allegedly transferred to a company that has been connected to Bautista.

Bautista allegedly moved his money through bank accounts in Dominican Republic and abroad, and acquired interests in more than 150 local properties – including luxury apartments, villas and asphalt plants – as well as a private jet and several radio stations.

The Public Prosecutor’s case made use of extensive evidence, including Bautista and his close associates’ bank statements and tax declarations, information from company and property registries, registration details of airplanes and radio licenses, as well as testimonials and other documents.

The case against him seemed unassailable, yet in March 2015, it was dismissed due to a lack of sufficient evidence by a Supreme Court judge who is a member of the same political party of which Bautista is a high ranking official. This was contested by broad sections of society and led to thousands of people taking to the streets in protest.

Although the Public Prosecutor’s Office sought an appeal, in October 2015 the Supreme Court upheld its decision that Bautista would not have to face criminal charges, so the Senator remains a free man.

Bautista has faced similar allegations in the past. In 2012, he was accused of bribing then-Haitian President Michel Martelly to secure contracts and is currently being investigated in Peru for possible illegal campaign contributions to ex-Peruvian president Alejandro Toledo.

According to a 2014 World Bank report chronic poverty in Dominican Republic is rife and almost one-third of the population remains poor despite having the skills and assets to generate higher income. If Bautista had been diverting public funds into his own pockets as so many have alleged, this can only have served to intensify this cycle of poverty.

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