Analysis: Arrest of Odebrecht ups stakes in Petrobras probe
IN arresting Marcelo Odebrecht, Brazilian federal prosecutors have netted themselves a whale.
Odebrecht’s journey from heir and leader of one of Brazil’s largest family business empires and most influential firms to a jail cell in Curitiba is an economy-shaking development in the unfolding Petrobras bribery scandal that suddenly shows no signs of abating.
Odebrecht’s billionaire family’s empire spans across more than 20 nations. The company over which he presides as president, Odebrecht, has built Brazilian World Cup stadiums, Cuba’s deep water port, Mi- ami’s airport and is Angola’s biggest private employer. The conglomerate is a major and aggressive donor to Brazilian political campaigns at all levels.
Police detained Odebrecht, 46, and Otavio Azevedo of Andrade Gutierrez on Friday as part of a co-ordinated federal operation involving 220 police officers in four states.
Biggest fish
The strike is the culmination of months of digging by investigators who were convinced that a scheme involving Petrobras insiders and contractors to rakeoff vast sums from inflated construction and service contracts had to have the blessings of corporate higher-ups.
“This is the biggest fish they’ve caught yet,” said David Fleischer, an emeritus professor of political science at the University of Brasilia.
The arrest of a business boss with such wide-reaching political ties was adding new fuel to the investigation and could deepen Brazil’s recession, said Christopher Garman, head of country analysis for Eurasia, from Washington.
Economists are already forecasting the worst contraction in 25 years.
“This is a line of investigation that keeps growing and can contaminate the whole economy,” Garman said.
Odebrecht, whose grandfather Norberto founded the company in 1944, has denied wrongdoing and a judge has yet to accept formal charges.
In an interview at Odebrecht’s Sao Paulo offices last month, he declined to comment on the record about alleged company involvement in the Petrobras scandal, saying only that investigators are looking at a small part of the vast web of 500 companies and 15 divisions that make up Odebrecht.
In a wide-ranging interview, he did agree to talk about his conglomerate’s legal campaign finance contributions, saying such contributions are part of the influence process that major contractors participate in.
The company gives money to candidates based upon a consensus of its top executives. The list of recipients includes governors, political parties that back mayors and about 150 members of congress.
“When you are the industry leader, and we are the leader of practically all industries, naturally you have to deal with the politicians of that sector,” Odebrecht said.
Odebrecht, which reported 108 billion reais (R423bn) in revenues in 2014, does everything from heavy construction to making petrochemicals. – Bloomberg