How a web of corruption ensnared Brazil

BRASILIA >> The silver-haired senator from Brazil’s western frontier was still in his pajamas when federal police agents banged on the door of his suite at the Royal Tulip, the futuristic luxury hotel that serves as a bastion for much of Brazil’s political elite. It was 6 a.m.

The agents were armed with a secret recording that sounded like the plot for a Hollywood thriller. The senator, Delcidio do Amaral, had been caught detailing an elaborate plan for an oilman ensnared in Brazil’s spiraling graft scandal to flee the country on a private plane.

Amaral, 61, was until his arrest in Brasília that morning in late November the governing party’s most powerful leader in the Senate. He quickly sought a plea agreement, but prosecutors let him fester in prison for weeks, making a deal only after the disgraced senator provided one stunning disclosure after another that betrayed his former comrades and brought the government of President Dilma Rousseff ever closer to collapse.

“I felt like I had just crashed into a wall after a high-speed chase,” recalled Amaral, who was freed in February. “I messed things up, so I figured I needed a chance to make them right again. You need to be pragmatic.”

Seeking to turn Amaral definitively against Rousseff and their Workers’ Party, investigators toyed with code-naming their operation Catiline, after the renegade patrician whose conspiracies roiled the Roman Senate in the first century B.C.

The senator’s accounts of colossal bribes, back-room oil deals and desperate cover-ups — pieced together from interviews, leaked intercepts of telephone conversations and court filings — offer a rare glimpse into how a leftist party that rose to power vowing to stamp out the corruption of a privileged political elite ended up embracing its predecessors’ practices. His testimony has accelerated Brazil’s political crisis, in which fearful rulers are masterminding power grabs, secretly recording each other and preparing for the day that they, too, might find themselves on the wrong side of an early-morning police raid.

Even the judge who at first was heralded for fearlessly pursuing the powerful now stands accused of breaking the law for releasing evidence from the investigation.

The upheaval began two years ago when prosecutors discovered a scheme inside the national oil company, Petrobras: Contractors had paid nearly $3 billion in bribes to executives who in turn channeled money into the campaigns of parties in Brazil’s governing coalition. Nearly 40 politicians, business moguls and black-market money dealers have been jailed since, and the list is expected to grow, with prosecutors investigating suspects including the leaders of both chambers of Congress.

Scholars say the corruption scandal ranks among the most far-reaching in the developing world, likening it to an earthquake hitting the nation’s privileged elite. It has unspooled alongside crushing economic challenges, as falling commodities prices have sent unemployment soaring to 9.5 percent from 6.8 percent a year ago. In 2015 alone, Brazil lost 1.5 million jobs, a stunning turnabout from the nation’s 7.6 percent economic growth in 2010.

The double whammy of political and economic meltdown has devastated the global ambitions of Latin America’s largest nation at the worst possible time: Brazil is simultaneously grappling with an epidemic of birth defects linked to the mosquito-borne Zika virus and preparing to host the Olympic Games this summer.

That the heart of the scandal is Petrobras, founded in 1953 and surrounded by a mythical nationalist aura, has only multiplied its ripple effect. The company is the centerpiece of a web of state-controlled energy companies and banks that form the cornerstone of Brazil’s economy, projecting power across the nation and abroad. It also financed an array of arts programs including a symphony orchestra, modern dance troupes and painting exhibitions, activities the company has slashed along with its own jobs.

Brazilians often joke about corruption’s deep roots here, tracing it back to when the Portuguese navigator Pedro Alvares Cabral arrived in 1500, bearing gifts as a strategy to lay claim to lands inhabited by indigenous peoples. It was only a quarter-century ago that another president, Fernando Collor, was forced to resign over an influence-peddling scandal, lapses that seem bush league in light of what is happening today.

It was when Amaral began wrecking the government he once loyally supported that many Brazilians began to grasp how pervasive the skulduggery had become.

He testified that Luiz Inacio Lula da Silva, the former president and founder of the Workers’ Party, had arranged to purchase the silence of a businessman convicted of running a vote-buying scheme.

He contended that Vice President Michel Temer, who is maneuvering to impeach Rousseff, was involved in an illegal ethanol-purchasing operation. He also targeted Aecio Neves, the opposition leader who narrowly lost the 2014 election, revealing that his family had a secret bank account in Liechtenstein. (Neves said his mother had opened the account to pay for the education of her grandchildren.)

Before Amaral’s revelations, Rousseff had largely managed to stay above the fray, in part by boasting of bolstering judicial independence by allowing prosecutors to pursue graft in her own party. Then the senator claimed that the president had instructed him to sabotage the investigation into Petrobras by persuading a high-ranking judge to seek the release of construction tycoons charged with corruption.

Both Rousseff and da Silva say Amaral is lying. More broadly, Rousseff said in a recent interview that she had not known about the corruption at Petrobras, despite serving as its chairwoman from 2003 until 2010, when she was elected president, a period when graft was thriving. She also insists that her campaigns got no illegal financing.

Amaral, assailed by leaders across the spectrum as a fabulist, smiled through interviews like a Cheshire cat. A gifted orator, he intersperses his accounts with sayings from the Pantanal, the vast wetlands where his family owns cattle ranches. Reaching for ways to explain the political maelstrom, he at one point recited a verse from an old Brazilian song.

“I’m just doing my part to help the republic,” the senator said.

An actor dupes a senator

In hindsight, Amaral said, he recognizes that he never should have trusted Bernardo Cervero, a struggling young actor from Rio de Janeiro.

The senator, who had been director of gas and energy at Petrobras in 2000 and 2001, said he had agreed to meet with Cervero, 34, in November because of his friendship with the actor’s father, Nestor, who was sentenced to prison on corruption charges stemming from his own tenure at the oil company. The younger Cervero, an actor in an experimental theater troupe, surreptitiously recorded on his phone their conversation at the Royal Tulip, the horseshoe-shaped hotel where the senator lives in Brasilia, a short drive from the presidential palace.

Amaral assured Cervero that he would persuade justices on Brazil’s highest court to release his old friend on house arrest. Then he explained how he would arrange to pay the Cervero family $1 million plus a stipend of about $13,000 a month, which prosecutors suspect was to ensure the family did not inform on his own dealings at Petrobras.

And Amaral laid out how he would help the elder Cervero flee to Spain, including details like deactivating his electronic monitoring device. The actor suggested an escape by boat, but the senator said a private plane was preferable, adding: “The best way for him to leave is through Paraguay.”

That was enough for obstruction charges against Amaral and Andre Esteves, the billionaire banker the senator said would finance the journey.

Before his arrest, Amaral was known in Brasilia as a skilled behind-the-scenes negotiator, drawing from his long experience in the oil business.

Schooled by Jesuits and trained as an engineer, he worked in the Netherlands for the energy giant Royal Dutch Shell in the early 1990s. Back home, he climbed the bureaucracy of Brazil’s government-controlled energy industry.

It was while serving in the Energy Ministry in 1993 that he got to know Rousseff, an obscure functionary in charge of energy policy in the southern state of Rio Grande do Sul.

“I met Dilma during a fight,” he said, recalling his first meetings with Rousseff when she was seeking to renegotiate the debt of a public electric utility with the federal authorities. “She’s extremely aggressive. Always has been.”

Amaral joined the Workers’ Party in 2001 and won a Senate seat the next year, when da Silva ran successfully for president.

As Brazil grew richer with the discovery of deep-sea oil fields, so did Amaral.

Some colleagues in the Workers’ Party still recoil at the quinceanera that Amaral and his wife hosted in 2011 for their daughter’s 15th birthday. Comparing the event, in the western city of Campo Grande, to the balls organized by European nobility, society columnists fawned over every lavish stroke: 240 bottles of Veuve Clicquot Champagne, and a gown made from Givenchy crystals for the birthday girl.

Panic in Workers’ Party

In December, while the senator languished in prison, his old friend from Petrobras, Nestor Cervero, told investigators that Amaral had pocketed a $10 million bribe back in 2001, during a deal to buy turbines from Alstom, the French power company. Amaral denied that and all accusations that he had illegally enriched himself, declaring: “I am not a corrupt man.”

Amaral was the first sitting senator to be arrested since Brazil re-established democracy in the 1980s, and his jailing spawned panic and outrage in the Workers’ Party, which da Silva and other union leaders founded in 1980 in resistance to Brazil’s military dictatorship.

The senator’s readiness to double-cross his colleagues made one thing certain: More secret recordings were about to enrich the saga of Brazil’s political impasse.

Shortly after the arrest at the Royal Tulip, Education Minister Aloizio Mercadante, one of Rousseff’s top aides, contacted Eduardo Marzagao, a confidant of Amaral’s, offering to help defray his family’s legal expenses.

“Hell, Marzagao, you tell me how I can help,” Mercadante said. “That’s what I’m here for, to help.”

He was unaware, of course, that Marzagao was recording the call; prosecutors now have Mercadante on their target list, too.

The judge and Lula

For more than a year, Sergio Moro, a crusading judge in southern Brazil, had overseen the Petrobras inquiry. He seized on new anticorruption legislation allowing defendants to reduce their jail sentences in exchange for information, helping prosecutors jail one powerful figure after another.

The labyrinthine inquiry eventually led to da Silva, universally known as Lula. It was clear that the former president had profited from connections to magnates at the helm of construction companies, which paid him millions of dollars for speeches.

Then prosecutors found that such companies had paid to renovate a country estate near Sao Paulo and a beachfront apartment in the city of Guarujá, two properties they contend he controls. (Da Silva denies owning either one.)

At the country house, police agents found a mug with the logo of Corinthians, da Silva’s favorite São Paulo soccer club, engraved with the words “to the illustrious President Lula.” The wine cellar had bottles dedicated to him. Docked at a wharf in the lake, pedal boats were inscribed with the names of his grandchildren, Pedro and Arthur.

As the investigators encircled him, da Silva grew increasingly alarmed, according to intercepts of his phone calls obtained in the inquiry. He disparaged the Supreme Federal Tribunal, used vulgar epithets to describe the heads of both houses of Congress and called on his comrades in the Workers’ Party to ratchet up pressure on prosecutors.

“Why can’t we intimidate them?” the former president asked one congressman. Instructing him on how to irritate an investigator, da Silva said: “He needs to go to sleep knowing that the following day he’ll have 10 legislators irritating him at his house, irritating him at his office, facing a case at the Supreme Federal Tribunal.”

As the pressure mounted, Amaral’s 255-page plea deal was leaked into the news media in early March, provoking a round of angry denials and desperate moves. Rousseff nominated da Silva, her predecessor and patron, to be her chief of staff, which would give him broad legal protections.

For a few hours on March 16, the audacious plan seemed to work.

Brazil’s Game of Thrones

That same day, Moro released recordings of da Silva’s phone calls with Rousseff and other politicians. The calls depicted a former president seeking to salvage his heroic narrative alongside a sitting leader trying to stave off impeachment proceedings she has likened to a slow-motion coup.

Justices on the Supreme Federal Tribunal suspended da Silva’s nomination. But the soft-spoken judge also faced recriminations, for revealing conversations of the nation’s leader without the authorization of its highest court, leading to accusations that his once-admired inquiry had become a partisan witch hunt.

As the legal case grinds on, more allies are abandoning Rousseff with an eye on seizing power for themselves. They say she should be impeached for violating fiscal laws by using funds from state banks to cover budget gaps.

Led by Temer, whose cryptic demeanor has his rivals comparing him to a butler in a horror movie, the centrists anchoring Rousseff’s coalition broke away last week.

In Congress, lawmakers accused of immense personal corruption are speeding up the impeachment process of the president, who has not been tainted with claims of illicit personal enrichment.

Amaral, whom the Senate ethics committee is trying to expel from his seat, has not watched this spectacle from the sidelines. On March 13, he revved up a Harley-Davidson motorcycle and joined hundreds of thousands of antigovernment protesters in Sao Paulo. But he did not remove his helmet, wary of how the angry crowd might react.