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New Arrests Expand Brazil’s Anti-Corruption Drive

A new wave of arrests is continuing to expand the scope of Brazil’s wide-reaching anti-corruption probes, but the growing number of cases will likely move slowly through the country’s already backlogged court system.

The Attorney General’s Office on May 8 announced a round of arrest warrants linked to a scheme involving the payment of bribes in exchange for lucrative government contracts. According to Brazil’s Federal Police, the operation was dubbed “Deja Vu” because of the similarities between this scheme and others uncovered since investigations into what may be the biggest graft scandal in history began four years ago.

Prosecutors allege that between 2010 and 2012, three former employees of the state-run oil company Petrobras worked with three financial operators to pay more than $56.5 million in bribes to public officials and political party representatives. The kickbacks were linked to a fraudulent $825 million contract signed in 2010 between Petrobras and the construction conglomerate Odebrecht. Both companies have been at the center of the ongoing anti-corruption investigations, which have become collectively known as “Operation Car Wash” (“Operação Lava Jato”).

The recent round of arrest warrants follows on the heels of a similar slate of detention orders issued earlier this month that were tied to large-scale money laundering and graft schemes uncovered as part of the Car Wash probes.

In the first round of arrests on May 3, authorities in Brazil, Uruguay and Paraguay targeted 43 suspects allegedly involved in a “grandiose” decades-long scheme that laundered at least $1.6 billion. According to prosecutors, the massive amount of money was moved through 3,000 offshore accounts in 52 different countries between 2008 and 2017.

The investigation, sparked by testimony from two money exchangers arrested in Uruguay in 2017, identified dozens of black market currency traders, financial operators and cash suppliers, several of whom are accused of laundering cash for Sérgio Cabral, the former governor of Rio de Janeiro imprisoned last year for corruption and money laundering.

Dario Messer, a dual Brazilian-Paraguayan citizen who owned several money exchange offices in Brazil as well as a bank in Antigua and Barbados, has been accused of directing the laundering operations.

Messer was living in Paraguay at the time his arrest was ordered, and remains a fugitive. Paraguayan news outlet ABC has raised concerns that authorities may have intentionally moved slowly to carry out the arrest warrant, and previously failed to report intelligence about Messer’s suspicious activities, because of his close relationship to Paraguayan President Horacio Cortes.

Brazilian Federal Prosecutor Eduardo El Hage suggested to Folha de São Paulo that the operation has the “potential” to be “explosive” and provide investigators with fresh leads because of the involvement of a slew of black market currency exchangers, which were the original impetus for the early Car Wash probes.

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