Bugging in Brazil Exposes Fear of Biggest Betrayal Yet

  • Country awaits jailed tycoon Marcelo Odebrecht’s plea bargain
  • Former president Sarney spoke of ‘machine gun’ revelations

The tale of Brazil’s political crisis is one of betrayals -- and the most explosive one may be yet to come.

Marcelo Odebrecht, the former head of Brazil’s largest construction conglomerate who was arrested in a massive corruption scandal, is trying to reduce a 19-year sentence through a plea bargain. Its potentially devastating impact on the political class was made clear in a chat between convalescent former president Jose Sarney, 86, and a long-time pal. “Odebrecht will show up with a 100-caliber machine gun,” Sarney said.

Marcelo Odebrecht in 2014.
Marcelo Odebrecht in 2014.
Photographer: Kiyoshi Ota/Bloomberg

Little did he know that his friend, former Petrobras executive Sergio Machado, was secretly taping their conversations as part of his own collaboration deal, going so far as to record him at a hospital. The leaked recordings were obtained during a probe, dubbed Carwash, into corruption at the state-run oil company.

The ailing politician was just the latest target in the country’s political crisis where rampant backstabbing has become the path to survival. Machado recorded Sarney and several other members of Brazil’s political elite to gain a bargaining chip with investigators. The recordings toppled two ministers just after Acting President Michel Temer appointed them, and prompted requests for the arrest of Sarney and Senate President Renan Calheiros, which were rejected by the Supreme Court Tuesday.

Even greater fallout is expected if Odebrecht and executives from his family’s construction conglomerate open up to authorities. Based on the names cited in spread sheets seized by the police during raids, the deal could ultimately implicate dozens of politicians from across Brazil’s political spectrum.

“The political players are trying to survive, and in order to survive, they have to betray someone,” said Carlos Pereira, a professor of political economy at Fundacao Getulio Vargas in Rio de Janeiro. “With the Odebrecht agreement, we are at a critical junction, a real opportunity for big changes. There is growing intolerance for corruption among Brazilians.”

Marcelo Odebrecht is expected to show links between undeclared funds and donations related to the re-election campaign of suspended President Dilma Rousseff, Veja magazine reported this month, without saying how it obtained the information. IstoE magazine said Rousseff directly asked Odebrecht for 12 million reais ($3.4 million) in illegal donations for her 2014 campaign. Rousseff said the reports of both Veja and IstoE are “lies.”

The start of talks between Odebrecht and prosecutors doesn’t guarantee that an agreement will be made. According to Brazilian law, investigators can only use the information obtained through a plea bargain if a deal is signed at the end of the process with reduced sentences for the witnesses.

The plea bargains have been key to expanding the investigation beyond Petroleo Brasileiro SA. They helped prosecutors turn an inquiry into a 26-million-real bribery scheme at the oil company into a probe that has stretched across the entire economy to uncover 6 billion reais in bribes siphoned from public contracts, prosecutors say.

Odebrecht would be the latest of many witnesses who betrayed confidants in deals with prosecutors in the case. Former Petrobras head Paulo Roberto Costa was the first to hand over information about politicians and money launderers who had been his partners in crime for almost a decade. He collaborated in August of 2014 after his daughters, who owned illegal Swiss accounts, were caught trying to cover up evidence.

A couple months later, Petrobras manager Pedro Barusco turned over his former boss, Renato Duque. Duque is serving 20 years, while Barusco had an 18-year sentence reduced to a two-year home arrest he is serving from his beach house. The investigation has since snowballed, with more than 50 executives, politicians and money launderers collaborating with authorities in exchange for reduced sentences.

Antonio Castro de Almeida Castro, a lawyer for many defendants in the Carwash case including Sarney, has called the investigation a “neo-inquisition” that kept its momentum with selective leaks of case documents and abusive preventive arrests in which defendants are pressured to talk. Odebrecht was jailed for nearly a year before a judge handed him his 19-year sentence. A Supreme Court justice Tuesday tossed out evidence of an intercepted phone call of then-President Dilma Rousseff because the high court hadn’t signed off on the hack, but the damage was already done: the leaked tape fueled impeachment protests.

Castro said Machado decided to turn his back against old friends only because his children had been threatened with jail time for alleged involvement. He said the plea bargains are an important instrument but need to be voluntary, not provoked by threats. Machado’s lawyer, Fernanda Tortima, declined to comment as the case is under court secrecy.

Sarney called his old pal a “moral monster” after he caught the statesman on tape. Machado had told his old friend that he left his phone behind to avoid unwanted wiretapping by police, Castro said. But the executive kept a second hidden device to tape the man he used to describe as his father.

David Samuels, a political science professor at University of Minnesota, said the investigation driven by plea bargains has created some “perverse” incentives.

“Why not, if they’ll let you off easy?” he said. “They’re throwing everybody under the bus. I’m surprised more people aren’t doing it.”

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