Even he's probably not safe.

Photographer: Vanderlei Almeida/AFP/Getty Images

Brazil's Year of the Snitch

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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Watching him buckle up for the flight to Rio de Janeiro for the holidays, few passengers would have guessed that the graying man in a burgundy polo shirt seated in the back of the plane was wearing an ankle monitor below his slacks, or that federal agents were watching his every move.

The idyll burst when a few passengers finally recognized Nestor Cervero, one of Brazil's most famous white-collar criminals. "Thief!" they growled as the plane descended to Rio.

A former higher-up in state oil company Petrobras, Cervero was convicted earlier this year of paying bribes, fixing supply contracts and shunting dirty money to some of the country's most powerful politicians. Instead of going down silently, however, Cervero agreed to talk, and thanks to his testimony -- and the confessions of dozens of other penitents like him -- public prosecutors and a crusading federal judge have managed to unravel the biggest political corruption scam in Brazilian history. That deal won him a vastly reduced sentence and the right to spend Christmas and New Year's at home, as well as a heap of public derision.

Such indulgences go down poorly in a country where public figures who get caught with their hands in taxpayers' pockets rarely see jail time. But Cervero is part of a new generation of Brazilian justice. And without his willingness to come forward and the country's newfound prosecutorial zeal, civic revolt against bent officials might amount to very little.

So all hail 2015, Brazil's year of the snitch. Investigators in the city of Curitiba, where the so-called Operation Car Wash probe into corruption at Petrobras is based, have struck 40 such plea bargains, turning criminals into strategic witnesses for the prosecution.

Negotiating reduced sentences is not new in Brazil. But until recently, most criminals preferred to gamble on the feeble court system and take their secrets to jail. Everything changed after 2012, when Brazil's Supreme Federal Court sent two dozen moguls and political bosses to jail in a sweeping vote-buying scam. A rigorous anti-corruption law followed in 2013, and now criminals and cronies are lining up to cop their pleas.

Thanks largely to dishonor among thieves -- not to mention financial trackers skilled in sniffing out hidden money -- prosecutors have since secured 80 convictions of seemingly untouchable moguls and politicians, whose jail sentences total 782 years. So many criminals have been repurposed as state witnesses that police are running short on ankle bracelets.

Brazilians would be forgiven for thinking that little has changed. By cutting deals with prosecutors, confessed criminals have managed to convert harsh jail terms into suspended sentences and house arrest.

Yes, Fernando "Baiano" Soares, a lobbyist at the heart of the Car Wash cabal, had to forfeit a bundle of cash and two fancy vacation homes as part of his plea deal. But when he left jail in November after agreeing to finger accomplices in the Petrobras scheme, he went home to his luxury apartment in one of Rio's toniest beach districts.

Pedro Jose Barusco Filho, sentenced last year to 18 years for turning his second-tier job at Petrobras into a bribe-collection counter, quickly signed an agreement with prosecutors and promised to return $615 million he'd skimmed from supply contracts. By Christmas, he was spotted kicking back at a luxury spa in the Rio hills. Two other guests reportedly left on the spot.

Then there is Alberto Youssef, a shadowy money dealer who has been in and out of custody since 2005, when he first agreed to help authorities take down a money-laundering ring at a state-owned regional bank. But he went back on his word and left investigators empty-handed.

This time, the feds were cleverer. When, in early 2014, police again caught up to Youssef -- now for helping high-rolling oil company executives and politicians on the take spirit their off-books earnings to offshore tax havens -- they doubled down on the man known as "the black market's central banker." Jailed for breaking his earlier plea bargain, and with his name popping up in testimony from other state witnesses, Youssef buckled, agreed again to speak out, and led Brazil's sleuths to the corner offices of Petrobras and beyond.

Snitch by snitch, the Car Wash case has made its way from the oil rigs to the Brazilian capital, where 54 senior politicians, former politicians and their associates are now under investigation. All eyes are now on Delcidio do Amaral, who is not only the first sitting Brazilian senator to be arrested but also a former Petrobras bureaucrat who served as a key dealmaker to the ruling Workers' Party for the past 13 years. So far, Amaral hasn’t named any names, but the prospect that he might sing is roiling the political corridors. If anyone knows where the bodies in Brasilia are buried, it's Amaral.

So does Jose Carlos Bumlai, a wealthy cattle rancher who was on a first-name basis with Workers' Party legend Luiz Inacio Lula da Silva, the former president. Now in prison on charges that he brokered a fake loan that ended up as an illegal campaign contribution to the ruling party, Bumlai could prove a damaging witness -- if he decides to talk.

For now, the silence is deafening.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mac Margolis at mmargolis14@bloomberg.net

To contact the editor responsible for this story:
Brooke Sample at bsample1@bloomberg.net