A Brazilian Corruption Story Finally Stirs Outrage: Dom Phillips

TV Globo's Sunday-night news-magazine program, "Fantastico," is one of Brazil's most popular shows -- a breezy mixture of entertainment and in-depth reporting that is something of a national institution.

It's the investigative reports that grab headlines, and none more so than last Sunday's 22-minute expose of the fraudulent ways in which companies competed to get lucrative contracts with a public hospital in Rio de Janeiro.

Globo knew this was a particularly explosive report. "Certainly you've heard a lot about corruption, but today you're going to see its face in the most blatant way," said presenter Zeca Camargo. "It's shameful."

Bosses and representatives from four big supplies-and-services companies -- Locanty, Bella Vista, Rufolo and Toesa -- were secretly filmed over two months negotiating contracts with a man they believed was the purchasing manager of the Federal University of Rio de Janeiro's Pediatric Hospital, a public institution. Actually, they were dealing with experienced undercover reporter Eduardo Faustini.

The report showed representatives of all four companies freely offering bribes and explaining how they fixed bidding processes. Kickbacks of 10 percent were "normal," said one manager, "extremely normal." She eventually agreed to a 20 percent rate. A representative of Locanty promised his company's payments would be discreet. "It doesn't even seem like it's money," he said, reassuringly. "It's brought in boxes of whiskey, understand? Boxes of wine. Don't worry. We're used to this already."

Globo let each negotiation get to the final stage before payment. For just three contracts, the purchasing manager would have earned nearly $750,000 in kickbacks. His fees would have simply been added to the price of the contract -- in effect, public money would be paying to bribe a public servant.

"This is your money," the "Fantastico" voiceover reminded the audience.

The four companies were all told about the report and offered a chance to respond by Fantastico. All four either denied wrongdoing or refused to comment.

Corruption in Brazil is hardly news: The country is rife with it. But something in the bragging, in the blase attitude of the company reps -- and perhaps the fact that it was a children's hospital -- deeply offended viewers. Reaction was instant and condemnatory.

Geraldo Almendra, an essayist on the blog Alerta Total, wrote:

Society has no more way out -- either demand that the bribers and the bribed, corrupters and corrupted be treated as the perpetrators of heinous crimes, or continue witnessing the death of thousands of citizens every year, direct victims of the lack of investment in health, safety and sanitation.

The next night, Globo's "Jornal Nacional" news program ran another lengthy report, with more exclusive video. Both the city and state of Rio de Janeiro canceled contracts with the four companies concerned, and the federal Health Department followed suit. The federal police announced an investigation into the four companies, as did the public prosecutor's office.

Lawmakers quickly realized there was political capital to be made out of the scandal. Opposition parties declared they would form a Parliamentary Inquiry Commission. Luiz Paulo, a Rio de Janeiro state deputy and leader of the Brazilian Social Democracy Party in Rio's state assembly, said:

I have never seen such shameful, criminal and grotesque scenes ... This is the time to check what is taking place, punish the culprits and come up with proposals that minimize the possibility of this corruption happening.

On March 20, blogger Gabriel Diniz linked to an interview with the undercover reporter responsible, Eduardo Faustini. The interview detailed other investigations that Faustini had conducted for "Fantastico" -- filming drug gangs, corrupt politicians, and even taking a domestic flight with a fake gun and a suitcase full of fake money.

Journalist Carlos Newton, writing on the Tribuna da Imprensa blog, highlighted the director of the hospital, who had sanctioned the filming:

He should be hailed as a national hero, but this will never happen ... This great Brazilian, who is an example for the younger generations, now runs the risk of being relentlessly persecuted in the public service, having his career hindered just because of his noble character.

Indeed, there was something in all this national bluster that didn't quite ring true: Brazilians know only too well their country is infected with corruption at many levels of public and business life. In Transparency International's 2011 Corruption Perceptions Index, Brazil came in 73rd in a list of 183 countries and territories.

As Jose Reis Barata Barata, a prolific columnist, wrote on the Observador Politico site:

Nothing that was filmed is new, as none of the police, administrative and political measures are true … What is serious is the legal uncertainty. Law without proper and consistent application of the penalty for noncompliance is not law. Law disrespected and not applied has an inverse social effect -- it is a stimulus for crime.

As Barata suggested, the deeper problem exposed by the report is the flexible attitude toward the law that many Brazilians have. There is a Portuguese phrase here: "Leis que pegam e leis que nao pegam" -- "Laws that catch on and laws that don't catch on."

Perhaps, if the outrage over the hospital scandal persists, laws against bribery might start to "catch on." Brazilians aren't counting on it just yet.

(Dom Phillips is the Rio de Janeiro correspondent for World View. The opinions expressed are his own.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

    To contact the author of this story:

    To contact the editor responsible for this story:
    Timothy Lavin at

    Before it's here, it's on the Bloomberg Terminal.