segunda-feira, dezembro 08, 2014

2014 Presidential Election Finance and Petrobras

         For my final project in Political Science I had to choose someone in Politics and see where there financing came from. In America the financial information seem to be much clearer and deliberative, while in my country things are less explicit, which gives room to a lot of speculations. The professor gave the option of researching about our own country, and I ended up deciding to do that, due specially to the current events that are going on in Brazil. Many controversies are being brought up in this years presidential election in Brazil, since what was known to be the “workers party” 'PT' ended up being capital intensive and following neoliberal ideology rather then democratically favoring societies demands and being progressive, which is what we expect from a Workers Party. The party is being part of major scandals on corruption meaning both tax evasion and money laundering, specially due to the World Cup that took place earlier this year, and to the Olympic Games that Brazil will host in 2016. When researching the financial contributions to Dilma Rouseff, Brazil's re-elected president under PT, it was clear that the major contributions received by herself and her party come from entities that are somehow tied with Construction, due to the major projects supported by her in the making of the World Cup. Also, currently in the Supreme Court of Brazil, the nation's most important company, Petrobras, is also being investigated due to campaign finance and payola to politics and political party’s in a scheme of corruption and money laundering that moved R$ 10 billion reais.
           The scheme that is now in the Supreme Court of Brazil is called 'Lava Jato' or 'jet wash' comes from a cartel of large contractors (OAS, Odebrecht, Engevix...) that combined prices for Construction projects for Petrobras, but the contracts were overrated. Part of the money from the super over billing was distributed among executives within Petrobras and people that supported the scheme. Payola's were passed out in different percentages to three of the major political party's PT, PMDB and PP, this money was supposedly to finance electoral campaigns in 2010, the first election of Dilma. Among the main contracts that are being investigated are three refineries, one in Pernambuco, one in Rio, and one in the US, the Pasadena Refinery, which seem to also be a scheme that generated a loss of US$ 792 million dolars to Petrobras. The question of private investment in electoral campaign is a hazy topic, since when critically analyzed it is clear that firms don't vote, and therefore they shouldn't contribute to elections.
      The contractor firms that outset the whole scheme are among the largest firms of Brazil, and contributed largely to the re-election of president Dilma. I made an illustration of the share of investments that were injected into president Rousseff and her presidential campaign:
The electoral campaign for president Dilma Rousseff (PT) raised R$ 350.9 million and spent R$ 350.5 million. Among the corporations that donated the most are the food processing company and frigorific JBS, the construction company Andrade Gutierrez and OAS, which are involved in the 'jet wash' operation done by Federal police that investigates corruption and payola scheme in Petrobras. The amount donated by the major firms are respectively JBS donating R$48 million, following OAS R$51 million, Andrade Gutierrez R$27 million , Odebrecht R$18 million and Bradesco bank R$8.2 million; The major contributors are JBS and OAS.
     JBS S.A. is a Brazilian company that is the largest (by sales) food processing company in the world, producing factory processed beef, chicken and pork, and also selling by-products from the processing of these meats. The company has 150 industrial plants around the world. Brazilian Development bank also known as National Bank for Economic and Social Development injected a sum of around R$12.8 billion in JBS by the emission of bonds and stocks bought from the company to promote internationalization and reduce informality since 2007. The relationship of the government injecting a lump sum of capital into the firm, and in contrast the firm providing liquid capital to finance campaign is a characteristics of politics, and might be what took place in regards to the major contribution that was privately done from JBS to Dilma Rouseff.
         OAS is a Brazilian corporation that works in several countries in the area of civil engineering and infrastructure. The corporation manages three stadiums in Brasil, which were part of the World Cup games and went through major reforms to fit into FIFA's requirements. The company is 85% owned by one person, Cesar Mata Pires 65 yo, founder and executive president of the corporation. He is one of the Brazilian's that entered the Forbes magazine for the first time this year, due precisely to the reforms administered by his company, for the World Cup and for the Olympic Games. The contractor firm OAS was the major beneficiary among the firms that were binding procedures for the events, and was largely criticized in the 2013 protests that took place against the major government spending in the world cup game requirements, the people claimed that the money that was supposed to go to Education was going to the pockets of OAS. Following the political ideology and scheme, the propensity given to OAS to get the stadium reforms was payed back in campaign donations, and ended up re-electing the president that preferred the highly centralized corporation to take over the infrastructure of the events held in Brazil. This firm together with the fourth major donor, Odebrecht, were not only involved in the reforms to the events, but are also involved in the money laundering scheme that is being investigated.

     The 2014 elections in Brazil was tough, even tough president Dilma Rousseff got re-elected, it didn't seem a overall consensual decision, even tough the world cup ended up being successful it generated riots and social discontentment due to misuse of public money to promote Fifa standards rather then the needs of society. The other candidates that were running for president were also involved in corruption schemes, and were majorly supported by some of the same corporations not as intensive but somewhat similarly. Corporate donations to politics always illustrate a double way strategy that benefits or proceeds past rewards or benefits that were given in return, it is a legitimate way for capital to flow and seem to disregard the will of the people, which don't fit with the democratic government that we are sold.

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