Corruption goes Brazilian


Dime con quien BNDES y te dire quien eres…

Back in April, Juan Cristobal wrote about a big corruption investigation in Brazil. Uncovered by the magazine Época, the story involved local conglomerate Odebrecht, state development bank BNDES, and a large loan promised in 2009 by then President Lula Da Silva to the comandante presidente for the construction of Metro Los Teques.

Both Odebrecht and BNDES formally denied any wrongdoing one month later.

While JC’s post put the focus on Odebrecht’s questionable activities in Venezuela, I would like to refer to the other main part involved: The National Development Bank of Brazil, run by Brazil’s government, and known publicly as BNDES.

Last week, a group of South American journalists presented a special reportage about BNDES’ activities in several countries, including possible acts of corruption like bribes and overpricing. Titled as “The invisible hand of BNDES”, the project is coordinated through the new investigative site BRIO, co-founded by Brazilian journalist Fernando Mello.

The team of 17 people had access to official documents, thanks to Brazil’s version of the Freedom of Information Act (Lei de Acesso à Informação). The investigation covers BNDES’ massive spending (which grew 1,000% in a decade), focusing on five specific cases: the purchase of commercial planes in Argentina, brand new highways in Bolivia and Peru or the construction of a new hydroelectrical plant in Ecuador. All those involving Brazilian companies one way or another.

In our case, it has to do with Line 5 of Caracas Metro, which started construction in 2007 (one year later than planned) and its first station is supposed to be ready later this year. The project also involves the omnipresent Odebrecht. The Line 5 project has faced plenty of delays, changes and cost overruns, as the title of the article (“A delayed subway and three times more expensive”) clearly implies. In eight years of works so far, less than half of the project (47%) is done.

What is BNDES’ role in this? The bank paid a small part of the bill, but tried to keep the info hidden from the public. Our own economic development bank BANDES (with an extra “A”) is involved as well. As in B(A)NDES delictivas …

BNDES money now finances 5.4% of the Line 5 venture, after it had its cost increased by 218% (currently, the Brazilian bank contributes $219m of the $3.9bn total).

The BNDES, despite BRIO’s efforts, kept the amount of money for Line 5 and for specific projects in Latin America secret … Compared to Venezuelan official data, the figures released differed by almost $150m for the specific case of Line 5. The BNDES later updated the information on their site.

Figures released by the Venezuelan government differ from the values now made public by BNDES.”

When BRIO tried to question government sources to find out what’s behind the delays, they only found silence.

The entire article (written by El Nacional’s former investigation-unit head David Gonzalez) is long yet satisfying, but full of details and personal testimonies. The whole line 5 of the Metro is a hot mess, but it’s just a sample of the many troubles that the Caracas subway had faced for years now. And that isn’t the only subway system in Venezuela facing both delays and cost overruns.

The article also highlights the special relationship between the central government and our Southern neighbors:

In Venezuela, Brazilian construction companies are among the main beneficiaries of public contracts. This is largely due to agreements made between Chávez and his then colleague Luiz Inácio Lula da Silva, Brazil’s president between 2003 and 2010. The increase in investments caught the attention of public servants at Itamaraty, Brazil’s Ministry of Foreign Relations.

Data obtained by the Commercial Sector of the Brazilian embassy in Caracas show that 2007 was the first year of Chávez’s presidency in which Brazil’s main companies invested heavily in Venezuela, with investments made in previous years considered “marginal”. Today, they manage more than $23bn in public contracts.”

It’s no secret that Lula was a very close ally of the late comandante supremo. And he still likes to remain in touch.

You can read the entire series of reports here. They’re well worth the time, but you need to register first to read them. They’re all available in three languages: English, Portuguese and Spanish. And for the time being, they’re fully free.

24 thoughts on “Corruption goes Brazilian

  1. As I wrote before, since LuLadron and his buddy Chavez became best friends, Brazil and Guisozuela are partners in crime, that’s all. Common denominator? Massive Corruption, of course.

    Corruptzuela gladly imports and exports its deadly Cuban diseases anywhere it can; Brazil was just another natural Chavismo victim, due to its proximity. With Colombia and Bolivia we do Drugs, with Brazil and others Oil, Banking and soon Chicken and Pork Mega-Guisos.

    On the bright side, after Chavez’s Smartmatic also stole the last elections in Brazil (coincidentally, much like in Vzla, in “overtime”, after 6pm..), Brazilian people have started waking up and standing against Populism and Chavista Totalitarian tendencies; partly because they saw first-hand Cubazuela’s Debacle before it is too late, much like Spain.

    Luckily for Brazil, the Military are not totally Bribed and corrupted, so democracy still has a chance next door.
    Like all Latin-American countries they’ll have to fight heavy corruption, but they are not a confirmed Petro-Narco Kleptocracy like Guisozuela just yet.


  2. Brasil mostly exports services and goods to Venezuela , none of those business have anything to do with oil, Brasil imports no oil from Venezuela and has quietly avoided making any significant commitments to involve itself in any oil ventures in Venezuela , Petrobras presence in the Venezuelan oil industry is marginal , largely because Petrobras experiences with Pdvsa have not been very fortunate. (Despite the govt doing all it could to attract Brasilian investments to the indsutry) . The main beneficiaries have been construction companies like Odebrecht but now they must contend with long overdue payments from the govt. Relations are not what they used to be . The Brazilians do jobs but dont like not being paid, and the Brasilian govt is facing its own crisis. Not as savage as the one affecting Venezuela but bad enough.!! Venezuela is now a whipping boy of what to avoid in Brasilian politics. Maybe they still hope they get paid , keep smiling until they do but start creating a discreet distance . The Venezuelan regime is starting to stink.!!


    • “Brasil mostly exports services and goods to Venezuela , none of those business have anything to do with oil”

      So this is just for Oil painting Art projects?

      In 2007 Brazil and Venezuela pledged closer trade and energy ties, including building a new oil refinery in Brazil. The $4.5bn refinery scheme to be completed in 2010 will be 40%-owned by Venezuela’s state oil firm PDVSA, while Brazil’s national oil firm Petrobras will hold the rest.[5]


      • Lula: as everyone knows the whole refinery project joint venture went bust years ago because Pdvsa didnt put up the money , the refinery is being built by Petrobras with no Venezuelan participation .


        • You wrote:

          “Brasil mostly exports services and goods to Venezuela , none of those business have anything to do with oil”

          “Petrobras tried to collect the money owed by PDVSA, without success. In October 2013, when investments in the refinery had reached $18 billion, the Brazilian company decided to cease its collection attempts — although that went unreported until this week.”


          • As Pdvsa put up no money , just to keep appearances Petrobras ‘loaned’ Pdvsa the money it should have contributed using its own moneys , this fictional loan is now being ‘erased’. The fact that Pdvsa was for all practical purposes out of the venture has been public knowldege for quite a bit of time .


      • Emilia: I mean not in terms of ourselves but in terms of Brasilian politics where its been mostly this last year that the stink in the relationship has become more noticiable . Specially after the repressions of early 2014 , and the breakdown in Venezuelan finances and general situation. It doesnt help that so many Brasilian companies are not getting paid. !!


  3. Too bad I didn’t get a chance to start the construction of the Metro in Venezuela !! All the planning was ready, as I posted on my twitter account; it would have been finished by 1963, or earlier, after I finished the Autopista a la Guaira, La Cota Mil, and many, many other highways you use today in Guisozuela.

    It would have costed just 200 Million Bolivars, at the time. And by now, the entire country, including Maracaibo, Barquisimeto, Valencia, etc would have metros too, besides Guatire, Guarenas with metros, and a completed Oriental highway all the way to Barlovento, easily completed before 1970.

    I hear these projects still far from complete after 60 years of unprecedented Oil Bonanza?

    Geez, I liked to steal quite a bit, but these adecos/coyanos and now Chavistas are something else!!


    • He has his own twitter page? Lol

      8 years and not one stop? And Chavez said Venezuela was gonna have a space program! lol


  4. Thank god for good investigative reporting. This type of work is essential the democracy and republican values.


  5. Dilma is in a very weak position right now. I don’t think that she will even remain the president by the end of this year. And unlike Venezuela, the natural resources’ revenues are not big enough to sugar-coat the terrible economic situation. The poor people’s pockets are just getting empty.


    • Wish Brazilians the best. They are fighting a very important fight against Cubazuela’s carcinogenic populism. The entire Latin-American region depends on their success.


      • I agree with you, if the Brazilian Workers’ Party (PT) falls, the whole Bolivarian superstructure will collapse economically and politically just like a rotten tree falling. It will be like the USSR being dismantled all over again.

        What is poetic is that the whole thing started here (First Foro de Sao Paulo summit, in Sao Paulo, in 1990), and it will end in the same city 25 years later. If you don’t know, Sao Paulo is our San Cristobal, the strongest bastion of resistance against the “carcinogenic populism”, to use your words.


          • Not even close. Even during the military dictatorship: 1964 to 1985, the corruption levels among the generals were very low, even their critics would ponder that although they were authoritarian and nacionalist, they were not thieves. They all died poor.


            • That may well save the Brazilians. The various center-leftist governments now know they can’t get away with anything like they do in Vzla. The military might get pissed. That’s what I’ve read, at least. In Brazil, like everywhere else in L.America there’s a big corruption problem. Buy there’s some democracy left, some separation of powers, and some accountability. Some of the people of Petrobras have gone down and will be punished. In PDVSA they are applauded when they steal..


  6. OT:

    Senadores brasileños denunciaron en la noche del lunes que Venezuela no autorizó el aterrizaje de una aeronave de la Fuerza Aérea Brasileña que los trasladaría a Caracas en una anunciada misión para verificar la situación política en el país.

    El senador Ronaldo Caiado, del partido Demócratas, acusó al gobierno de Venezuela de impedir el aterrizaje.

    Según dijo Caiado, “el gobierno venezolano acaba de desautorizar nuestro viaje. Eso es una afrenta. Nosotros tenemos que hacer una moción de repudio pidiendo la exclusión de Venezuela del Mercosur y rompiendo todos los acuerdos legislativos de Brasil con ese país. Es algo inimaginable, que sólo existe en las dictaduras“.


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