Court orders ex-Brazil President Lula whom PM Lee admires to serve his 12-year jail sentence over graft

In 2015 just 2 months before the general election, Prime Minister Lee Hsien Loong gave an interview to Time magazine.

He told Time that he was influenced “a great deal” by his father, the late Lee Kuan Yew. “I mean, he’s my father. I grew up learning from him, I worked under him when he was Prime Minister, with him in Cabinet these last 30 years until he died. So, it’d bound to be a very deep influence,” he said.

“He was very good at preparing for Singapore to move on and not be stuck in the Lee Kuan Yew mode, with his planning for succession – giving his successors room to do things their way and pursue policies as they felt necessary.”

Apart from his father, PM Lee also named other world leaders whom he admires. The first he mentioned was Mr Luiz Inácio Lula da Silva, who was the Brazilian President for eight years from 2003 to 2011.

“He was remarkable – very little education, left-wing firebrand, mobilised a nation, became President and was able to not only to get people to support him, but actually pursue very sensible policies which promoted growth and development and improve people’s lives,” said PM Lee. “I met him and I was very impressed.”

Brazil judge orders ex-president Lula jailed

Last Friday (6 Apr), Reuters reported that the Brazil’s Supreme Court had ordered Luiz Inacio Lula da Silva, known simply as Lula, to turn himself in to the police within 24 hours to serve his 12-year sentence for a graft conviction.

Lula was convicted last year for taking bribes from an engineering firm in return for help landing contracts with the state-run oil company Petrobras. The Supreme Court rejected Lula’s plea to remain free until he exhausts all his appeals, in a case he calls a “political witch hunt”.

The Brazilian financial markets rallied after the Supreme Court decision was announced.

Lula led Brazil in two four-year terms as president during those years of prosperity that were fueled by a commodity boom. He was very popular in Brazil due to his social programs targeting the poor. His hand-picked successor Dilma Rousseff was also impeached and removed from office amid corruption scandals and economic crisis in mid-2016.

Lula implicated in Operation Car Wash

In March 2014, Brazilian Federal Police launched a money-laundering investigation called Operation Car Wash.

It began at a petrol and car wash complex in Brasilia, Brazil’s capital, and it was initially thought to be just a routine open-and-shut police operation. The Federal Police team had the location under surveillance believing that it was the centre of a money-laundering operation run by a former convicted criminal, Alberto Youseff.

Then, in one of Youssef’s intercepted emails, it was discovered that he was paying for a Land Rover for an executive. The executive turned out to be Paulo Roberto Costa, the man in charge of refining and supply in Petrobras. Costa was arrested and some US$8 million was uncovered as evidence of money laundering. Criminal charges were brought against Costa, who then negotiated a plea bargain with the authorities.

Little did the Federal Police know that the testimony given by Costa would lead to uncover full-blown corruption cases involving politicians. Costa admitted that the Land Rover was just one of many bribes he received to issue contracts to construction companies. Corruption in the Petrobras supply division he oversaw, Costa said, “was the tip of the iceberg”.

Investigators later learned that there was a cartel of companies that dealt with Petrobras. According to a secret agreement that existed for more than 10 years, the cartel would nominate one of its members to be awarded in each of the Petrobras multimillion-dollar contracts. Petrobras executives would be bribed to go along, and the cost of the bribe built into the contract. In fact, the scheme stretched far beyond Petrobras to contracts for stadiums for the 2014 World Cup, the 2016 Rio Olympics and other major infrastructure projects throughout Brazil.

Latin America’s largest construction company bribes politicians in multiple countries

In 2015, the Federal Police moved against the cartel players. Twelve top-level executives were arrested, among them Marcelo Odebrecht, CEO of the largest construction company in Latin America. Its bribing operation typified that of cartel members and was the most extensive in the region. He was later sentenced to 19 years in prison for corruption, money laundering and criminal association.

Odebrecht then began to talk in hopes of reducing his 19-year sentence. According to authorities, Odebrecht had a division of “Structured Operations” that ran an intricate off-the-books accounting system and a bank to bribe not only company executives, but also politicians. In testimony to prosecutors, Odebrecht admitted that his company bribed politicians from all the major Brazilian parties in exchange for appointing their own people in key positions in Petrobras.

With Odebrecht’s testimony, dozens of Brazilian congressmen, senators and ministers were implicated. It especially dealt a big blow to the Workers’ Party of Brazil and its 2 Presidents, Lula and Dilma Rousseff. Dilma Rousseff was impeached in August 2016 and 2 weeks later, Lula was formally charged with corruption in connection with the Car Wash scandal.

While Brazil’s ruling elites were being held to account, investigators were also making steady progress on the international front with the help of the US Department of Justice, because the illicit money from Brazil was being laundered through US financial system.

In December 2016, Odebrecht pleaded guilty to American charges that it provided almost US$800 million in bribes for more than 100 projects in 12 countries through the US financial system. It agreed to pay a US$3.5 billion fine and disclose details of its corrupt activities in Latin America and Africa, which involved bribing various political parties in those countries. Said Attorney Walter Alban who served as the public ombudsman in Peru from 2000 to 2005, “There aren’t political parties any more. There are groups that define themselves as political, but strictly speaking, they are supported in all cases by illegal funds”.

Keppel’s involvement in Operation Car Wash

As part of the Car Wash probes, Singapore’s public listed company Keppel Group was also implicated. It was first cited in the “Operation Car Wash” investigation in February 2015 when Brazilian media reported claims that Keppel FELS, a wholly-owned subsidiary of Keppel O&M had made bribe payments to Petrobras executives as well as the Workers’ Party of Brazil. Keppel initially denied the charges.

In October 2016, Keppel then acknowledged that “certain transactions” associated with the company’s former Brazilian consultant “may be suspicious” following internal investigations. It also notified authorities in the relevant jurisdictions of its intention to cooperate.

And in Dec last year, Keppel O&M corruption scandal was finally confirmed in public when Keppel issued statements saying that it would pay a hefty fine totaled US$422 million as part of a global resolution with authorities in Singapore, Brazil and US over the corruption charges.

According to court documents released by the US Justice Department, Keppel O&M “knowingly and willfully conspired” to pay bribes as part of a “decade-long scheme” to win 13 contracts with Petrobas and Sete Brasil. From 2001 to around 2014, millions of dollars in bribes were disguised as large commissions paid to the Brazilian consultant under “legitimate consulting agreements” by Keppel O&M.

These illicit payments, made to bank accounts in and out of the US under the names of shell companies controlled by the consultant, were then transferred to bank accounts elsewhere and into the pockets of Petrobras officials and politicians of Lula government.

From the 13 contracts that it secured through the 13-year-long bribery scheme, Keppel O&M and its related entities earned US$351.8 million. The scandal came to light when Keppel O&M’s Brazilian consultant, Zwi Skornicki, was arrested as part of Car Wash probes. Skornicki, in turned, was nabbed after former Petrobras executive Pedro Jose Barusco Filho made the allegations against him in his testimony to Brazilian Federal Police as part of a plea bargain in November 2014.

US court records also pointed out the involvement of six former executives at Keppel O&M, with four of them being Singapore citizens. One of the remaining executives is a legal permanent resident of the US, while the other holds US citizenship. It was revealed that Keppel O&M executives had authorised the consultant during several telephone calls to pay one per cent of the contract value as bribes. Accordingly, the consultant received approximately US$14.4 million in bribes paid to the oil executives and the Workers’ Party of Brazil.

And according to Skornicki’s testimony, the Brazilian politician who received Keppel O&M’s bribe was Joao Vaccari Neto, the former treasurer of Brazil’s Workers’ Party and close ally of Lula. He was sentenced to 15 years and four months’ jail in September 2015.