Image source: The BRICS Post | Xinhua

Despite the recession, Brazil on the right track

The current situation in Brazil is a very interesting one. From all perspectives. The political situation, the scandals, the recession, the inequality rise, all that has managed to drop the country’s financial growth by approximately 5%. Add to it the stress of the Olympic Games, which will take place in Rio, August 2016 – you have the mess! But what is really happening there, and why should we should we take a look at the whole picture to say that Brazil is actually on the right track?

Let’s get to know the scandal

The first and most important name to know when it comes to the scandal is Petrobras. To give a short summary of what is Petrobras and what really happened a couple of years ago, founded in 1953, Petrobras is a national oil company and the second-largest open market oil extractor in the world. When it was revealed that an estimated amount of 3 billion dollars were stolen from the company in forms of bribes, kickbacks, inflated contracts, money laundering operations with more than 100 people from the political elites implicated in the scandal, the Lava Jato operation[1] began, which is investigating the parties involved.

The scandal that hit Petrobras got to immediately hit the Brazilian society, not because of the novelty of the fraud but mainly because of the scale it took, in one of the most important state owned companies. It also raised directly questions about corruption in the country, anti-corruption lawmaking and most importantly, issues of trust. It is also very important, as the former President of Brazil, Dilma Rousseff is accused of being involved and she is also accused of manipulating the federal budget to disguise a growing deficit. She is also faced with impeachment, while Michel Temer is now serving as the country’s interim president. Finally, the financial hit that Petrobras received has been major, leaving the company indebted and out of the bond markets, and leaving a currency that is extremely undervalued.

On the right track?

The recent news is that the crowd feels like there is no actual democracy and there is a sentiment of general disappointment, as the current interim President has not been chosen by the public. This is true, but on the other hand, the procedure that the Brazilian constitution foresees in such cases has been followed step by step and a lot of changes have taken place, ever since the scandal broke. Right after the outbreak of the scandal, Brazil didn’t lose any time: after pressure from the public it immediately strengthened its anti-corruption laws with the Clean Companies Act. Implemented in 2014, the law—which applies to all industries—targets bribery, bid rigging and fraud in public tenders and contracts. The law holds companies accountable for their employees’ actions. This means that not even the President of Brazil is safe from anti-corruption drives and that no one is immune to corruption in Brazil. This can only be a sign that the authorities are dealing with this problem seriously and they are absolutely committed towards change via democratic means.

Let us remind ourselves that Brazil is not alone in corruption. The recent Panama Papers worldwide scandal, a number of world leaders are involved in the lists, which means no country can hide from corruption anymore. The point comes to how every country deals with a scandal: do they cover it up, or do they choose democracy? Brazil chooses democracy, and a “fresh start” – and democratic changes always take time to be achieved.

[1] Lava Jato means “Operation Car Wash” and it refers to the current investigation of all the political elites (and not only) involved in the scandal

Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.
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