OECD takes unprecedented action against Brazil after setbacks in the fight against corruption

RIO DE JANEIRO, BRAZIL – Faced with what has been perceived as a setback in the fight against corruption in Brazil, the Organization for Economic Cooperation and Development (OECD) has taken an unprecedented decision: to create a permanent monitoring group on the issue in Brazil.

The organization, which Brazil is seeking to join, is concerned about the “surprising ending of Lava Jato,” use of the law against abuse of authority, and the obstacles in sharing financial institutions’ information for investigations.

The OECD has already notified the Brazilian government of its decision to create the monitoring group. The Ministry of Foreign Affairs and the Planalto failed to reply to a request for comments.

The measure, which had never been taken against any country before, marks an escalation in the OECD’s positions. Since 2019 it has issued public warnings to the government and even sent a high-level delegation to the country to meet with authorities in an attempt to reverse measures to undermine its investigative capacity against corruption.

“The mission occurred in November 2019 and we left the country quite satisfied, only to learn soon after that the problems – with rare exceptions – were still there and that new problems that threatened Brazil’s ability to fight international bribery continue to emerge,” said Drago Kos, chair of the OECD’s anti-bribery working group and a member of the International Anti-Corruption Advisory Council.

A ‘U-turn’ in the fight against corruption

Experts from three OECD member countries will now be continuously and independently monitoring the situation of the fight against corruption in the country, and will hold regular meetings with Brazilian authorities.

This is the first time in 59 years that the organization has taken such action against any country, be it one of its 37 permanent members or any other of the group’s candidate nations.

Joining the OECD is considered a priority in President Jair Bolsonaro’s foreign policy. Ten days ago, during an event for American investors at the Council of the Americas, Foreign Minister Ernesto Araújo said that “Brazil will soon join the OECD, which is something decisive for us, very important, a way to anchor Brazil in the atmosphere of liberal democracies and market-driven economies.”

Elected under the banner of fighting corruption, the Bolsonaro government now sees its membership to the OECD threatened should the assessment of Brazil’s performance on the issue fail to improve.

Asked if the current Brazilian anti-corruption measures are compliant with the minimum parameters for the country to be accepted into the organization, Drago Kos said that “if you had asked me this question a few years ago, my answer would have been a definite ‘yes’. Today I just don’t know: while Operation Lava Jato provided us with such positive information about Brazil’s ability to fight national and international corruption, today it seems that some of the proceedings started in 2014 are reversing.”

According to Kos, this is merely a personal opinion and the organization he leads should deliberate on the matter at some point, but there is no set date as yet.

Lava Jato, abuse of authority law, Prosecutor’s Office and Treasury

The OECD decision was made in December, but has only now become public. There are two main reasons for the measure and some additional recent concerns.

The first is the approval of the abuse of authority law, which criminalizes certain behaviors by judges and prosecutors and was passed by Congress against the will of then Minister of Justice and Public Safety Sérgio Moro, but with Bolsonaro’s acquiescence. He stated that “the Prosecutor’s Office often abuses. I am a victim of that. I faced so many lawsuits in the Federal Supreme Court for abuse of authority. This can’t happen. I know that a large part (of the Prosecutor’s Office) is upright, but individually some abuse (their power).”

For the OECD, it can be used as an element of intimidation against investigators who are doing their job.

The second directly concerns the Bolsonaro clan: in July 2019, then Federal Supreme Court (STF) Chief Justice Dias Toffoli granted an injunction to Senator Flávio Bolsonaro’s defense in which he suspended the investigation into the splitting scheme case in Rio de Janeiro’s Legislative Assembly.

Toffoli accepted the argument of the president’s eldest son’s defense that his tax and bank secrecy had been breached by investigators, who gained access to the information without a court order.

The decision also interrupted all other proceedings involving the sharing of banking or tax data between the Federal Treasury and the Financial Investigation Unit (UIF, formerly COAF) and the Prosecutor’s Office. The injunction was reversed six months later by the STF plenary, which reiterated that this type of cooperation did not require judicial authorization. However, justices established stricter rules for sharing such information between financial and investigative bodies.

In February this year, the Superior Court of Justice (STJ) again overturned the breach of Flávio’s banking and tax secrecy. The Prosecutor General’s Office is appealing the decision.

“In our opinion, these actions seriously undermine Brazil’s ability to detect and fight corruption effectively,” assesses Kos.

But the organization’s concerns do not end there: “We are also aware of current problems by following media reports of occurrences in the area of corruption and checking them with the Brazilian delegation and other sources,” said the head of the OECD’s anti-bribery group.

One such occurrence was the formal termination of the Lava Jato task force in February 2021. Months before that, however, the operation was already fatally stricken, both because of negative repercussions resulting from the disclosure of messages exchanged between then-judge Sérgio Moro and prosecutors and the actions of the Bolsonaro government, which interfered with the operation of the Federal Prosecutor’s Office, by appointing someone close to the president and not chosen by his peers in a three-name list to head the body.

In addition, Moro left the Ministry of Justice accusing Bolsonaro of political interference in the Federal Police. The ex-minister suggested that the president intended to control investigations in order to prevent further inquiries into his sons’ deeds.

The president even conceded that he was interested in obtaining more intelligence information, but denied that he was acting to protect his family. In October 2020, Bolsonaro stated, “I have ended Lava Jato because there is no more corruption in the government.”

For Drago Kos, there are problems with this statement. “There is no government in the world absolutely free of corruption, but governments should invest their utmost effort in fighting all forms of corruption in their own ranks, irrespective of the suspects’ identities.”

The OECD’s anti-bribery head described the interest of Brazilian authorities to “terminate as soon as possible” the task force’s efforts as “surprising.”

“Operations like Lava Jato, which start because of urgent and important corruption problems, should never last forever. However, bearing in mind that in this case not all investigative activities related to the Lava Jato case have been completed, including in some important cases, the urge to terminate the operation as soon as possible is truly surprising,” Kos said.

For him, the communication between Moro and prosecutors is “unethical” but does not end the legacy of Lava Jato.

The expert classified the content of the messages exchanged between Judge Moro and investigators, which came to light in the Vaza Jato scandal, as indications of “a cooperation between prosecutors and judges (that) is not common in criminal cases and can certainly be considered unethical.”

However, Kos said he still doubted if the conduct of officials in the case had been illegal, and stressed that one should not forget that the leaked messages were obtained illegally and were an attack on professionals uncovering a major corruption case.

In his opinion, procedural flaws can’t be used to completely invalidate almost seven years of investigative work. Moreover, reviews should be conducted case by case, as advocated by Justice Edson Fachin when overturning Moro’s rulings against ex-president Luiz Inácio Lula da Silva.

Other Justices, led by Gilmar Mendes, see in the flaws presented enough material to reject all the work done in Curitiba. The dispute between viewpoints in the Supreme Court currently leans towards Gilmar’s favor, who called the operation “the greatest judicial scandal in history.” The trial was interrupted by a request for a review by Justice Kássio Nunes Marques. Kos is far from agreeing with Justice Gilmar’s assessment.

“Operation Lava Jato placed Brazil on the global anti-corruption map, showing that the country is truly willing to address a corruption case of great magnitude. Of course, mistakes are always possible. But this will have to be proven in each individual case, separately, and should in no way affect the overall legacy of the operation,” Kos says.

Source: BBC Brasil