Descrição de chapéu What the dictatorship in Brazil was

Regime Propped up Large Contractors in an Era Full of Financial Scandals

Due to a lack of transparency and the fragility of control bodies, the military regime maintained an honest image

São Paulo

"The business is profitable in any respect: Odebrecht can cover all of its expenses and also require additional costs. The more expensive the construction, the higher the earnings for shareholders."

The statement may sound familiar, given the country's recent news. However, Folha printed it on its pages in the distant year of 1978, still in the penultimate of the governments of the military regime.

At the time, the newspaper echoed a report by the German magazine Der Spiegel about alleged irregularities in an agreement signed between Brazil and Germany that made the construction of the nuclear power plants in Angra viable. The European publication questioned links between ministers and contracted companies, delays in construction, and the project cost.

Allies of then-President Ernesto Geisel repudiated the content of the magazine's accusations. And, just as it would happen 36 years later in the context of Operation Lava Jato, the contractor's leading name was summoned to testify at a CPI: Norberto Odebrecht, the founder of the construction company, spoke to parliamentarians in April 1979.

The parliamentary committee, created because of the report, heard dozens of other witnesses but had little consequence.

If today the mantra of supporters of the former generals' regime is that, despite authoritarianism, there was no corruption at the time, the archives of the period and press reports show a series of controversial episodes involving senior officials and even political unrest provoked by revelations that went public.

In the final years of the regime, opponents took up the anti-corruption discourse. There were cases such as Luftalla, suspected of granting loans to the family of the wife of ex-governor Paulo Maluf, and Delfin, suspected of reducing the debts of a financial company. Even the use of the expression "sea of mud," conceived under the Presidency of Getúlio Vargas, in the 1950s, was recycled.

Geisel himself was privately critical of the environment that surrounded him. "Only in a country like Brazil in the current situation could I reach the Presidency," he said, before taking office, according to the book "The Dictatorship Defeated," by journalist Elio Gaspari. "How do you get to my name? Now, because so-and-so is an asshole, sicrano is an ass, a beltran is a bastard! Is that the way?"

Ten years before the CPI on Angra, there was the measure that is perhaps the most important connection of the period with the Lava Jato times. The government of President Artur da Costa e Silva decided to restrict the public contracting of foreign construction companies, which had traditionally run large projects throughout the country until then, to stimulate national capital.

The following decade and the economic advance of the so-called "Brazilian miracle" would be marked by so-called pharaonic works, such as the Transamazônica highway and the Tucuruí hydroelectric plant.

Without foreign competition, national companies found space to expand their operations. Odebrecht, once a company of more modest and regional projects, gained national prominence. Andrade Gutierrez and Camargo Corrêa consolidated their positions as large conglomerates, all today with confessions of paying bribes in public works.

The State expanded its role in the economy at the time, and this included the creation of state-owned companies and public funds.

"The process of corruption by contractors with the State predates [the regime]. But during the dictatorship, this was consolidated and maximized in a radical way," said history professor Pedro Henrique Campos, of the Rio Federal Rural University. In a doctoral thesis, he researched the relationship between the contractors and the dictatorship and wrote a book in this regard, "Strange Cathedrals."

Campos lists in the work cases of military officers appointed to major companies in the country in a rapprochement of the business community to the regime.

The professor cites as one of the factors for an "ideal scenario for corrupt practices at the time" the expansion of public funds and the business equipment of the Brazilian State.

The release of resources from the BNDES, which became the subject of debates in the presidential campaigns of this century, also emerged in a controversial episode of the military regime.

One of the most influential names of the period, General Golbery do Couto e Silva, was criticized for asking the bank for financing, at the time called BNDE, for the multinational Dow Chemical, whose Brazilian subsidiary he headed while he was outside the government. But when Golbery was a lobbyist, he was already acting as an adviser to Geisel, who was the chief of staff.

Golbery was also mentioned in one of the main financial scandals of the dictatorship, the Coroa-Brastel case.

Interestingly, the imbroglio had years later one of its sentences issued by one of the stars of Lava Jato, Rio de Janeiro judge Marcelo Bretas.

In 1998, at the beginning of his career, the magistrate sentenced businessman Assis Paim Cunha to eight years in prison. The main subject of a financial maneuver that involved one of the most well-known ministers of the military regime, Delfim Netto.

Delfim and former Finance Minister Ernane Galvêas were denounced on charges of embezzlement of public funds by hastily authorizing the release of Caixa's loan to the entrepreneur who owned the retail and financial group Coroa-Brastel in 1981, at the time equivalent to US $ 25 million.

The background of the transfer, according to the prosecution of the Public Ministry at the time, was a bailout for a broken influential broker, Laureano. The Coroa-Brastel group was liquidated in 1983, leaving 34 thousand small investors injured because of bonds issued without backing (financial support to cover any redemption).

Paim Cunha died in 2008, at the age of 80, and said until the end of his life that he was led to enter the business because there was an interest by General Golbery in the salvation of the broker Laureano.

Even after the end of the regime in 1989, the Chamber of Deputies denied authorization for the Supreme Federal Court to sue Delfim. At that time, Congress had this prerogative in complaints against parliamentarians. The former minister always said that he did not commit any irregularities and that Golbery did not participate in the loan.

If episodes like this have already had repercussions despite the limited political freedom and expression of the time, there are still other controversial reports that have only recently been made public due to the release of files about the regime.

The Transamazônica highway . (Pará, 27.09.1972. Foto: Folhapress) - Folhapress

In 2018, a professor at the Federal University of São Carlos (SP), João Roberto Martins Filho, released research in which he showed that the dictatorship acted to stifle a corruption investigation in the purchase of UK frigates in the 1970s. The conclusions were based on confidential historical papers of the British government.

The documents showed that, in 1978, the United Kingdom was willing to investigate overbilling allegations in the purchase of equipment for the construction of ships sold to Brazil and suggested the payment of compensation. "It is clear that they would not like us to send a team of investigators and would not collaborate with one if he were," said a British diplomacy report.

Despite all this history, some factors may have contributed to the fact that even more cases of corruption have not surfaced and to the spread of the image of "honest" administration, which is now touted by supporters of the old regime.

The end of authoritarianism and the 1988 Constitution ensured a series of mechanisms for the control and inspection of society over various government levels.

The greatest example of this is the Public Ministry, alongside the Federal Police, the main actor in major investigations across the country, whose autonomy was guaranteed in the Charter promulgated that year.

Previously, without verification power, the institution worked closely with governments. There was no standardized action for areas such as administrative impropriety and defense of public assets.

At the federal level, until 1988, the situation sounds unusual today: the Federal Public Ministry had among its duties today functions performed by the Attorney General of the Union, of public defense.

Currently commonplace, Federal Police operations only became part of the routine in the mid-2000s, with the expansion of staff and the corporation's rigging. In 2001, the Comptroller General of the Union was also created.

Technological developments have also ensured transparency tools, such as the publication of government data and facilities for investigating financial crimes, such as the crossing of information in databases and the expansion of international cooperation in cases of resources held abroad.

Financial crimes, by the way, one of the crimes most targeted by operations like Lava Jato, had a milestone with the law criminalizing money laundering in 1998.

The success of the investigation initiated in Paraná owes much to another law, even more recent, of 2013, which regulated award-winning collaborations, in addition to typifying the crime of a criminal organization.

"Today, with transparency and investigations, there is more awareness of the size of the problem [of corruption]. But the problem already existed, without a shadow of a doubt. There were big scandals at the time, and they were muffled. The press could not publish. The situation was quite different," says retired state attorney Ricardo Prado, from São Paulo, who chairs the Democratic Public Ministry association.