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article imageBrazil's Petrobras corruption: a multi-layered scandal

By AFP     Mar 14, 2016 in World

The Petrobras corruption scandal rocking Brazil could see iconic leftist leader Luiz Inacio Lula da Silva end up behind bars -- and even help bring down his successor President Dilma Rousseff.

Here is a look at how the mega-scandal has plunged Brazil into instability, with more to come.

What's Petrobras and what happened?

Petrobras is a state oil company that was long the pride of Brazil's industrial sector.

In 2009, investigators in a probe code-named Operation Car Wash began to peel back the first layers of what turned out to be a colossal corruption scheme.

The investigation accelerated from 2015 onward, revealing that some of Brazil's biggest construction companies colluded with Petrobras executives to concoct massively inflated contracts.

The extra cash -- estimated by the company to total at least $2 billion -- was laundered and divvied up between Petrobras executives, their partners in crime, and politicians who gave them jobs.

Stolen money was also being funnelled to political parties as campaign funds. Lula was in power between 2003-2010, much the same period as the Petrobras scam, and his Workers' Party was allegedly one of the main recipients of these funds.

Who has been implicated?

A demonstrator disguised as former Brazilian president Luiz Inacio Lula Da Silva as a convict takes ...
A demonstrator disguised as former Brazilian president Luiz Inacio Lula Da Silva as a convict takes part in a protest against Brazilian President Dilma Rousseff on March 13, 2016 in Copacabana, Rio de Janeiro
Christophe Simon, AFP/File

A Who's Who of business and political elites have now been implicated at some level -- some of them charged, some already imprisoned, others merely called in as suspects.

At the business end, they include Marcelo Odebrecht, the now former CEO of the huge Odebrecht construction group, former international chief for Petrobras Nestor Cervero, and billionaire banker Andre Esteves.

The political line-up is just as star-studded, including Workers' Party Senator Delcidio do Amaral, former party treasurer Jose Vaccari Neto, lower house speaker Eduardo Cunha, Joao Santana, a former campaign guru for Lula and Rousseff, and most recently Lula himself.

What is Lula accused of?

Investigators allege that Lula took a luxury apartment and a country house as bribes from Petrobras-connected companies. He denies this vigorously and says a mounting legal onslaught against him aims to stop him returning to the presidency when Rousseff ends her second term in 2018.

There were two parallel cases. One was the federal probe and another, in which criminal money laundering charges have already been filed, was opened at the state level. State prosecutors also asked for Lula to be put into preventive detention.

On Monday, the Sao Paulo state judiciary asked for its case to be transferred to the federal level, putting the whole affair in the hands of the Operation Car Wash prosecutors. For now, Lula remains free.

Is Rousseff in trouble?

Yes and no.

Brazilian President Dilma Rousseff has not been charged or accused of anything but was the chairwoma...
Brazilian President Dilma Rousseff has not been charged or accused of anything but was the chairwoman of Petrobras during much of time the corruption scheme was underway
Evaristo Sa, AFP/File

She has not been charged or even specifically accused of anything. But she was chairwoman of Petrobras during much of the time that the corruption scheme was underway -- although she insists she had no knowledge of the activity.

However, Rousseff faces unconnected charges in an impeachment procedure in Congress and badly needs Lula's help to maintain her political base with the left.

The fallout from Petrobras is adding to her unpopularity and declining political credibility. If Lula goes down, he may bring down Rousseff's chances of survival too.

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