Operation Car Wash (Portuguese: Operação Lava Jato, Portuguese pronunciation: [opeɾɐˈsɐ̃w lavɐ ˈʒatu]) was a landmark anti-corruption probe in Brazil. Beginning in March 2014 as the investigation of a small car wash in Brasília over money laundering, the proceedings uncovered a massive corruption scheme in the Brazilian federal government, particularly in state-owned enterprises. The probe was conducted through Brazil's antitrust regulator. Evidence was collected and presented to the court system by a team of federal prosecutors led by Deltan Dallagnol, while the judge in charge of the operation was Sergio Moro. Eventually, other federal prosecutors and judges would go on to oversee related cases under their jurisdictions in various Brazilian states. The operation implicated leading businessmen, federal congressmen, senators, state governors, federal government ministers, and former presidents Collor, Temer and Lula. Companies and individuals accused of involvement have agreed to pay 25 billion reais in fines and restitution of embezzled public funds.
According to investigators, political appointees in state-owned enterprises systematically extorted bribes from private-sector suppliers. Part of these bribes was channeled to political parties (particularly the MDB, PT, PSDB and PP), in order to illegally fund political campaigns (via caixa dois), as well as for personal gain. The largest amounts of bribes were detected in oil giant Petrobras; company directors negotiated with contractors to receive illegal kickbacks ranging from 1% to 5% of disbursements. Due to its pervasiveness in Petrobras, the scandal is also known as Petrolão (Portuguese for "big oil"). Investigators have also stated that contractors formed a cartel, involving the country's largest engineering conglomerates such as Odebrecht, Grupo OAS, Andrade Gutierrez, and Carioca Engenharia, to share government contracts among themselves and collude with corrupt politicians. Allegedly, the cartel also operated in contracts signed directly with government agencies, in projects such as the construction of football stadiums for the 2014 World Cup, the Angra 3 nuclear power plant, the Belo Monte dam, and the North-South and Fiol railways. Prosecutors also tracked overseas operations, and cooperated with authorities from 61 countries, among which Switzerland, the United States and Peru were the most frequent collaborating parties.
Appeals against rulings by Judge Sergio Moro were processed in the Brazilian justice system, in which the Supreme Federal Court (STF) is the court of last resort. Some of the contested issues were the stage at which convicted defendants would begin to serve their sentences, and the extensive use of plea bargains by prosecutors. In a 2016 decision penned by STF judge Teori Zavascki, the Court found that prison terms should be served once a sentence was confirmed by the local appeals court. This was welcomed by prosecutors as an incentive against illegal practices. Teori Zavascki, the judge overseeing the prosecution, died in a plane crash off the coast of Paraty, in January 2017, and the investigation lost a key backer in the Supreme Federal Court. In 2019, the STF reverted its ruling, and decided that prison sentences only take effect in Brazil after all possible appeals to higher courts are exhausted.
In January 2019, Sergio Moro announced that he would resign from his position as a federal judge, to join the incoming administration of right-wing president Jair Bolsonaro as Justice Minister. This move drew criticism, since Moro had sentenced former president Lula, Bolsonaro's leading rival in the presidential race. Moro fell out of favor with Bolsonaro and left his post in April 2020. He was replaced as the judge in the case by Luiz Bonat.
The probe's reputation was further damaged by revelations arising from a leak of personal conversations between investigators by hacker Walter Delgatti Neto. Delgatti hacked the investigative authorities' online communications over Telegram groups. Dubbed Vaza Jato, the leak purports to expose undue pre-trial coordination between Judge Moro and prosecutors in the case to produce evidence, direct hearings and discuss possible sentencing. The hacking leak was published in the press by The Intercept Brasil and journalist Glenn Greenwald, who claimed that Moro passed on "advice, investigative leads, and inside information to the prosecutors" to "prevent Lula's Workers' Party from winning" the 2018 Brazilian general election. Moro and Dallagnol deny any wrongdoing; they maintain that the contents of the leak have not been confirmed and that, furthermore, no proof of illegal conduct was present in the leaks. Nevertheless, the leaks marked a shift in public opinion, having caused the investigation to lose support. The task force was officially disbanded on 1 February 2021.
Over time, the methods of prosecutors came under strong criticism from Supreme Federal Court judges. In March 2019, judge Gilmar Mendes referred, in a Court session, to Operation Car Wash investigators as "gangsters and scum", adding that their "methods dishonor institutions". In September 2023, STF judge Dias Toffoli stated that the arrest of President Lula was a "setup", "one of the gravest errors in the country's judicial history", and declared all evidence obtained from a settlement with Odebrecht null and void, adding that Operation Car Wash acted as a "21st-century pau de arara". Chief prosecutor Augusto Aras believes that Operation Car Wash left a "cursed legacy".
Operation Car Wash (Portuguese: Operação Lava Jato, Brazilian Portuguese: [opeɾɐˈsɐ̃w lavɐ ˈʒatu]) was a landmark anti-corruption probe in Brazil. Beginning in March 2014 as the investigation of a small car wash in Brasília over money laundering, the proceedings uncovered a massive corruption scheme in the Brazilian federal government, particularly in state-owned enterprises. The probe was conducted through Brazil's antitrust regulator. Evidence was collected and presented to the court system by a team of federal prosecutors led by Deltan Dallagnol, while the judge in charge of the operation was Sergio Moro. Eventually, other federal prosecutors and judges would go on to oversee related cases under their jurisdictions in various Brazilian states. The operation implicated leading businessmen, federal congressmen, senators, state governors, federal government ministers, and former presidents Collor, Temer and Lula. Companies and individuals accused of involvement have agreed to pay 25 billion reais in fines and restitution of embezzled public funds.
According to investigators, political appointees in state-owned enterprises systematically extorted bribes from private-sector suppliers. Part of these bribes was channeled to political parties (particularly the MDB, PT, PSDB and PP), in order to illegally fund political campaigns (via caixa dois), as well as for personal gain. The largest amounts of bribes were detected in oil giant Petrobras; company directors negotiated with contractors to receive illegal kickbacks ranging from 1% to 5% of disbursements. Due to its pervasiveness in Petrobras, the scandal is also known as Petrolão (Portuguese for "big oil"). Investigators have also stated that contractors formed a cartel, involving the country's largest engineering conglomerates such as Odebrecht, Grupo OAS, Andrade Gutierrez, and Carioca Engenharia, to share government contracts among themselves and collude with corrupt politicians. Allegedly, the cartel also operated in contracts signed directly with government agencies, in projects such as the construction of football stadiums for the 2014 FIFA World Cup, the Angra III nuclear power plant, the Belo Monte Dam, and the North-South and Fiol railways. Prosecutors also tracked overseas operations, and cooperated with authorities from 61 countries, among which Switzerland, the United States and Peru were the most frequent collaborating parties.
Appeals against rulings by Judge Sergio Moro were processed in the Brazilian justice system, in which the Supreme Federal Court (STF) is the court of last resort. Some of the contested issues were the stage at which convicted defendants would begin to serve their sentences, and the extensive use of plea bargains by prosecutors. In a 2016 decision penned by STF judge Teori Zavascki, the Court found that prison terms should be served once a sentence was confirmed by the local appeals court. This was welcomed by prosecutors as an incentive against illegal practices. Teori Zavascki, the judge overseeing the prosecution, died in a plane crash off the coast of Paraty, in January 2017, and the investigation lost a key backer in the Supreme Federal Court. In 2019, the STF reverted its ruling, and decided that prison sentences only take effect in Brazil after all possible appeals to higher courts are exhausted.
In January 2019, Sergio Moro announced that he would resign from his position as a federal judge, to join the incoming administration of right-wing president Jair Bolsonaro as Justice Minister. This move drew criticism, since Moro had sentenced former president Lula, Bolsonaro's leading rival in the presidential race. Moro fell out of favor with Bolsonaro and left his post in April 2020. He was replaced as the judge in the case by Luiz Bonat.
The probe's reputation was further damaged by revelations arising from a leak of personal conversations between investigators by hacker Walter Delgatti Neto. Delgatti hacked the investigative authorities' online communications over Telegram groups. Dubbed Vaza Jato, the leak purports to expose undue pre-trial coordination between Judge Moro and prosecutors in the case to produce evidence, direct hearings and discuss possible sentencing. The hacking leak was published in the press by The Intercept Brasil and journalist Glenn Greenwald, who claimed that Moro passed on "advice, investigative leads, and inside information to the prosecutors" to "prevent Lula's Workers' Party from winning" the 2018 Brazilian general election. Moro and Dallagnol deny any wrongdoing; they maintain that the contents of the leak have not been confirmed and that, furthermore, no proof of illegal conduct was present in the leaks. Nevertheless, the leaks marked a shift in public opinion, having caused the investigation to lose support. The task force was officially disbanded on 1 February 2021.
Over time, the methods of prosecutors came under strong criticism from Supreme Federal Court judges. In March 2019, judge Gilmar Mendes referred, in a Court session, to Operation Car Wash investigators as "gangsters and scum", adding that their "methods dishonor institutions". In September 2023, STF judge Dias Toffoli stated that the arrest of President Lula was a "setup", "one of the gravest errors in the country's judicial history", and declared all evidence obtained from a settlement with Odebrecht null and void, adding that Operation Car Wash acted as a "21st-century pau de arara". Chief prosecutor Augusto Aras believes that Operation Car Wash left a "cursed legacy".
Investigation
The initial accusation came from businessman Hermes Magnus in 2008, who reported an attempt to launder money through his company, Dunel Indústria e Comércio, a manufacturer of electronic components. Ensuing investigations culminated in the identification of four large criminal rings, headed by: Carlos Habib Chater, Alberto Youssef, Nelma Kodama, and Raul Henrique Srour.
Investigation at first focused on the four black-market currency dealers and improper payments to Alberto Youssef by companies who had won contracts at Petrobras' Abreu and Lima refinery. After they discovered that doleiro (black-market dealer) Alberto Youssef had acquired a Range Rover Evoque for Paulo Roberto Costa, a former director of Petrobras, the investigation expanded nationwide. Once he was charged, Costa agreed to provide evidence to the investigation. A newly adopted law introduced 'rewarded collaboration' (Colaboração premiada) a type of plea bargaining involving sentence reductions for defendants who cooperate in investigations. Costa's deposition showed which political parties controlled Petrobras.
It also led to a wave of arrests. Fernando Soares, also known as "Fernando Baiano", a businessman and lobbyist, was allegedly the connection between major Brazilian construction firms and the government formed by the Workers’ Party (PT) and Brazilian Democratic Movement (PMDB). After Costa and Soares, many others agreed to collaborate with the prosecution; between 2014 and February 2016, the Federal Public Prosecutor's Office (Portuguese: Ministério Público da União) filed 37 criminal charges against 179 people, mostly politicians and businessmen. In December 2017, nearly three hundred people had been accused of crimes in the scandal. After Marcelo Odebrecht, grandson of the company founder, was sentenced to 19 years in prison, he and other Odebrecht executives were, due to the sentence reduction incentives of the 'rewarded collaboration' law, willing to act as witnesses and to give information about the broader corruption scheme. Odebrecht had a secret branch used to make illegal payments in several Latin American countries, from Hugo Chávez in Venezuela to Ricardo Martinelli in Panama. Odebrecht was given fines totalling $2.6 billion by authorities of Brazil, Switzerland, and the United States after the company admitted bribing officials in twelve countries with some $788 million.
Costa and Youssef entered into a plea bargain with prosecutors and the scope of the investigation widened to nine major Brazilian construction firms: Camargo Correa, Construtora OAS, UTC Engenharia, Odebrecht, Mendes Júnior, Engevix, Queiroz Galvão, IESA Óleo e Gás, and Galvão Engenharia,
as well as politicians involved with Petrobras. Brazilian President Dilma Rousseff, who chaired the board of Petrobras from 2003 to 2010, denied knowledge of any wrongdoing. The Brazilian Supreme Court authorized the investigation of 48 current and former legislators, including former President Luiz Inácio Lula da Silva, in March 2016. Eduardo Cunha, president of the Chamber of Deputies from 2015 to 2016, was convicted of taking approximately $40 million in bribes and hiding funds in secret bank accounts and sentenced to 15 years in prison.
On 19 January 2017, a small plane carrying Supreme Court Justice Teori Zavascki crashed into the sea near the tourist city of Paraty in the state of Rio de Janeiro, killing the magistrate and four other people. Zavascki had been handling Operation Car Wash corruption trials.
A Miami Herald report noted in September 2017 that when Operation Car Wash began in 2014, fewer than 10,000 electronic monitoring bracelets were in use to enforce home detention sentences; by September 2017 the number had ballooned to more than 24,000.
Effect on Petrobras
Petrobras delayed reporting its annual financial results for 2014, and in April 2015 released "audited financial statements" showing $2.1 billion in bribes and a total of almost $17 billion in write-downs due to graft and overvalued assets, which the company characterized as a "conservative" estimate. Had the report been delayed by another week, Petrobras bondholders would have had the right to demand early repayment. Petrobras also suspended dividend payments for 2015. Due in part to the impact of the scandal, as well as to its high debt burden and the low price of oil, Petrobras was also forced to cut capital expenditures and announced it would sell $13.7 billion in assets over the following two years.
The conviction of Aldemir Bendine, Petrobras' former CEO, on corruption charges was annulled by the Supreme Federal Court in 2019 due to objections to the trial procedure.
The former chief of staff for President Lula, José Dirceu, was arrested for organising a large part of the bribery.
The President of the Chamber of Deputies, Eduardo Cunha (PMDB-RJ), was investigated for receiving more than US$40 million in kickbacks and bribes.
Former president (1990–1992) and senator (2007–2023) Fernando Collor de Mello was charged with corruption.
On 8 March 2016, Marcelo Odebrecht, CEO of Odebrecht and grandson of the company's founder, was sentenced to 19 years in prison after being convicted of paying more than $30 million in bribes to Petrobras executives.
In April 2018, former president Luiz Inácio Lula da Silva – after having been sentenced for passive corruption and money laundering in relation to a luxury apartment in Guarujá received from Grupo OAS – entered prison in Curitiba to serve his 12-year sentence. However, illegal communications between Car Wash prosecutors and its lead judge came to light in mid-2019, in which the parties suggested that their prosecutorial motive was to prevent Lula's re-election. There were calls to release the former president (see Leaked conversations below). As a result, he was released on 8 November 2019 after a Supreme Court ruling.
On 3 July 2018, failed Brazilian billionaire Eike Batista was convicted of bribing former Rio de Janeiro governor Sérgio Cabral Filho for state government contracts, having paid Cabral US$16.6 million, and was sentenced to 30 years imprisonment.
Political parties
Lula and the Worker's Party
Emílio Odebrecht said in a written report to the Attorney General of Brazil's Office (PGR) that he discussed donations to Worker's Party's (PT) campaigns with former PT president Lula. Financial support, according to the contractor, came even before Lula became president. Marcelo Odebrecht said that the "Amigo" account for former President Luiz Inácio Lula da Silva, was created in 2010 with a balance of R$40 million. In his statement, he said he gave the money to Antonio Palocci, former Finance Minister and Rousseff's chief of staff, who had been the PT's contact with Odebrecht since the prior administration, when Emílio Alves Odebrecht and Pedro Novis had handled payments. He said that in the middle of 2010, at the end of the Lula administration, he knew that Dilma Rousseff was going to take over and that the balance of the account would be "managed by her at her request". Thus, he set apart a sum that would be destined exclusively for the former president. He said that Lula never asked directly for donations and that everything was done through Palocci, but it became clear that the donations were ultimately for the former president.
On 4 March 2016, Lula was questioned for three hours as part of the fraud inquiry into the dealings of Petrobras, and his house raided by federal police agents. Lula, who left office in 2011, denied allegations of corruption. Police said they had evidence that Lula had received kickbacks. Lula's institute called actions against him "arbitrary, illegal and unjustifiable", since he had been cooperating with the investigations. Lula, convicted of accepting bribes worth 3.7 million reals (1.2 million dollars), was sentenced on 12 July to nine and a half years in prison. He appealed the sentence to the Federal Regional Court-4, which increased his sentence to twelve years and a month. On 5 April 2018, Moro ordered his imprisonment, and he surrendered two days later.
Temer and Brazilian Democratic Movement
The plea bargain testimony by Odebrecht Engenharia Industrial's former president Márcio Faria da Silva said that on 15 July 2010, President Michel Temer led a meeting about an agreement to pay approximately US$40 million in bribes to the Brazilian Democratic Movement in exchange for contracts with the international Board of Directors of Petrobras. According to Faria, Temer, who at the time was a candidate for vice-president on Dilma Rousseff's ticket, delegated to Eduardo Cunha and Henrique Eduardo Alves, then deputies and present at the meeting, the task of making the payments which represented 5% of the contract's value. The meeting took place in Temer's political office in São Paulo. He did not discuss any details about the financial agreement, limiting himself to trivial conversations about politics.
Aécio and Brazilian Social Democracy Party
Marcelo Odebrecht said in his plea bargain testimony that the Social Democratic (PSDB) party, led by Senator Aécio Neves (PSDB-MG), received at least 50 million reals in exchange for favoring the business contractor in energy deals. He said that improper payments were made due to business deals with two state companies: Furnas and Cemig. The first federal investigation was under the leadership of Dimas Toledo, an ally of Neves, in the early years of the Lula administration (2003–2005). The second state-run investigation was influenced by Aécio during the period when the PSDB was in power in Minas Gerais (2003–2014).
Political families
Odebrecht also discussed family involvement. In eleven cases under the jurisdiction of the Supreme Federal Court (STF), investigations implicate father and son, husband and wife, or siblings. The president of the Chamber, Rodrigo Maia (DEM-RJ), has the most family members implicated. Maia was charged in the same investigation as his father, councilor and former mayor Cesar Maia. According to the Odebrecht testimony, Rodrigo obtained cash resources both for his father's campaign and also for himself. The Brazilian Democratic Movement leader of the Senate, Renan Calheiros (AL), was charged along with his son, the governor of Alagoas Renan Filho (PMDB), in two inquiries. They allegedly participated in an agreement to divert resources from work on the Canal do Sertão and also received resources in the form of a slush fund they refer to as a caixa 2. In the case of the father, two other inquiries are ongoing.
The governor of Rio Grande do Norte, Robinson Faria (PSD), was charged along with his son, federal deputy Fábio Faria (PSD-RN). The two allegedly received contributions through a slush fund in return for defending Odebrecht Ambiental's interests in the area of basic sanitation in the state. The president of the PMDB, Senator Romero Jucá (RR), and his son Rodrigo Jucá both figured in one of the inquiries. The father helped Odebrecht negotiate a provisional measure and obtained an electoral donation of 150,000 reals for his son. Romero Jucá was also charged in four other inquiries. A father asking for a contribution for a son was also why former minister José Dirceu was investigated along with Zeca Dirceu, federal deputy. The father was able to raise the money for Zeca in exchange for the acting for Odebrecht's interests in the government.