Tag Archives: Lava Jato

Anti-Defamation Laws: Politicians Abuse Them, But Can Anticorruption Activists Use Them?

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Defamation is a scary word for the anticorruption community. After all, anti-defamation laws are frequently abused to harass, deter, and discredit people who accuse politicians of misconduct. But defamation suits can also be an important tool for anticorruption activists to defend against false and misleading attacks designed to undermine their work. As smear campaigns deter and diminish anticorruption advocacy, we must be cautious in our attempts to weaken or repeal anti-defamation laws, for they may prove to be a necessary line of defense.

To understand why anti-defamation laws can be so important to activists, take the case of Peruvian journalist Gustavo Gorriti. Gorriti has spent much of his life trying to investigate and expose corruption. When the Lava Jato scandal rocked Latin America, his publication, IDL-Reporteros, helped uncover millions in bribe payments to public officials. Gorriti played an important role in what shaped up to be one of the most consequential anticorruption investigations in the continent’s history.

Unsurprisingly, Gorriti came under fire for his investigative work. Among other lines of attack, stories started to pop up in some media outlets falsely accusing Gorriti of having ties to directors of the bribe-paying construction company that he had investigated; these stories were clearly part of a campaign to undermine his credibility by spreading false or misleading information. This is no isolated case. Corrupt politicians and their supporters routinely make use of disinformation campaigns to discredit accusers. The problem is only getting worse, and the consequences are serious. Such campaigns often spark violence and harassment against anticorruption activists, and they can even lead to the opening of criminal investigations purporting to act on the (fabricated) allegations. Other times, disinformation undermines public support for important reforms. These consequences make life harder for the people who, like Gorriti, want to expose corruption.

What did Gorriti do about this problem? Trying to persuade the public through counterspeech wasn’t very helpful. But Gorriti had another idea: sue for defamation. If persuasion couldn’t overcome the lies thrown at him, then perhaps he could use the legal system to hit his attackers where it hurts—their pocketbooks. Claiming to have borrowed the idea from a Finnish journalist who tried the same, he did his research on who was spreading lies and brought them to court. His strategy was successful, and Gorriti scored some important victories, including getting his opponents to retract their false statements and apologize.

Although anticorruption activists and journalists rarely file suits against their attackers, more might (and for that matter, should) start to follow Gorriti’s example. Recent defamation suits against media companies and politicians show that they have a real impact. They correct the record and deter people from initiating smear campaigns in the first place. Continue reading →

The Fake News and Corruption Behind the Criminal Investigation of Transparency International

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Transparency International and its Brazilian chapter are now the subject of a criminal investigation in Brazil. As GAB readers know (here), the investigation is part of Supreme Court Justice Dias Toffoli’s crusade to reverse the convictions handed down in Lava Jato, the landmark Brazilian corruption case. The aim is to ensure defendants escape all punishment in Brazil and are protected from prosecution in the dozen other Latin American and African countries where they paid bribes.

Today’s Guest Post by a Brazilian insider reveals just how groundless the investigation of TI is and Justice Toffoli’s direct conflict of interest in letting one of the Lava Jato defendants off the hook. The author explains that it starts, as the respected Brazilian journal Crusoé explains in the headline to its February 16 issue, with “A HISTORY OF FAKE NEWS AGAINST TRANSPARENCY INTERNATIONAL: How the narrative was planted, leaked, refuted and reheated in the PGR [Federal Attorney General Office] to retaliate the anti-corruption NGO.”

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Brazilian Supreme Court Justice Orders Investigation of Transparency International

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Six days after it reported in its annual survey of corruption perceptions that the fight against corruption in Brazil was losing steam, Transparency International was placed under investigation by Supreme Court Justice Dias Toffoli (here). The ostensible reason is that the internationally renowned corruption fighting organization, headquartered in Berlin with a Brazilian chapter, misused public funds.  According to the justice, the group is a “foreign” organization and thus funds received in Brazil for its anticorruption work should have been allocated to the national treasury.

TI immediately issued a statement denying all wrongdoing. In the statement it pointed not only to the close connection between release of the 2023 CPI and Justice Toffoli’s decision to open an investigation, but to the criticisms the international organization and its Brazilian chapter have levelled against Justice Toffoli’s continuing efforts to gut Lava Jato, the case where a cartel led by the Brazilian engineering and construction firm Odebrecht bribed some 415 politicians and 26 political parties in Brazil as well as dozens officials in ten Latin American and two African countries (here).

Last September the justice tore up 2017 cooperation agreement between prosecutors and Odebrecht, making it difficult if not impossible for prosecutors in other nations to pursue charges against the company and those it bribed in their countries (here). Last week, as the Financial Times reported in breaking the investigation story, Toffoli issued another ruling letting Odebrecht off the hook; this one suspends a multimillion-dollar fine the company had been ordered to pay.

Brazilian citizens, opposition parties, and Brazil’s friends in the international community have all begun to speak against this effort to undo one the largest — and for its faults (as rehearsed on this blog (latest post here)) — one of the most important steps forward in recent years in the fight against corruption. In Brazil, its neighbors, and indeed globally.  

Let’s hope Brazilian authorities hear them.

Brazil’s Car Wash Operation May Be Over, But Its Legacy Will Endure 

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Brazil’s Lava Jato (“Car Wash”) Operation, launched in 2014, exposed one of the largest corruption schemes ever, resulting in the conviction of over 361 people for corruption, money-laundering, procurement fraud, and other crimes. Those convicted included prominent members of the Brazilian business and political elite, including the current President, Luiz Inacio Lula da Silva (known as Lula). Over the last few years, however, the Car Wash Operation has unraveled, with several of its most important achievements reversed. In 2019 a Brazilian hacker publicized text messages allegedly exchanged between Sergio Moro, the presiding judge in many of the Car Wash cases (including Lula’s), and the Car Wash prosecutors, prompting allegations of bias. The specialized Car Wash prosecutorial task force was disbanded in February 2021, and the Brazilian Supreme Court annulled Lula’s conviction on procedural grounds in April 2021, paving the way for his re-election to a third presidential term in October 2022. Most recently, as I discussed in a post here, the Brazilian Supreme Court held that key evidence obtained by Car Wash prosecutors in a settlement agreement with one of the companies at the heart of the scandal was inadmissible due to procedural irregularities, potentially rendering dozens of additional convictions subject to reversal.

So, was it all for nothing? I don’t think so. True, some of the operation’s most important successes are vanishing. But Car Wash helped strengthen Brazil’s legal and institutional framework for anticorruption and has helped pave the way for the country to embrace a more transparent, honest, and efficient system. More specifically, Car Wash has left a positive legacy with respect to the Brazilian approach to (1) corruption prevention; (2) corruption investigations; and (3) the resolution of corruption cases. Continue reading →

Guest Post: The Brazilian Supreme Court’s Erroneous Nullification of the Car Wash Evidence

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Today’s guest post is from Eduardo Carvalho, a Brazilian prosecutor from the State of Rio de Janeiro.

There has been a great deal of commentary in the Brazilian and global anticorruption community – including on this blog (see here, here, and here) – on a recent decision by Supreme Court Justice Dias Toffoli concerning important evidence on which Brazilian prosecutors relied in securing numerous convictions in the so-called Lava Jato (Car Wash) Operation. The evidence in question—principally files stored on computer disks—was obtained from the Odebrecht company as part of settlement agreements with Brazilian, Swiss, and US authorities. Justice Toffoli, expanding on a previous ruling by Justice Lewandowski, found that this evidence was obtained in violation of Brazilian laws on international cooperation and evidence handling, and therefore could not be used in court. As a result, an enormous number of Car Wash convictions are likely to be nullified. From an anticorruption perspective, this is a disaster, undoing years of hard work and allowing scores, perhaps hundreds, of corrupt politicians to go free.

But according to Adonis Brozoza’s post last week on this blog, the responsibility for this lies with the prosecutors, not the Justices. Mr. Brozoza argues that the prosecutors, in their zeal to secure corruption convictions, ignored relevant laws and procedures on international cooperation and evidence handling. This sloppiness, he maintains, so compromised the reliability of this crucial evidence that the Justices were obligated, under the relevant Brazilian laws, to rule this evidence inadmissible.

Respectfully, this assertion is both legally questionable and factually incorrect. While I do not impugn the good faith of either the Justices or Mr.Brozoza, careful attention to the relevant laws, and to what the relevant authorities actually did, demonstrates that Justice Toffoli’s ruling ought to be overturned by the full Court. Continue reading →

The Perils of Taking Shortcuts: How Brazilian Prosecutors Alleged Carelessness with Evidence May Undo Years of Hard Work 

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Brazil’s so-called Lava Jato (Car Wash) Operation, launched in 2014, exposed one of the largest corruption schemes ever. The investigation resulted in over 361 convictions (for corruption, money-laundering, procurement fraud, and other crimes); among those convicted were numerous prominent members of the Brazilian business and political elite, including the current President, Luiz Inacio Lula da Silva (known as Lula). In building its cases against these defendants, Brazilian federal prosecutors made extensive use of “leniency agreements,” offering some companies lighter penalties in exchange for evidence against other parties. One of the most important of these leniency agreements was the one Brazilian prosecutors, working in conjunction with U.S. and Swiss prosecutors, reached with the Odebrecht company, a major Brazilian infrastructure conglomerate at the center of the corruption scheme.

But over the last few years, the Car Wash operation has started to unravel, with several of its most important achievements reversed. In 2019 a Brazilian hacker publicized text messages allegedly exchanged between Sergio Moro, the presiding judge in many of the Car Wash cases (including Lula’s), and the Car Wash prosecutors, prompting allegations of bias. The specialized Car Wash prosecutorial task force was disbanded in February 2021, and the Brazilian Supreme Court annulled Lula’s conviction on procedural grounds in April 2021, paving the way for his re-election to a third presidential term in October 2022. The most recent setback to the Car Wash Operation, already discussed and debated on this blog (see here, here, and here), is a decision by the Supreme Court Justice Dias Toffoli this past September. In that decision, Justice Toffoli declared that, due to procedural errors, none of the evidence acquired in the leniency agreement with Odebrecht could be used in any judicial proceeding. This ruling puts numerous Car Wash convictions at risk: Defense attorneys may now seek to annul convictions in cases in which their clients were convicted primarily on the Odebrecht evidence.

Many in the anticorruption community, in Brazil and abroad, have denounced Justice Toffoli’s ruling, and have suggested that it may have been improperly influenced by political or personal considerations. But as a technical legal matter, Justice Toffoli’s decision was probably correct. While it is understandably frustrating to see so much hard work wiped away and the prospect of convicted corrupt actors going free, the responsibility here appears to lie more with the Car Wash prosecutors than with the Supreme Court. Indeed, the recent developments in the Car Wash saga should serve as a cautionary tale for investigators and prosecutors. In their understandable zeal to catch and convict bad actors, law enforcement authorities must be careful to scrupulously and rigorously observe all legal requirements. Continue reading →

Guest Post: The Odebrecht Ruling and Prosecutorial Transparency in Brazil–A Rejoinder

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Two weeks ago, we published a guest post is from Professor Gregory Michener and Breno Cerqueira, based on an op-ed they had originally published (in Portuguese) in the Folha de São Paulo newspaper, concerning an important decision last by Justice Toffoli of the Brazilian Supreme Court. That decision nullified the evidence that Brazilian prosecutors had acquired from the Odebrecht firm as part of the agreement to settle the corruption charges against that firm; Justice Toffoli’s decision thus called into question ever subsequent corruption conviction that had relied on this evidence. That guest post prompted a response, which we published last week, from a Brazilian lawyer who took issue with many of the assertions that Professor Michener and Mr. Cerqueira had made in their piece. (The author of that post asked to remain anonymous. While GAB does not usually publish anonymous pieces, after considering the reasons for the anonymity request, I decided to grant it in that case.) Today’s guest post is from Professor Michener and Mr. Cerqueira, who offer a rebuttal to last week’s criticisms of their piece.

I realize that some readers may find this a bit excessive, especially since the issues here involve some fine technical points of Brazilian law. But in my view the issues are so important—going to the heart of one of the largest and most important anticorruption investigations in the world over the last decade (the “Car Wash” Operation)—and the legal issues are sufficiently difficult even for attentive outsiders to understand, that a thorough debate about what the most recent decision does and does not mean, that this exchange serves a useful purpose. I am grateful to all the parties involved for being willing to engage in this important conversation..

Without further adieu, here is Professor Michener and Mr. Cerqueira’s rebuttal to the criticism of their post on Justice Toffoli’s ruling:

The Odebrecht case spanned twelve countries and involved nearly a billion dollars of elaborate payments made from Odebrecht’s in-house bribery department to corrupt governments on three continents. (Perhaps the best way to understand the case is through the documents posted with the US Department of Justice press release about the settlement of the US Foreign Corrupt Practices Act charges in the case.)

The primary objective of our editorial was to discuss the deficient transparency of corruption cases in Brazil, an understudied aspect of corruption that should be of concern to citizens everywhere. Transparency of corruption cases can assign responsibility and promote accountability, deter graft among businesses and public officials, identify institutional weaknesses that need to be fixed and, perhaps most importantly, provide an important historical archive to keep the record straight – not only of crimes committed but of retributive government efforts in favor of the public interest. In the case of Brazil, we argued, a lack of transparency worked in favor of corruption and impunity, which is currently on the upswing.

We find it ironic that the critic of our article, a Brazilian lawyer (“Anonymous”), would ask for anonymity if his or her critiques were squarely fair handed and factual. (As an aside, anonymity is illegal as per the Brazilian Constitution (Article 5 IV – “the expression of thought is free, and anonymity is forbidden”). As a leading anticorruption specialist and friend commented on the Anonymous post a day after it appeared, it attempts to “muddy the waters.” Rather than “setting the record straight” it simply creates doubt where little should exist. The following explains why: Continue reading →

Guest Post: The Recent Brazilian Ruling on Use of Evidence from the Odebrecht Case—Setting the Record Straight

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Last week, this blog featured a guest post from Gregory Michener and Breno Cerqueira on the recent decision by Justsice Toffoli of the Brazilian Supreme Court, which concerned the settlement that Brazilian prosecutors had previously reached with the Odebrecht company—and the evidence against other defendants that Odebrecht had provided prosecutors as part of that settlement. A Brazilian lawyer with first-hand knowledge of the case submitted the following guest post, which takes issue with a number of the claims made in the previous post. Although it is not GAB’s usual practice to publish anonymous posts, in this case the sensitivity of the matter and the importance of raising these issues led me to exercise my editorial judgment to publish the post below without the author’s name.

The recent guest post on this blog regarding the recent judicial ruling on the settlement in the Odebrecht case is inaccurate in certain respects.

  • The first and most important inaccuracy is that, in contrast to what the post indicates, Justice Toffoli’s ruling did not annul the settlement in the Odebrecht case. Rather, the ruling held that the evidence included in certain important Odebrecht databases contained in hard drives, obtained by the Brazilian prosecutors from Swiss authorities, may not be lawfully used in criminal or civil investigations. The guest post properly states this aspect of the ruling—that it prohibited the use of this evidence —but the suggestion that the ruling annulled the settlement itself is not accurate.(A potentially important issue is whether the ruling would apply with the same force to the evidence turned over directly to the Brazilian prosecutors by Odebrecht, rather than obtained by the Brazilian prosecutors from the Swiss authorities. But the guest post fails to make that distinction.)
  • Second, the guest post seems to treat Justice Toffoli’s decision as a surprise, or at least unanticipated. But in fact, several prior decisions by other Brazilian Supreme Court Justices (particularly Justice Lewandowsky) had reached essentially the same conclusion, though with regard only to particular defendants. Justice Toffoli’s ruling extends and generalizes those prior decisions, ruling that the evidence in question cannot be used at all, thus obviating the need for individual defendants to obtain a similar ruling by the court in their individual cases.
  • Third, the post seems to imply that Justice Toffoli decided this case because he was appointed by President Lula, and previously served in senior positions in Lula’s first administration. But this is a gross simplification, especially when one remembers that Justice Toffoli handed down several decisions that went against against Lula’s interests (including rulings against prominent members of Lula’s party in the Mensalao case, and during Lula’s time in jail). Notably, Justice Toffoli apologized for some of those earlier decisions in the more recent decision currently being discussed. Therefore, rather than favoring Lula and his party consistently, a more plausible hypothesis, based on Justice Toffoli’s record, is that he seems inclined to decide cases in favor of the interests he sees as commanding the current political agenda. This may be at least as objectionable as guest post’s suggestion that he is decides cases systematically out of loyalty to Lula, but as a matter of empirical analysis of judicial trends, it is importantly different. (And Lula himself is, or should be, attentive to that.)
  • Fourth, another inaccuracy in the post, though admittedly a less important one, is the claim that prosecutors had not made public the Odebrecht agreement’s legal framework until last week. This is not true. The agreement has been publicly available for more than five years on the Ministry of Federal Prosecution’s website, which provides easy access to several of the resolutions that the federal prosecutors have concluded.
  • Finally, it is worth addressing the suggestion at the end of the post that transparency regarding the facts reported by Odebrecht under the settlement agreement might have reduced the chance of a decision such as Justice Toffoli’s. This cannot be characterized as a factual inaccuracy, as it is inherently a speculation about what might have happened under different conditions. Nevertheless, that assertion seems too rudimentary. There may be good reasons why prosecutors (and other control agencies, such as, in the case of Brazil, the Comptroller General and the Attorney General’s office) elect not to disclose all of the facts contained in the evidence turned over by the company right away. The most obvious reason for not publicly disclosing this evidence right away is that the evidence may be relevant to ongoing investigations. And it is not true that the U.S Department of Justice (DOJ) would make public comparable factual material, if doing so would jeopardize ongoing investigations. (Some also claim that the DOJ decides on the degree of disclosure of facts in statements of facts attached to Foreign Corrupt Practices Act negotiated resolutions based more on, or at least with an eye to, strategic or geopolitical considerations than transparency concerns.) Again, though, the claim that more transparency about the settlement and the associated evidence would have helped seems reasonable, and is not strictly speaking inaccurate. There is certainly room for reasonable disagreement about the prosecutors’ approach to disclosure. But the issue is far more nuanced than the post suggests.

I want to emphasize that these comments are not meant to contradict the importance of making pointed critical assessments of judicial decisions in general and Justice Toffoli’s ruling in particular. Nor do I wish to offer any further opinion on these fraught, highly controversial legal and political issues. But given the intensity of the discussion in Brazil, and the unfortunate tendency for all sides in these debates to hurry over or oversimplify key facts, I thought it was important to advocate for subtlety and raise these problems about the recent guest post on this blog.

Guest Post: The Judicial Annulment of the Odebrecht Settlement Evidence in Brazil, and Its Implications

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Today’s guest post is from Professor Gregory Michener, Brazilian School of Public and Business Administration, Getulio Vargas Foundation (FGV-EBAPE) and Breno Cerqueira, a Brazilian public official. The post is based on an op-ed originally published (in Portuguese) in the Folha de São Paulo newspaper.

Earlier this month, a single Justice on Brazil’s Supreme Court invalidated, on dubious procedural grounds, the plea bargain that prosecutors had reached seven years ago with the Odebrecht firm, which resolved serious corruption charges that the prosecutors had brought against the firm. The alleged impropriety concerned how the Brazilian prosecutors had interacted with their counterparts in the United States and Switzerland, which had also brought cases against Odebrecht, which ultimately pled guilty and paid penalties in all three jurisdictions. According to Justice Toffoli (who, incidentally, had been implicated in Odebrecht’s wrongdoing when he was Solicitor General, though he succeeded in suppressing reports about his alleged wrongdoing), the Brazilian prosecutors from the Lava Jato (“Car Wash”) Task Force had engaged in discussions of the case with their U.S. and Swiss counterparts without those foreign prosecutors having first filed a formal official request for international legal cooperation, and without including representatives from the Brazilian Ministries of Justice and Foreign Affairs in the discussions. Strikingly, Justice Toffoli ruled that none of the evidence obtained from Odebrecht in the plea deal—and which was used in hundreds of other cases—could lawfully be used. Tofolli’s decision thereby threatens to undo the vast majority of the convictions that the Car Wash prosecutors had secured before the task force was disbanded.

This decision is troubling for a number of reasons. For one thing, the decision put the private interests of defendants ahead of the public interest of deterring and prosecuting corruption. No one denies that due process is important. However, preserving indisputable evidence of corruption can be achieved without a wholesale dismissal of charges. The nullification of the Odebrecht case is a nullification of justice and of the public interest.

Perhaps even more troubling, the decision is unsettlingly aligned with President Lula’s promise of revenge against the Car Wash Operation—and the individual judges, prosecutors, and others involved in that operation. Lula himself was jailed for 18 months after he was convicted for taking a bribe (in the form of a luxury apartment)— a conviction that was ultimately overturned on technical grounds (principally that the case was brought in the wrong venue). Lula, his supporters, and many mainstream media outlets have characterized the conviction as a baseless and politically motivated prosecution. That Justice Toffoli, a Lula appointee, issued this sweeping ruling—and also issued a broad and highly political statement condemning the entire Car Wash operation—would certainly seem consistent with the notion that the ruling had more to do with political and personal motivations than the law. Worse still, the ruling not only invalidates the Odebrecht plea deal and all other convictions that relied on the evidence it produced, but the ruling also calls for the investigation of the Car Wash prosecutors and judges for (alleged) misconduct.

Now, it is worth noting that Justice Toffoli’s ruling is unlikely to have any effect on Odebrecht’s plea agreement with the U.S. authorities. U.S. evidentiary standards tend to be more permissive, at least in this context, about barring the use of illegally sourced evidence – especially in cases where the public interest has clearly been aggrieved. And Odebrecht is unlikely to try to use the Brazilian ruling to wriggle out of is plea deal with the U.S., especially since that deal provides that non-compliance can result in further prosecution.

One more observation may be pertinent here: The Brazilian prosecutors may have hurt their cause by not providing sufficient transparency in an official register of the crimes, including their investigation, prosecution, and ultimate plea bargain. In the U.S., the Department of Justice website provides open and transparent information about all Foreign Corrupt Practices Act plea agreements. In the case of Odebrecht, company representatives signed affidavits testifying to US$788 million in bribes to government officials in 12 countries, including US$349 million in Brazil. In all, ill-gotten gains netted Odebrecht US$3.336 billion of construction contracts, including US$1.9 billion in Brazil. By contrast, Brazilian authorities failed to provide the transparency required under Brazilian law. The Federal Public Prosecutor, which handles civil and criminal cases, disclosed nothing until, following last week’s decision, it posted the agreement’s legal framework. The Office of the Comptroller General, which handles administrative crimes, posts all plea bargains on its website but includes few to no specific details about crimes.

The issue of transparency raises a counterfactual question: to what extent would things have been different if the facts of the Odebrecht case had been made transparent, engraving outrageous corruption permanently on the public record from the very beginning? Just maybe Justice Toffoli’s decision might have been different. Transparency affects the legal and political environment in unmeasurable ways, and may have impacted subsequent judicial rulings.

When it Comes to Corruption, Lula is Toxic, but Bolsonaro is Lethal

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The second round of Brazil’s presidential election—which pits incumbent right-wing President Bolsonaro against left-wing former President Lula—is a no-win situation for those who principally care about anticorruption. Both candidates have been embroiled in corruption scandals, and though both have deployed corruption allegations against their opponent, neither has articulated anything resembling a meaningful anticorruption agenda. For those voters whose top priority is increasing integrity and accountability within the Brazilian government, the question at the ballot box on October 30 will be: which candidate is the lesser of two evils?

Though painful, that question has a clear answer: Bolsonaro poses by far the greatest threat to anticorruption efforts in Brazil, and to the integrity of Brazilian democratic institutions as a whole. Lula is by no means an ideal candidate, and it is entirely understandable that many Brazilian voters are deeply concerned about the numerous corruption scandals involving his party, the PT (see here, here, and here). But Bolsonaro’s administration has been ripe with scandals as well (see here, here, here, and here). Ultimately, whatever Lula’s personal ethical failings may be, he is far more likely than Bolsonaro to preserve the institutional accountability mechanisms that are necessary to address corruption over the longer term.

To get an idea of why, it is useful to take a look at Bolsonaro and Lula’s track records:

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