Panel 4, Mr. Marcos BEMQUERER COSTA (TCU), Brazil; Enhancing Integrity for Business Development in the Middle East and North Africa, 18 April 2016, Paris, France, session 4

1. How the performance of the Federal Court of
Accounts of Brazil (TCU) and the Lava Jato
Operation Intersect in the Largest corruption
scandal ever in Brazil.
.
Ministro-Substituto Marcos Bemquerer

2.  Corruption is an endemic and ancient problem in
Brazil, which affects all societies, all forms of
government, all social spheres. What we see in
Brazil today, however, is that it is no longer a
matter of isolated actions, but organized crime
activities that permeate the structure of
Government aiming at taking resources that
should be used for public purposes and using it for
the benefit of a few private citizens. The
consequences are extremely harmful for society as
a whole, in social, economic, political and even
legal terms.

3.  In Brazil, there are several bodies involved in
overseeing public resources and, in the past few
years, the fight against corruption is part of the
activities of different institutions. In addition to the
Federal Court of Accounts, which is in charge of
external control, I would like to highlight the
performance of the Judiciary Branch, of the ,
parliamentary committees of the national
Congress, of the Public Ministry, of the Police, and
of Internal Control.
 The lava jato operation is the largest investigation
on corruption and money laundering in the history
of Brazil and is an example of cooperation
between several bodies: Federal Police, Federal
Public Ministry, Federal Revenue, among others.

4. Origin of Lava Jato
 The TCU had already detected irregularities in gas
stations in the capital of Brazil associated to the
performance of the Petrobras group (BR distributor)
and had sent the results of its investigation to the
Federal Public Ministry - MPF.
 The Lava Jato operation began in March 2014, as a
result of the documents sent by TCU to the MPF.
Initially, its purpose was to investigate the use of a
network of gas stations in the capital of Brazil and car
washes to carry out transactions with illicit resources
belonging to four criminal organizations led by illegal
currency dealers who operate in the parallel currency
exchange market.

5. Origin of Lava Jato
 Later, the Federal Public Ministry obtained evidence
of a huge criminal corruption scheme involving
Petrobras.
 In this scheme, that has been ongoing for at least 10
years, large contractors organized in a cartel payed
bribes to senior executives of the state owned
company and other public agents. The amount of the
bribes varied between 1% and 5% of the total of the
billionaire overpriced contracts. This bribe was
distributed through financial operators in the scheme,
including illegal currency dealers investigated in the
first stage of the operation.

7. Numbers of the Lava Jato Operation
 93 convictions, totaling 990 years and 7 months of
penalties;
 1.114 investigation procedures initiated;
 97 requests for International cooperation, 85 of which are
active requests to 28 countries and 12 passive requests
to 11 countries;
 49 leniency agreements with individuals;
 484 search and seizure warrants;
 117 bench warrants issued;
 133 arrest warrants issued.

8. Numbers of the Lava Jato Operation
 6 administrative misconduct charges against 33
individuals and 16 companies requesting payment of US$
3,3 billion;
 Total amount of refund requested (including fines): US$
6,2 billion;
 Crimes that involve bribes totaling US$ 1,8 billion. Of this
total, US$ 860 million have already been recovered due
to leniency agreements (US$ 180 million from repatriation
and US$ 680 million from blocked assets);

9. TCU PERFORMANCE IN THE SCOPE OF THE
LAVA JATO
 TCU had been identifying, for several years,
embezzlement of a large amount of resources in
public works conducted by Petrobras, including those
under investigation in the Lava Jato Operation. On
12/8/2010, for example, that is, 3 years before the
Lava Jato began, TCU notified the National Congress
about the indication of serious irregularities detected in
contracts singed for the Construction of the Abreu e
Lima Refinery in Recife, in the state of Pernambuco.
The estimation in that isolated case alone was that it
could cause loss to the public treasury in the amount
of US$ 368 million.

10. TCU PERFORMANCE IN THE SCOPE OF THE
LAVA JATO
TCU has a wide range of instruments that can be used
in the Lava Jato operation:
sentence the accountable agent to pay the debt;
 a fine equivalent to 100% of the amount of the loss;
 declare an individual ineligible for the exercise of a
special appointment position in the government for
the period of 5 to 8 years;
 declare a person or company unsuitable to
participate in public bids with the Federal Public
Administration; and
 make assets unavailable to holder.

11. TCU PERFORMANCE IN THE SCOPE OF THE
LAVA JATO
In 2015, TCU produced a study to estimate the
potential global loss in Petrobras in the face of a
possible cartel formation of the contracts made in the
Supply Department of the company, from 1997 to
2015. The study concluded that: the total loss
including other departments of Petrobras can
reach the amount of US$ 8 billion.
Also in 2015, a norm was created to make it mandatory
for TCU to examine leniency agreements before they
are agreed upon within the scope of the Lava Jato
Operation.

13. TCU PERFORMANCE IN THE SCOPE OF THE
LAVA JATO
On 02/25/2016 TCU created a technical unit specialized
in analyzing cases and conducting audits under the
scope of the Lava Jato Operation.
TCU’s objective is to use the instruments it has to punish
in an exemplar manner those accountable and obtain
the largest refund possible to the public coffers (up to
US$ 16 billion, including debts + fines)

14.  “Since money is power and the political domain is
competitive, dishonest politicians, who can count on
criminal resources, have a competitive advantage in
relation to honest politicians. If there is no
institutional reaction there is a real risk of a
progressive predominance of criminals in public
institutions, damaging the democratic system itself.”
Federal Judge Sérgio Moro, in charge of the
Lava Jato Operation.

15. THANK YOU!
MARCOS BEMQUERER COSTA
Substitute-Minister
Tribunal de Contas da União
Brazil SAI
e-mail: bemquererM@tcu.gov.br
phone: (61) 3316-7474
Site: www.tcu.gov.br