An Unending Cycle of Corruption and Crime
Brazil has long been known for its corrupt politicians, unfair government, and dwindling economy. Yet, nothing hit the news quite like Operação Lava Jato (Operation Car Wash), the biggest money laundering scandal in the country’s history involving politicians, business executives, and multi-billion-dollar companies. Money laundering has been an ongoing problem amidst the Brazilian government and the country’s most esteemed companies. For such a large-scale problem, the root of it must be just as complex: political corruption. Something seemingly ingrained in Brazilian culture, so technically speaking, could there ever be an end to it?
Operação Lava Jato began as a complex and extensive investigation in Curitiba, a southern city in Brazil that extended to other major cities in Brazil, but what now has turned into the biggest anti-corruption effort in the country. The basis of the money laundering operations uncovered in Operation Car Wash initially “focused on doleiros (black market money dealers), who used small businesses, such as petrol stations and car washes, to launder the profits of crime” (Watts). The Car Wash’s initial goal was to investigate small money laundering operations, more specifically those who illegally sold foreign currency and rather than registering their dirty profits, they would set up small businesses in order to “clean” their money so that the money would appear to have come from legal means. However, there was a bigger scheme behind the money laundering of the doleiros; investigators discovered that the doleiros were working for a business executive at the multi-billion dollar oil corporation Petrobras in Brazil, thus leading investigators to uncover interconnected plots of corruption within the government and the oil company Petrobras. What began as a plot to uncover money launderers and the root of their crimes turned into investigating political corruption amidst Brazil’s most powerful leaders and most affluential business models. Most recently, the son of Brazil’s current president, Flavio Bolsonaro, who holds a seat in the Brazilian Senate, was charged with graft and money laundering through a national favorite chocolate store named Kopenhagen. Well after Operation Car Wash was put to an end, new cases of money laundering and other illegal activities involving politicians still arise.
The repercussions of the findings of Operation Car Wash were extensive, severely affecting the country’s economy, “The alleged involvement of several politicians has complicated government response to the country’s economic crisis. GDP shrank by almost four per cent in 2015,” not to mention the growing inflation, “inflation has reached 10.7 per cent with the bank rate a dizzying 14.25 per cent” (Nicholson) Efforts to avoid money laundering are seemingly inevitable if the country is unable to control the financial system which keeps track of all monetary transactions between the government and other institutions (Oliveira). If politicians continue to hold the power to evade the system, or if doing so fails, bribe officials to evade punishment, then money laundering cannot be resolved through legislation or other government actions. Furthermore, in the Quarterly Journal of Economics Paolo Mauro provides evidence that there is a correlation between a country’s bureaucratic efficacy and economy, which he uses to prove that “corruption lowers private investment”. According to Mauro’s research, Brazil’s bureaucratic efficacy index ranges between 4.5 and 5.5 which is considerably low, which he then utilizes to compare it with the country’s GDP and GDP per capita and combined with data from other countries demonstrates a correlation between bureaucratic efficacy index and the country’s economic efficacy. Various sources prove that political corruption has a direct connection to economic decline, thus explaining Brazil’s inability to grow economically.
Suggesting that new legislation should be passed in order to combat money laundering in a severely politically corrupt country would be useless. Brazil has a plethora of anti-money laundering laws already and yet, despite this money laundering scandals continue to be uncovered. Following a large money laundering scandal in 1991, Brazil’s first Money Laundering Act was passed in 1998 in attempt to curb money laundering at the time (Millard 3). However, just over a decade later Operation Car Wash was initiated, revealing money laundering and political corruption. This demonstrates that greedy politician and business executives are willing to disregard laws despite the consequences that might follow in order to satiate their greed. Therefore, new legislation would not be an effective solution to combat money laundering. Although efforts have been made to combat money laundering in the form of legislation and anti-money laundering regimes, money laundering will never fully be abolished until corruption is resolved. At the end of the day, corruption is the true culprit: greedy and dishonest politicians, bribed officials and business executives. It is an unending cycle of crime and corruption.
The solution to money laundering and all of its causes and repercussions is not a simple one: ending political corruption. The task is seemingly impossible, but by comparing how virtually corruption-free countries operate and thrive, it might give us insight on how to possibly take on this challenge. Countries such as the Netherlands, Switzerland, and Denmark were highly ranked as having some of the least political corruption based on the corruption perception index (CPI) in 2020.
Nicholson, B. (n.d.). Brazil’s Fight Against Corruption. International Bar Association. Retrieved November 29, 2021, from https://www.ibanet.org/article/A3D435C5-FB84-48F2-9BE5-E03D7B312F1A.
Watts, Jonathan. “Operation Car Wash: The Biggest Corruption Scandal Ever?” The Guardian, Guardian News and Media, 1 June 2017, https://www.theguardian.com/world/2017/jun/01/brazil-operation-car-wash-is-this-the-biggest-corruption-scandal-in-history.
Mauro, Paolo. “Corruption and Growth.” The Quarterly Journal of Economics, vol. 110, no. 3, Oxford University Press, 1995, pp. 681–712, https://doi.org/10.2307/2946696.
de Oliveira, Jose Carlos, et al. “The ‘Enforced Self — Regulation’ Model And The Theory Of Capture: Obstacles To The Effectiveness In Money Laundering Combat In Brazil/O Modelo De ‘Autorregulacao Regulada’ E A Teoria Da Captura: Obstaculos A Efetividade No Combate A Lavagem De Dinheiro No Brasil.” Quaestio Iuris, vol. 10, no. 1, Feb. 2017, pp. 365+. Gale OneFile: Informe Académico, link.gale.com/apps/doc/A567632714/IFME?u=usocal_main&sid=bookmark-IFME&xid=35a06f6c. Accessed 28 Nov. 2021.
Millard, George H. (1999), “Brazil: Money Laundering”, Journal of Money Laundering Control, Vol. 2 №4, pp. 365–371. https://doi-org.libproxy1.usc.edu/10.1108/eb027203
