Background

The political crisis surrounding Brazil’s two year-long corruption probe entered a new phase this week as scandal coalesced around the popular former president Luiz Inacio Lula da Silva (“Lula”).

Operation Car Wash, or Lava Jato in Portuguese, is an investigation that began in November 2014. The probe seeks to uncover the truth behind corruption perpetrated by Brazil’s giant state-owned oil firm Petrobras.

Car Wash has been a bombshell in Brazilian politics because of the wide net being cast – and some of the big names getting caught up in it. Apparently no one in the Brazilian ruling class is safe. By the end of 2015, over 30 senators and congressmen were under investigation for corruption. In all, over 482 politicians, executives, and Petrobras officials have been arrested according to Sergio Moro, the federal judge heading up the investigations.

The probe began as an investigation into money laundering at a few petrol stations (hence the name). Before long it widened into a systemic corruption probe with the oil giant Petrobras at its center. Most of the illicit payments came in the form of bribes from construction companies and middlemen in return for Petrobras contracts. Since Petrobras is state-owned, members of the government were also complicit in the scheme, with government-appointed executives and officials in control of Petrobras procurement acting as gatekeepers who could determine the winning bid of any given contract.