Latin America’s nexus of corruption has been widely known for a long time, even if specific players and evidence has been harder to get. But, no one would have been able to forsee the explosive revelations that have emanated from Brazil in the recent past. The country, once seen as on a path to joining the developed world and playing a larger role in world affairs, is now battling political instability, enormous deficits, a teetering economy, and unceasing revelations of corruptions by those, past and present, in charge of administering the country’s affairs. The most of these revelations leave in doubt the ability of the acting President, Michel Temer, to continue in his role.
Corruption in Brazil, and across South America, is often seen in a “pay to play” system. Businesses are expected to pay bribes to politicians to gain access and influence. That corruption is both a consequence and a cause of the lingering inequality in the region. JBS, a large meat-packing company in Brazil, is the latest company confirmed to have paid these bribes.
JBS is no small concern. Based in Sao Paolo, the company does some $50 billion in annual sales. Through acquisitions it has also become a major player in the United States’ beef and poultry markets and is the world’s largest producer of beef products. For many years, JBS was a family company, but it went public in 2007, although the Batista family that started it continued to maintain control through their family’s investment firm.
JBS has been caught up in an on-going corruption probe of the Brazilian meat-packing industry in which prosecutors allege meat inspectors were bribed to ignore health and safety violations, some of them quite serious. In March, the headquarters of JBS was raided by investigators. As part of a plea agreement, JBS turned over substantial evidence to prosecutors including numerous taped conversations, which only made the story even more interesting. Those tapes potentially incriminate the current President, as well as a past Presidential candidate and past Finance Minister.
President Temer is alleged to have spoken with Joesley Batista, one of the leaders of JBS, about paying bribes to Eduardo Cunha, a former speaker of the House who has been disgraced in a separate corruption investigation. The money apparently paid to Cunha was hush money to prevent his revealing of other incriminating information. Brazilian newspaper O Globo also reported that the tapes indicate aides close to Temer accepted bribes from JBS in the past for assistance in tapping export markets. Temer denies the claims.
Brazil’s current President is only in office because his predecessor, Dilma Rousseff, was impeached and removed from office on August 31, 2016. Although Rousseff has been rumored to be implicated in corruption surrounding state oil company Petrobras, she was removed from office for the far more mundane reason of violating “budget laws.”
News of the recordings of Temer has sent the Brazilian stock market reeling, with an ETF tracking the index of the Brazilian stock market down by about 16%, while the Brazilian real has fallen by 7%.
While many in the country are undoubtedly yearning for more stability, revelations of such widespread corruption throughout the vast majority of the political elite is hoped to bring cultural and legal changes to end the worst of these abuses. Both Brazil and the region desperately need it.