This is Comperj. The biggest petrochemical complex in Brazil. It’s located in Itaboraí, a small city
in the state of Rio de Janeiro. The multibillion dollar project launched in
2008 and the plan was to open in 2011. Thousands of Brazilians moved there to work. But it’s 2018, and Comperj never opened. Construction of the complex stopped in 2015,
after it became a symbol of the largest corruption scandal in Brazil’s history -- Operation
Car Wash. Hundreds of prominent Brazilians including
CEOs, members of Congress and even a former President have been implicated. Some of Brazil’s largest companies lost
billions of dollars and the country slid further into recession. Four years since it broke, the scandal is
still rippling through Brazil, leaving places like Itaboraí devastated in its wake. Itaboraí was the perfect place for one of
Brazil’s most ambitious energy projects. It had the space for 2 refineries and a petrochemical
plant - spanning 45 square kilometers. It’s also close to Brazil’s newly discovered
natural gas fields off the coast of Rio and Sao Paulo. When the project launched, it was estimated
that Comperj would generate 200,000 direct and indirect jobs in the area. Itaboraí became a boomtown. In 2010, 50,000 people moved there, 160 new
businesses opened, and Itaboraí’s population grew by over 16%. But 1,200 kilometers away, police broke a
case that would doom Comperj. In 2012, they had this gas station, in Brasilia,
under surveillance. They suspected it was being used to launder
money. Criminals would bring in illegal cash, report
it as gas station earnings, and then funnel the cash to someone else - making the money
hard to trace back. The police arrested a known money-launderer,
Alberto Youssef, and offered him a plea deal in exchange for the source of the money. But he warned his lawyers:
“If I speak, the Republic is going to fall”. Youssef testified that he was laundering money,
not for criminals, but for top executives at Petrobras, Brazil’s state-owned oil company. Petrobras was the largest oil company in Latin
America. It also owned Comperj. The police launched a massive investigation
-- Operation Car Wash -- and soon discovered Petrobras was at the center of an intricate
corruption scheme. The company used its projects to enrich criminals,
engineering companies, and Brazilian government officials. Here’s how it worked in the Comperj project: When Petrobras needed to build the complex,
it started a bidding process for the job. Typically, engineering firms would compete
for the contract, driving down the price for Petrobras. But a group of these companies got together
and formed an agreement. Instead of competing against each other, they
cooperated to fix prices and take turns accepting projects. Odebrecht, the biggest firm and ring leader
of this cartel, won some of the major contracts to build Comperj. This allowed Odebrecht to overcharge Petrobras,
and profit immensely. The original cost for Comperj was about $6
billion. By 2015 Petrobras has paid at least $14 billion. Odebrecht then money laundered some of its
profits through outside businesses, like the gas station before paying bribes to Petrobras
executives and politicians. Petrobras executives would take the bribes
as incentive to keep giving contracts exclusively to the cartel. Politicians took the bribes in exchange for
their influence over Petrobras. Like Rio de Janeiro’s state governor, Sergio
Cabral, who received more than $800,000 to give Comperj contracts to a firm in the cartel. This also became an important funding source
for their reelection campaigns. "Brazil's Petrobras, one of the world's biggest oil companies in a heap of trouble." "The company's in the midst of an escalating corruption scandal." After the scandal broke, Petrobras and the
engineering companies were in trouble. Over two dozen executives were initially
arrested. Compounded by falling oil prices, Petrobras
lost half its stock value between September 2014 and January 2015 Construction on Comperj was incomplete when
13,000 workers were laid off. Today, in Itaborai, 40,000 people are signed
up for the city's employment program. An average of 250 people line up here
in search of odd jobs. Many of these unemployed residents used to
work at Comperj. The massive layoffs at Comperj, affected the
rest of the city as well. With Brazil's economy still trying to recover
from a recession, Itaborai has found it hard to bounce back on its own. Today, some limited construction is planned
to resume at Comperj after Chinese and Brazilian firms partnered with Petrobras. The natural gas unit is expected to open there
in 2020. But this would only create about 5,000 jobs
And the problem is, the closing of Comperj and devastation of Itaboraí is not an isolated
incident… it happened all over Brazil. And all over Latin America. Operation Car Wash successfully revealed systemic
corruption in Brazil. Car Wash put ex-President Luiz Inácio “Lula”
da Silva in jail, contributed to the downfall of his successor Dilma Rousseff, and a related
investigation has led to her successor Michel Temer, being charged for corruption. The ex-CEO of Odebrecht was sentenced to 19
years in prison. Eike Batista, once Brazil’s richest man
was sentenced to 30 years. But the same companies were funding major
infrastructure projects all over Brazil. So the scandal brought many to an abrupt stop. This nuclear power plant in Angra dos Reis, for instance. Like Comperj, it was halted in 2015 because
of direct involvement in the Car Wash scheme. $60 million in bribes were paid out of the
project’s funding. By 2016 , 11 projects were reportedly stalled
in Brazil alone. It didn’t stop there. The engineering companies involved worked
all over Latin America and in 2016, 17 projects were reportedly stalled in at least 7 countries. Like this irrigation project in Peru. Where 3 former presidents have been accused
of taking bribes from Odebrecht. In Colombia, this river dredging project was
stopped after Odebrecht admitted to paying $11 million in bribes. And in Venezuela, at least 23 infrastructure projects
have been suspended. These stalled projects mean lots of layoffs. A report estimates the Car Wash scandal wiped
out 500,000 jobs in Brazil alone. Over four years after the scandal broke, Brazil’s
unemployment is still high. Operation Car Wash is a blessing and a curse. On one hand, it's uncovering systemic corruption
that has plagued Brazil for decades. But on the other, it's threatening Brazil's
democracy. For many, the prosecution of prominent leaders,
especially Lula, who was imprisoned at a time when he was leading in the elections polls,
has revealed a bias in Brazil's judicial system. The elections are now the most divisive in
the country’s history, with many losing faith in their political leaders.
