Concern About Brazil's 2016 Olympics Raised After Corruption Probe Into Energy Giant Petrobras
Ahead of the 2016 Olympics, a corruption probe in Brazil is raising other questions about the largest construction firms, according to the Wall Street Journal.
The current investigation involves a coalition, or cartel, formed by the firms in order to drive up the value of contracts with Petroleo Brasileiro (Petrobras), the state-controlled energy company.
The firms also bribed Petrobras executives and politicians in Brazil.
This new investigation into corruption comes months after the country dealt with similar issues over the stadiums for the 2014 FIFA World Cup.
In May, just a month before the soccer tournament began, the costs of the stadiums–both in new construction and refurbishing–surpassed initial estimates, Bloomberg reported.
As a result, a publicly funded stadium became the second-most expensive, behind England's Wembley Stadium.
Delays were partly to blame for the cost increase, in addition to corruption, a government official told Bloomberg then. But the worker deaths during the construction process also gained international attention and concern.
"I've been saying for years that the World Cup and Olympics together could become the biggest financial scandal in Brazilian history if they aren't properly monitored," Alberto Murray Neto, a lawyer and former member-turned-critic of the Brazilian Olympic Committee, told WSJ. "Now, considering everything that has happened, I think these companies should be scrutinized all the more closely."
Investigators said they believe the practice of bribing for big government contracts is a widespread problem in Brazil, and the top executives of a few companies were recently arrested.
No executives have been charged yet, but the actions leading to the arrests have confirmed what some have suspected for some time.
One critic also said that the relationship the country has with construction contracts mirrors the relationship between the U.S. government and military contracts.
An example of a red flag involved two companies whose government contracts were pulled amid the allegations of the Petrobras cartel, but despite the government's concerns, the contracts were reinstated.
These firms appear to wield a significant amount of power over public policy as well, the WSJ reported.
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