From the Car Wash to the Butcher Shop, Corruption Permeates Brazil

COMMENTARY International Economies

From the Car Wash to the Butcher Shop, Corruption Permeates Brazil

Mar 27th, 2017 2 min read
James M. Roberts

Research Fellow For Economic Freedom and Growth

James M. Roberts' primary responsibility is to edit the Rule of Law and Monetary Freedom sections of Index of Economic Freedom.

For the past three years, a massive (and still unfolding) public corruption scandal known as “Operation “Car Wash” has rocked Brazil.

The scandal includes allegations of widespread kickbacks and money laundering schemes connected to construction contracts with the state-owned Petrobras oil company.

Now, the country is confronting another major embarrassment.

According to The Wall Street Journal, a number of big Brazilian meatpacking companies allegedly participated in a scheme to falsify sanitation certifications for beef, chicken, and other meat and animal feed products.

Bloomberg reports that the food producers allegedly “bribed government officials to approve the sale of spoiled meat” and added cardboard to meat products, or used acid used to mask the smell of tainted meat.

The sad news for Brazilians is that these corruption scandals could have been anticipated, and maybe even avoided.

Brazil’s scores in the annual Heritage Foundation Index of Economic Freedom had been deteriorating for the decade when former Presidents “Lula” da Silva and Dilma Rousseff had been in office. Both represented the leftist/populist Workers’ Party, “Partido dos Trabalhadores.”

As noted in a recent Heritage Foundation report on economic freedom in Latin America, the last time Brazil received an overall economic freedom score above 60—the minimum for a country to be considered moderately free—was in 2006.

Notably, the country’s score began going downhill when da Silva took office in 2003 and began reversing the liberalization reforms of his center-right predecessor, President Fernando Henrique Cardoso.

At the end of the Cardoso era, Brazil’s rank on the 2003 Transparency International Corruption Perception Index was 54th out of 133 countries listed.

By the time Rousseff was impeached and removed from office in 2016 on charges of administrative misconduct, Brazil’s corruption ranking had dropped to 79th of 176 countries.

As The Wall Street Journal’s Mary O’Grady has reported, cronyist sleaze from Brazil has spread throughout the region in Latin America. The primary agent for that strain of corruption is Brazilian construction giant Odebrecht, a big beneficiary of contracts from Brazil’s “opaque” national development bank called BNDES.

As Brazil works its way out of this morass of corruption, let’s hope a new generation of political leadership arises that is determined to improve the rule of law and put Brazil back onto the path toward economic freedom.

This piece originally appeared in The Daily Signal