This weekend I finished Malu Gaspar’s definitive history of the Odebrecht case (A Organização: A Odebrecht e o esquema de corrupção que chocou o mundo; Companhia das Letras 2020). While not an academic book, it offers an insightful and page-turning perspective on the evolution of business-state relations in Brazil over three generations.
Gaspar’s first book, Tudo ou Nada, was a gripping portrait of Eike Batista, the business tycoon who was, for a brief moment at the heyday of the commodities boom in the 2000s, the country’s richest man. Once again in A Organização she points to both the personal foibles and the structural relations that shape business in Brazil, and which ultimately landed both Eike Batista and Marcelo Odebrecht in jail.
The rise of the Odebrecht conglomerate was a multi-generational effort. At the heart of the tale is Marcelo Odebrecht, the third in a patriarchal line of corporate presidents at the company begun by his grandfather. The developmentalist impulse that made Odebrecht into a top firm during the 1970s and 1980s taught the company to stick close to the government of the day, to build friendships across the political spectrum, to push the mantra of “national champions” and the “Estado indutor,” and to use all of the resources provided by the national treasury and state-owned banks to expand both within Brazil and beyond, especially in the Latin American and African countries that founder Norberto Odebrecht referred to as Brazil’s “geopolitical base” (72).
Lava Jato pierced the veil that had long obscured the conglomerate’s influence operations. Gaspar pieces together a tale that illustrates how influence slowly faded over into corruption, which then became a central plank in the growing conglomerate’s business model. Along the way, Odebrecht built goodwill with media companies by building headquarters on friendly terms for many of Brazil’s major newspapers, and paying for advertising years into the future for newspapers facing financial challenges (105). It hired and supported the family members of important politicians, including Lula’s brother, who smoothed over the company’s relations with labor unions for more than a decade (113), and Lula’s nephew, who worked to smooth the firm’s relations in Angola (228). It helped solve politicians’ personal and professional challenges, making foundational contributions to presidential institutes for both Cardoso and Lula, hiring consultants to help the children of major politicians find their way in life, and ultimately, providing favors wherever it could to build goodwill.
Along the way, the firm made under the table payments – call them unregistered campaign contributions, call them corruption – to all the major players in Brazilian politics. In the election of 2010, the firm distributed an astounding US$420 million to politicians across the spectrum; in 2012 and 2013, this figure had grown to US$730 million. The conglomerate was talented at using a variety of access points across government to contest decisions that ran against its business interests, including both licit challenges in the courts, as well as more unsavory tactics, such as offering R$50 million to a congressman to neutralize government initiatives (211-214). Nor was its influence limited to Brazil: in its 2016 agreement with the U.S. Department of Justice, Odebrecht admitted paying US$788 million in bribes in twelve countries, and petrochemical firm Braskem (jointly controlled with Petrobras) admitted to another US$250 million.
In the process, Odebrecht shaped the Brazilian economy and politics to its needs. In the early 1990s, the company helped to rewrite legislation on public bidding, scaring away competition without greatly enhancing the real stringency of bidding requirements (91). In the 2010s, President Rousseff rewrote an important regulation governing the anticorruption law, following precisely the directives Odebrecht had sent the government (417). Throughout the years, Odebrecht was able to draw from a deep well of government support: when it declared bankruptcy at long last in June 2019 under the crushing blow of Lava Jato, the bulk of its unsecured debt was held by state owned banks (535).
Even those who have read the raft of recent books on Lava Jato will find A Organização a page turner. Gaspar weaves together many well-known details in new ways, as well as bringing new details to an old story. Her description of the squeeze that prosecutors put on the top executives in the firm is in the best spirit of a Grisham novel. Her depiction of how much Dilma Rousseff knew about the firm’s machinations – and in particular, the hidden correspondence between Rousseff and campaign strategist Monica Moura, who was later jailed (355ff) – is novel. The references to corruption in the judiciary are among the best hints at a relationship that Lava Jato failed to uncover before the prosecutorial task force was shut down this year. The book also provides a surprisingly heart-rending recounting of the construction giant’s descent into ignominy, and the intergenerational schism that tore apart the Odebrecht family as a result.
At the end of the day, the question I am left with is whether Odebrecht’s demise will change business-state relations in Brazil. Odebrecht is a feeble shell of its former self. Other firms may have learned a cautionary lesson from its decline. But politicians who were on the receiving end of Odebrecht’s largesse have faced nothing akin to the punishment that business leaders endured, and the judiciary – especially in the highest court – has not moved forcefully against politicians implicated in the last decade’s corruption. With these perverse incentives still in place, one wonders: who and what will Malu Gaspar’s third book be about?
