Brazil bribery scandal threatens to overflow into Peru

9 August 2015

In a week that saw the re-arrest of José Dirceu, the coordinator of government during the Lula administration in Brazil, new information has come to light about the activities of Brazilian construction and engineering companies in Peru and the methods used to secure contracts there. Dirceu was originally arrested for his role in the Mensalão scandal in Brazil, but is now accused of being deeply involved in the Petrobras scandal, receiving payments even when still under house arrest.

Brazilian construction companies have played a key role in undertaking public investment projects in Peru, particularly in infrastructure, successively during the governments of Alejandro Toledo (2001-06), Alan García (2006-11) and Ollanta Humala (2011-16). They include Odebrecht, Andrade Gutierrez, OAS, Galvão Engenharia, amongst others, which also secured major contracts in several other countries of Latin America and in Africa. One of the most important projects was the construction of the Inter-Oceanic highway linking southern Peru with Brazil, which involved several large Brazilian construction companies.

The latest revelations concern mainly the period of García’s second presidency. A key intermediary between Dirceu and the Peruvian authorities appears to have been Zaida Sisson de Castro, the Brazilian wife of a top official in the Agriculture Ministry for the duration of García’s second term, Rodolfo Beltrán. Her home in São Paulo was raided last week after the judicial authorities in Curitiba said they had uncovered information as to her activities in promoting Brazilian construction companies in Peru. Beltrán has been a long-term confidant of García, also serving briefly as Minister of the Presidency during his first administration (1985-90). The role played by Sisson de Castro was originally identified in the testimony offered to Brazilian investigators into the Petrobras scandal by Milton Pascowitch, who has alleged that Sisson received substantial sums of money from Dirceu before the Mensalão scandal broke. Pascowitch offered this testimony in return for the offer of a reduced sentence for his collaboration in the Petrobras scandal.

Dirceu apparently visited Peru as many as nine times between 2006 and 2011. The first time was in January 2007, only months after García took office. He was accompanied by Sisson de Castro, alongside representatives of various Brazilian construction companies, one of whom has been arrested as a result of the Petrobras scandal. Sisson de Castro herself appears to have been a regular visitor to Government Palace in Lima according to the official record of visits. Dirceu’s second visit was in November 2008. Along with Pascowitch and others, he met up with a number of government ministers in Lima, including the then prime minister Javier Velasco Quesquén. Sisson de Castro was also there as a representative of a Brazilian engineering consultancy called Engevix. . During the five years of the García presidency, she maintained close contacts with most ministries since she also worked as a consultant for Galvão Engenharia According to El Comercio, she remained an influential figure after García stepped down and Humala became president .

Velasco Quesquén admits to being present at the meeting but says his role was strictly “protocol”. With García seeking a third term as president next year, his party (APRA) has been quick to distance itself from any possible connotation of wrong-doing, pointing out that meetings with Brazilian construction companies do not imply that any corrupt dealings took place. However, suspicions may prove harder to dispel. These come at an unfortunate time as García seeks to boost his standing in the polls with the elections approaching.

The deeper the Brazilian investigators go in revealing the nexus between business groups and government in Brazil and the methods used to achieve contracts the more is likely to come out about how these were applied to Peru and who was involved – knowingly or not – at the Peruvian end. This is likely to be a story that will run and run, especially in the context of a presidential election campaign. It is unlikely to be one that reflects well on public life, either in Brazil or Peru.

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