Anticorruption Institutional Improvements and Operation Car Wash

Abstract

The task of understanding how corruption occurs within the political and economic systems involves an ambitious undertaking that cuts across different branches of knowledge and different approaches, ranging from the definition of the phenomenon itself and its causes to the proposition of institutional frames designed to curb or discourage corrupt behavior. The most recent researches on corruption highlight that, since the end of the 1970s, there has been a significant increase in academic production that has come to treat corruption as a harmful phenomenon that imposes bottlenecks on economic development.

Master in Political Science at University of São Paulo – Brazil.

This text is part of the research for a master’s degree in Political Science at the University of São Paulo (2019).

1 Introduction

The task of understanding how corruption occurs within the political and economic systems involves an ambitious undertaking that cuts across different branches of knowledge and different approaches, ranging from the definition of the phenomenon itself and its causes to the proposition of institutional frames designed to curb or discourage corrupt behavior. The most recent researches on corruption highlight that, since the end of the 1970s, there has been a significant increase in academic production that has come to treat corruption as a harmful phenomenon that imposes bottlenecks on economic development. This literature points out that corruption is a disincentive to private investments (Habib & Zurawicki, 2002), shifts talent from creative activities to rentism (Acemoglu & Verdier, 2000), and distorts the allocation of public resources (Gupta et al., 2001; Mauro, 1998). Besides, corruption undermines trust in social relations and trust in government (Morris & Klesner, 2010; Seligson, 2002), undermining democracies’ core values.

These analyzes start from a theoretical approach that postulates that institutional reforms can deter or create disincentives to corrupt behaviors (Klitgaard, 1998; Rose-Ackerman, 1999). This approach influenced the literature that investigates the functioning of institutions responsible for the control of corruption. At the same time, it also seeks to identify bottlenecks that prevent effective control of corruption in countries. The issue of corruption is present throughout Brazil’s republican history. However, the re-democratization and promulgation of the 1988 Constitution paved the way for the country to undergo progressive institutional improvements that increase transparency and create and strengthen mechanisms of monitoring, inspection, and punishment of corruption. These incremental institutional changes promoted the development of the accountability institutions by expanding state capacities, optimizing specific interactions, and improving the fight against corruption (Power & Taylor, 2011; Carson & Prado, 2014; Machado & Paschoal, 2016).

This chapter seeks to provide a general map of the institutional improvement process that occurred in the country in the years that preceded Operation Lava Jato¹ and that somehow outlined the field of action of members of the political class and economic agents in their relation to public assets. This includes creating and improving the country’s accountability institutions and an entire repertoire of rules aimed at an increase of efficiency in identifying and punishing corruption. This creation occurred in a scenery of significant influence of international relations in the fight against corruption and money laundering since Brazil has made several international commitments on these topics.

While it is not the subject of this chapter, it should be noted that these changes were essential for the results achieved by Lava Jato, and part of them provided its actors with the capacity for discretionary action, which, in turn, produced politicized criminal control with selectivity traits, as shown in a previous work (Rodrigues, 2020). In this research, we mapped the institutional context in which Operation Lava Jato appeared and carried out a dense analysis of 144 criminal actions that took place in the nuclei of the operation in Curitiba, Rio de Janeiro, and Brasília, since the first ostensive police phase, in March 2014, until December 2018, focusing on the performance of the Federal Justice. This analysis made it possible to formulate the argument that Lava Jato results from the combination of institutional improvement and learning, added to the strategic action of the criminal justice system actors, especially the Federal Justice. The notion of strategic action of the argument consists of the performance of actors in the judicial system who place ends above means and calculate their steps and decisions according to the results they intend to achieve, which somehow distorts the essence of Justice, which, unlike Politics, finds its legitimacy in the means and procedures that are followed in the process of decision-making.

This chapter summarizes the first part of this explanatory mechanism for Lava Jato, with some additions about other institutions that are part of the country’s anti-corruption system and that participated in the operation, in addition to examples related to the Odebrecht Group. Nevertheless, it should be noted that this institutional dimension alone does not explain the results of Lava Jato, since the strategic action of the actors was essential for the operation to take place as it did and, more importantly, at the rate at which it occurred. Time was a key variable strategically calculated by the actors of the justice system that was essential to obtain the confession and cooperation of financial operators and business people who pointed out the responsibility of leading figures of the political class, as well as to ensure Lula’s ineligibility in 2018 and maintain public opinion pressure on the Courts. The strategic action also made it difficult to have effective control over the conduct of the first instance of the Federal Justice, at least until the first half of 2019, when a movement of settlement of accounts started mainly coming from the Supreme Federal Court.

Four sections compose this chapter, in addition to this introduction. The second section presents the history of Brazil’s international commitments in the fight against corruption and the crimes associated with it, particularly money laundering. The following section provides an overview of the Brazilian accountability institutions, focusing on those acting within Lava Jato, emphasizing the advancements in the years preceding the operation. Finally, the fourth section presents the main changes in the regulatory frameworks aimed at the severity of punishment and the improvement of the tools for monitoring and investigating corruption and money laundering in the country, followed by a brief section for final considerations.

2 International Commitments Linked to the Fight Against Corruption

The first aspect that stands out in the institutional changes in Brazil in the years that preceded Operation Lava Jato, notably from the 2000s, is the domestic repercussion of the internationalization movement to fight corruption, money laundering, and organized crime. Brazil internalized several international agreements through which its authorities committed to improve the fight against these crimes and to maintain comprehensive assistance with other countries to ensure the effectiveness of the investigations and punishment of the illegal acts and the repatriation of the agents’ advantages. Three international conventions against corruption stand out, one against transnational organized crime, three multilateral instruments of mutual assistance, several bilateral cooperation agreements, in addition to adhering to two international control mechanisms over the country’s involvement in fighting corruption and money laundering. Figure 1 shows the time series of international conventions and agreements described in this section, considering the dates on which the country internalized them.

Fig. 1

Source: Prepared by the author

International conventions and agreements aimed at fighting corruption, money laundering and organized crime (1999–2018).

The first international instrument on corruption introduced in the country reflects the global context of the expansion of US influence due to the alleged competitive disadvantage of companies based in that country. In the USA, companies were subject to punishment for corrupt acts committed abroad since the Foreign Corrupt Practices Act (FCPA) enactment in 1977. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, concluded in Paris in 1997, settled within the Organization for Economic Cooperation and Development (OECD) Council, started to integrate the Brazilian domestic legal order in 2000 (Decree 3678). Two years later, it had repercussions on creating two new crimes involving international transactions: active corruption and influence peddling (Law 10,467 / 2002). The introduction of these two new crimes did not produce relevant direct effects on the results of the national accountability institutions’ repressive actions since none of them appears in the criminal charges filed by Operation Lava Jato until December 2018. According to the implementation report of the provisions of the OECD Convention of October 2014, there were only three cases of investigation of international corruption and one formal charge in the country (OECD, 2014).

On the other hand, besides the provision of transnational corruption, the convention imposed a commitment to assist other countries in supplying information and documents instructing criminal investigations and proceedings, and to cooperate in the execution of a systematic monitoring program to watch and promote the convention’s full implementation. Furthermore, Brazil’s adherence to the commitments to prevent and repress transnational corruption in some way legitimizes the actions of the United States authorities aimed at punishing Brazilian companies listed on stock exchanges in that country or that are required to file periodic reports with its Securities and Exchange Commission. Also, starting in 1998, cases in which the payment of bribes has somehow occurred in the U.S territory entered the jurisdiction of these authorities. In the case of Odebrecht, for example, cooperation between the authorities of the two countries and Switzerland led to the signing of the world’s largest leniency agreement on anti-corruption matters, whereby Odebrecht and Braskem agreed to pay the penalty in the order of three billion and five hundred million dollars, subsequently reduced due to the company’s financial incapacity (USA, 2016).

The annual goals proposed by the National Strategy to Combat Corruption and Money Laundering (Estratégia Nacional de Combate à Corrupção e à Lavagem de Dinheiro—Enccla) mentions the OECD convention, of which the impact on the accountability institutions in the country is especially noticeable in reaffirming institutional values to fight corruption. The Enccla is a collaborative network with approximately eighty bodies and agencies, from civil society, the public prosecutor and the executive, legislative and judiciary, the state and federal levels. Established in 2003, the Enccla articulates the arrangement and discussions that formulate public policies and solutions to combat corruption and money laundering. Its plenary meetings have the participation of the main agencies involved with Operation Lava Jato²: Attorney General’s Office (Advocacia-Geral da União—AGU), Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica—CADE), Council for Financial Activities Control (Conselho de Controle de Atividades Financeiras—COAF), Office of the Comptroller General (Controladoria-Geral da União—CGU), Department of Asset Recovery and International Legal Cooperation of the Ministry of Justice (Departamento de Recuperação de Ativos e Cooperação Jurídica Internacional—DRCI), Federal Prosecution Service (Ministério Público Federal—MPF), Federal Police (Polícia Federal—PF), Federal Revenue of Brazil (Receita Federal do Brasil—RFB), Federal Court of Accounts (Tribunal de Contas da União—TCU) and Federal Justice (Justiça Federal—JF, through the National Association of Federal Judges—Ajufe, and the Federal Justice Council—CJF). Aside from Ajufe, the other agencies mentioned are part of the Integrated Action Cabinet of Enccla,³ which meets quarterly to follow up the implementation of actions and targets set in the plenary meetings.

Besides the recommendation for revision of the text translated into Portuguese of the OECD Convention in 2007, the Enccla included as a 2012 goal the improvement of the national fight against transnational bribery system to adapt to the convention commands. This set the strategic objective of strengthening governance, integrity, and control instruments in the federal public service, which involved ten participating institutions’ engagement. This strategic objective was reaffirmed in 2013 when it hosted a conference to train investigators and prosecutors on international bribery.

The second relevant milestone in the country’s adherence to international commitments to prevent and repress corruption, this time without being restricted to international bribery, was the introduction of the Convention against Corruption of the Organization of American States in 2002 (Decree 4.410), which materialized the country’s commitment to the primary purposes of the convention: the promotion and strengthening of mechanisms necessary to prevent, detect, punish and eradicate corruption, as well as the incentive to acts of international legal assistance. This commitment was reaffirmed in the same year, with the adhesion to the Mechanism for Implementation of the OAS Convention (Mesicic), through which member states review their legal frameworks and institutions in the light of that convention. Mesicic reports bring recommendations that have been reflected in several institutional changes aimed at improving efficiency in the cycle of monitoring, investigation, and punishment of corruption in the country. One such change is adopting models of specialization of the justice system institutions and the intensification of cooperation between the national accountability agencies. These models’ enactment led even to the Constitutional Court’s jurisprudence changes, such as the one in May 2018 (STF, 2018). In this instance, the Federal Supreme Court started to adopt a more restrictive understanding of special jurisdiction for high-level authorities, which was also possible due to the strong public support for Operation Lava Jato.

The Convention of Mérida, held under the United Nations, completes the trio of international instruments against corruption internalized by Brazil (Decree 5687 / 2006). This convention reinforces the commitment to cooperate with other countries in investigations involving corruption, in addition to encouraging the adoption of mechanisms for granting benefits to defendants who cooperate with the authorities, which occurred later with an important advance in the legislation on cooperation agreement (plea bargaining), in the year 2013, as will be explained below.

In addition to the corruption itself, the significant investigations that have taken place in Brazil in recent decades point out that the large schemes of diversion of public resources involve several people’s activities and the articulation of several companies, with a reasonably organized structure for the division of tasks. This organization was to ensure the success of deviant acts and guarantee that these acts were carried out employing sophisticated financial arrangements that would hide the illicit plot and its members’ identity. For this reason, the crime of corruption is usually associated with organized crime, which also stands out in the context of institutional improvement aimed at curbing the practice of high-level corruption. Brazil’s adherence to the United Nations Convention against Transnational Organized Crime, known as the Palermo Convention and introduced in the country in 2004 (Decree 5015), was another step toward conferring more efficiency against systemic corruption that is said to exist in the country. In addition to strengthening the legitimacy of the anti-corruption speeches, the convention encouraged the adoption of some changes that have occurred in the following years: the autonomous criminalization of participation in a criminal organization; the use of mechanisms of a premium nature (plea bargaining), and the suppression of the list that restricted the crimes that could be antecedents to money laundering.

When it comes to corruption involving prominent businesspeople and high-ranking politicians, the scenario of illegality likely accompanies the practice of concealment acts to hide the illicit origin of the resources and their real owners. That is why the investigations into grand corruption are expected to include investigating the crime of money laundering, based on a strategy known as “follow the money”, emphasizing the institutional design developed to curb money laundering when seeking to map the anti-corruption system from any country. Operation Lava Jato offers an excellent example of the importance of anti-money laundering mechanisms in corruption investigations. Of the eighty-two indictments (charges) between April 2014 and December 2018, only two did not accompany money laundering charges, by far the most recurrent crime in the operation. In the nucleus with charges filed with the Federal Court of Curitiba, it was attributed to 337 people in 515 charges, while the crime of active corruption appears against 173 people in 165 charges.

The first international convention introduced in the country that dealt with money laundering, celebrated within the United Nations’ scope and called the Vienna Convention (Decree 154/1991), aimed at combating the illicit traffic in narcotics. In this international scenario in which countries concentrated efforts in the fight against drugs, the law that criminalized money laundering (Law 9,613 / 1998) was introduced in the country, initially with a specific list of crimes that should precede the practice of money laundering to allow its autonomous criminalization.

One of the most relevant international landmarks for combating money laundering in Brazil occurred in 2000 when the country became a member of the Financial Action Task Force against Money Laundering and Terrorist Financing (FATF), an agency created in 1989 within the scope of the G7 (group of the seven wealthiest countries in the world). The FATF is an intergovernmental organization that develops and promotes national and international policies to combat money laundering and terrorist financing. Although the agency’s work has no binding force (hard law), it has a strong influence and effectiveness (soft law) on member countries. This influence is especially notable through the forty recommendations that constitute the international anti-money laundering standard (ALD), recognized by the World Bank and by the International Monetary Fund (IMF). The organization also conducts periodic visits to member countries to evaluate the implementation of the measures of prevention and repression of money laundering and terrorist financing. A great indicator of the FATF’s influence on institutional changes linked to the fight against money laundering (and corruption) appears in the Enccla’s annual actions. Table 1 summarizes the actions from 2004 to 2019 that expressly refer to the FATF recommendations, indicating the eventual results.

Table 1 Description and results of Enccla’s actions that mention the FATF (2004 to 2019)

The data show that compliance with the FATF recommendations has been the object of concern for the country’s accountability institutions, suggesting that money laundering through international financial transactions now has major obstacles, considering the country’s strong commitment to international agreements of legal assistance in criminal matters. Moreover, one can point to the strengthening of the agencies responsible for the actions of mutual legal assistance (Office of the Prosecutor General and Department of Asset Recovery and International Legal Cooperation).

In addition to adopting the Mercosur Protocol on Mutual Legal Assistance in Criminal Matters (Decree 3468 / 2000), the Inter-American Convention on Mutual Assistance in Criminal Matters (Decree 6340 / 2008), and the Convention on Judicial Assistance in Criminal Matters between the Member States of the Community of Portuguese Speaking Countries (Decree 8833 / 2016), Brazil signed several bilateral agreements that allow the streamlining of assistance in investigations and production of evidence. This process also entails seizure measures, retention, and transfer of goods, essential to prevent the fruition of concealed goods obtained illicitly. Between 2001 and 2013, sixteen bilateral assistance agreements were introduced, nine of which involve countries that collaborated with the Lava Jato investigation until March 2019: Canada, China, South Korea, Spain, United States, Ireland, Panama, United Kingdom, and Switzerland (Brazil, 2019).

The Federal Prosecutors Service’s task force reports that more than 630 acts of international legal assistance were carried out from 2014 to December 2019, which involved relations maintained with almost a third of the countries in the world (MPF, 2020a). This number shows the relevance of international cooperation for the results of the Operation Lava Jato. The charges against Odebrecht executives, for example, were not only partially supported by documents obtained through assistance with other countries but led the company to start a legal dispute to prevent the use of documents sent by the Swiss authorities regarding movements in offshore accounts that the Odebrecht Group allegedly controlled. Although the practice of “entraide sauvage” (wild legal aid) was recognized, as the documents that were of interest to Brazilian investigators were sent in a request for diligence made by Switzerland to instruct an investigation that was going on in that country, Odebrecht was not successful in excluding the evidence that instructed their executives’ first conviction. That trial included Marcelo Odebrecht, the president of the holding company at that time, who was sentenced to nineteen years and four months in prison in a closed regime, in addition to the obligation to pay damages of approximately sixty-three million dollars.

The relevance of the international instruments concerning the country’s anti-corruption activities described in this section goes beyond their imposing force by internalizing the national judicial order. They also reverberate the discourse about the importance of combating corruption in the national institutions, contributing to the engagement of the control agencies, although each of them also seeks their own interests, which are not always declared, as they find support in the legitimacy that public opinion confers to the fight against corruption.

3 Strengthening of the Accountability Institutions

Harmful actions to public assets or the abuse of public power for private benefit may constitute illicit acts as provided for in a broad national legislation. This legal characterization can be arranged in several analytical frameworks, as there are relevant variations in several elements. These variations may refer to the quality of the agents that concur for the illicit (public or private agents; persons or companies); the nature of penalties (economic or monetary, restricting rights and custodial); the procedures required for sanctions impositions (administrative or judicial); the relationship between the nature of the infraction and the competent authority for sanctioning (political, administrative or judicial).

The detailing of these different frameworks escapes this chapter’s objectives. Nevertheless, it is important to highlight that this complex legal structure of protection of fairness in dealing with public affairs helps to explain the existence in the country of a complex design of agencies with attributions that at times compartmentalizes and, other times, integrates continuous flows of information. These flows depend on more than one agency to incorporate the process that can go from identifying the illegal act to the application of the sanction (Power & Taylor, 2011; Machado & Paschoal, 2016; Carson & Prado, 2014). Criminal proceedings, for example, are restricted to charges against people (do not include companies, except in some environmental crimes), they involve the necessary participation of the Public Prosecution Service and the Judiciary, and are the only ones that can lead to imprisonment. The Prosecution Service is responsible for criminal charges, which are usually supported by investigations carried out by the police (Federal Police and civil police of the states), or can rely on evidence shared by other agencies. These agencies produce evidence in their regular exercise of inspection and punishment of conduct framed in different types of offenses, which is quite common when the same behavior is classified as a crime and as an administrative or civil offense. The Courts are responsible for conducting criminal actions in which evidence is produced under adversarial proceedings (possibility of the defense participation), in addition to the final judicial decision on the guilty of the defendants and the application or not of sanctions.

On the other hand, the administrative procedures of accountability of individuals and businesses for engaging in fraudulent acts and embezzlement of public funds can operate through several agencies with relative autonomy to investigate and apply penalties. Administrative contracts between private businesses and the government, for example, are subjected to the supervision of the contracting part and sanction power of the respective Minister of State or State Secretary, in addition to monitoring and sanctioning by the Federal and State Accounting Courts (Bidding Law). The Anticorruption Law (Law 12,846 / 2013), which provides for civil and administrative liability of companies for the practice of acts harmful to the national or foreign public administration, describes conduct similar to the illicit provided for in other legal norms. This provision leads to overlapping agencies’ attributions concerning supervision and punishment related to the same facts.

One can say that the country has a tangle of rules on types of offenses and sanctions, different forms of accountability for its practice, and distribution of competencies among different accountability institutions. This leads the literature to focus not only on each agency’s functioning, but also on the forms of interaction between them and the result of these interactions, which can lead to conflicts and inefficiency, but also competition, cooperation, collaboration, and compensation. The complexity of these interactions keeps the debate open whether the system should be better integrated and coordinated or more decentralized to optimize the performance of the anti-corruption system (Prado & Cornelius, 2020). It is important to highlight that the debate focused on the efficiency of accountability institutions in general gave little importance to equal and even more relevant issues, such as the deficiency in the control over some of these agencies and its reflexes on democracy.

This section does not intend to deepen this debate. It presents a general picture of the country’s anti-corruption institutions, focusing on those involved with the results of Operation Lava Jato, assuming that the state capacity of these agencies is included in the strategic calculations of people and companies that carry out activities in Brazil, eventually on risks associated with the practice of illicit acts, but above all as a constraint on the choice of means to be employed to achieve their political and economic goals.

The literature dedicated to studying the Brazilian accountability institutions recognizes a progressive process of institutional improvement by creating and developing agencies devoted to monitoring, investigating, and punishing illegal acts involving corruption and misappropriation of public resources (Power & Taylor, 2011; Aranha, 2018).

The central agencies dedicated to anti-corruption and anti-money laundering actions are on the list of twenty-two agencies that make up the Enccla’s Integrated Management Office. Still, we highlight those expressly mentioned by the task force Lava Jato as agencies that put forth the operation results (MPF, 2020a). These institutions operate in the federal level, but it should be mentioned that the Federal District and the twenty-six states have their accountability institutions, whose designs bear similarities with the federal model. However, they do not always possess equivalent state capabilities. We summarize these institutions’ roles in the anti-money laundering and anti-corruption activities, indicating the most significant changes in the last decades and their role in Lava Jato. The institutions analyzed are listed in Table 2, with an indication of the main activities aimed at controlling corruption and money laundering.

Table 2 Institutions involved with Lava Jato and its main anti-corruption and anti-money laundering activities

The Federal Police and the Public Prosecution Service, next to the Federal Justice, may be considered the main protagonists of the Lato Jato Operation and of the most significant anti-corruption operations in the country, either by direct action in criminal investigations or by that part of its agents who engaged in a kind of advertising crusade seeking public support for Lava Jato, under the pretense of preventing their strategies of being hampered by other institutions and actors. (Dallagnol, 2017; Moro, 2018). The justification presented by these actors gave them legitimacy in society. However, that justification shroud the personal and institutional interests and advantages achieved through this media role in the criminal justice system. It also blocked debates about the limits that must be observed by these institutions and removed discussions about structural reforms that would best achieve the objective of discouraging the systemic corruption that is claimed to exist in the country.

The Public Prosecution Service conquered relevant spaces of power after the 1988 Constitution, which separated the institution from the Executive Power and gave it significant autonomy to carry out a wide range of functions. These functions were supported by the broad task of defending the legal order, the democratic regime, and the unalienable social and individual interests (diffuse and collective rights). Concerning the control of corruption and the misuse of public resources, the Public Prosecution Service can use two judicial means to obtain the punishment of those responsible for the illicit acts: public civil action for acts of administrative improbity and criminal prosecution, which are not mutually exclusive and were adopted by Lava Jato.

The institution also has at its disposal an instrument of consensual nature to protect transindividual rights, the Term of Conduct Adjustment. This term allows the replacement of penalties provided by law for obligations assumed by the offending agent to adjust his conduct to the scope of lawfulness. There was controversy about the possibility of reaching this agreement in cases involving administrative improbity, prohibited by law but regulated in 2017 by the National Council of the Public Prosecutors. The controversy ended with Law 13,963, of December 24, 2019, which expressly authorizes the use of agreements in cases of administrative improbity. This change follows the tendency to appreciate consensual mechanisms in the face of the results obtained by Lava Jato from the collaboration and leniency agreements, introduced by US influence, which will be described in Sect. 4.

In the case of MPF, the process of institutional development was accompanied by investments in human and financial resources (Arantes, 2011b) and more pronounced independence between 2003 and 2017, when presidents Lula and Dilma Rousseff, both from the Workers’ Party, adopted the practice of selecting the first name of a list of three drawn up by the members of the Federal Prosecution Service for the post of Attorney General (Viegas, 2019).

The MPF’s great autonomy and discretion led some authors to claim that the institution has become a kind of fourth power (Arantes et al., 2010; Kerche, 2018b), devoid of accountability mechanisms over the performance of its members (Avritzer & Marona, 2017; Kerche, 2018a), emphasing its leading role in major operations to combat corruption.

Lava Jato illustrates the conjunction of the MPF’s wide discretion devoid of accountability, since this allowed the creation of anti-corruption task forces with different action capacities, without legal justifications or indications of objective parameters for differentiated treatment in the three main cores of Lava Jato, which explains, at least partially, the production of disparate results, as can be seen in Table 3. The data on the respective task forces refer to their creation and the initial number of federal public prosecutors who made up the task force. For each of the operation’s units, the results produced regarding the number of phases of police operations, the charges presented, and the trials at the first (judgments) and second instances (appeals) are also indicated, all of those within two years and six months of the creation of the respective task force.

Table 3 Differences between the three main units of Lava Jato Operation

This complexifies the discussion about the real effects that operations such as Lava Jato produce in discouraging the practice of corruption by businesspeople and politicians. Firstly, because it enables selectivity in the criminal punishment of corruption, even allowing specific economic sectors and political groups to be deliberately targeted, with the possibility of signaling the politicization of the justice system and not the improvement of criminal control at the national level. Moreover, the combination of ample discretion and low control makes it difficult and even prevents the identification of MPF’s real motivation for choosing priorities, which provides an incentive to the practice of corruption within the institution (Klitgaard, 1998).

The Federal Police is part of the Ministry of Justice and Public Security and performs various functions, such as the prevention and repression of drug trafficking, migratory police activities, control of possession and trade of firearms, and act as the federal investigation police, that is, its officers conduct investigations involving federal crimes. The Federal Police underwent a process of institutional construction, marked by investments made by the Executive Branch since the early 2000s. This process led to its material and human resources equipping, with an increase in its budget, holding regular public tenders, and significantly increasing the number of police officers and other employees, which resulted in a progressive increase in the famous operations (Arantes, 2011a).

The judges enjoy significant independence and autonomy in the 1988 constitutional regime, with prerogatives of office stability and life tenure (dismissal only through judicial proceedings and mandatory retirement at age 75). Access to first-instance courts is only possible through public tenders. The Appeals Courts comprise career judges and reserve a fifth of its seats to members of the Brazilian Bar Association (Ordem dos Advogados do Brasil -OAB) and prosecutors. The Superior Court of Justice (Superior Tribunal de Justiça—STJ) overlaps the court of common justice (federal and state) and the Supreme Federal Court (Supremo Tribunal Federal -STF), which is the constitutional court that combines standard jurisdictional functions (original and appeals). Only Justices nominated by the President of the Republic comprise the STJ and STF, which must be referred by the Federal Senate after a hearing where the nominee responds to questions from members of a committee of senators. It is required that two-thirds of the STJ judges come from appellate courts (federal and state) and one-third from members of OAB and public prosecutors. Figure 2 shows a simplified organization chart of the Brazilian Judiciary, with common justice on a white background and specialized courts on a gray background.⁴

Fig. 2

Source: Prepared by the author

Organogram of the Brazilian Judiciary.

Notes: (1) State and Federal small claim courts are not included, which are competent to judge small value cases and infractions of less offensive potential. Also not included are Military Courts of Justice in 3 states and Councils of Military Justice in 27 states.

Notes: (1) State and Federal small claim courts are not included, which are competent to judge small value cases and infractions of less offensive potential. Also not included are Military Courts of Justice in 3 states and Councils of Military Justice in 27 states.

Arantes (2011b) argues that the repressive control of political corruption promoted by the Public Prosecution Service in Brazil went through a double shift during the 2000s. First, there was an emphasis on the state sphere that used civil mechanisms (public class action suit and civil investigation); then, there was a concentration of efforts at the federal level through significant criminal operations, comprised of greater articulation between the three institutions involved (PF, MPF and Federal Justice). One may say that this arrangement found its culmination in Operation Lava Jato. The strategic action of the Federal Judiciary was essential for the results achieved, notably in the central unit of Curitiba. Noteworthy are the ad hoc changes in the state capacity of the courts responsible for the operation; judicial decisions with concealment of information that could move the case to another court; and the selective streamlining of cases, according to the selected priority of the defendants to obtain cooperation agreements that would lead to political actors being held accountable, with the former President Lula as the main target (Rodrigues, 2020). Despite the relevance of this strategic action for the production of results, including and especially making Lula’s candidacy in 2018 unfeasible, there is a history of institutional development of the Federal Justice that was also essential for Lava Jato, of which we highlight: a significant increase in the number of local courts, which rose from about three hundred in 1996 to almost a thousand in 2016; specialization of judicial units focused on the significant white-collar crimes (money laundering and crimes against the national financial system); substantial investments in the qualification of human resources; and progressive implementation of technological tools for optimization of judicial activities, such as fully electronic proceedings and software for online fulfillment of court orders aimed at producing evidence (Rodrigues, 2020). These technological advances have led to more efficiency in tracking the resources of complex financial operations that are usually associated with white-collar crimes. This process brings to the scene three institutions that have cooperatively integrated into the flow of investigation and punishment of these crimes: the Control Council of Financial Activities (Coaf), the Federal Revenue of Brazil (RFB), and the Department of Asset Recovery and International Legal Cooperation (DRCI).

Coaf was created in 1998 and, as the Financial Intelligence Unit of Brazil, produces intelligence reports disseminated to various national accountability agencies. It also compiles relevant financial data from communications made by multiple entities, public and private, which are part of sectors usually used in money laundering. Despite the lean administrative structure, its reports have been essential for tracking surreptitious financial transactions that lead investigators to the illicit assets of people and companies involved in the practice of corrupt acts. Table 4 shows the amount of exchange information between Coaf and other agencies in the country, from 2003 to 2019, while Fig. 3 shows the number of Finance Information Reports (RIF) produced and propagated annually by Coaf in the same period. This data can be considered a good indicator of close cooperation aimed at screening suspicious financial transactions and thus the possible increased costs associated with the practice of wrongdoings by covert financial mechanisms. One should note that, in 2019, eighty-three percent of the total exchanges were carried out with the police and prosecution’ service.

Table 4 Amount of information exchange between Coaf and other agencies (2003–2019)

Fig. 3

Source: Prepared by the author, based on Coaf (2011, 2020)

Amount of Financial Information Reports (RIF) produced by year.

The RFB generally escapes the radar of academics who dedicate themselves to studying the accountability institutions focused on combating corruption, which is explained due to its institutional mission aimed at the Union’s tax and customs administration activities. As it occupies a central role in the financial activities related to raising public revenue, the federal government has promoted constant investments in the institution, ensuring effective tax collection. One should highlight the technological advances for more accurate taxpayers’ records, tax intelligence, and service agility (Ezequiel, 2018). It is important to notice that, in 2009, OCDE approved a recommendation to strengthen the role of tax authorities against bribery (Recommendation on Tax Measures for Combating Bribery of Foreign Public Officials in International Business Transactions). Recommendations are non-binding legal instruments, but compliance with their provisions is subject to pressure by the OCDE assessment system and may be required as a condition for entry as a member, a claim made in May 2017 by Brazil, which has the key partner status since 2007 (Thorstensen & Nogueira, 2020).

Two critical elements help to explain the relevance of the RFB in the control of illicit activities that involve corruption and embezzlement of public resources but remain unnoticed in some analyzes on the accountability institutions (Power & Taylor, 2011; Prado & Carson, 2014; Machado & Paschoal, 2016). Firstly, the agency is part of the country’s list of anti-money laundering institutions, with an explicit provision for prevention activities in the institution’s bylaws. The RFB occupies one of the eleven seats in the Coaf plenary session, is part of the Integrated Management Office of Enccla, and participates in the National Network of Anti-Money Laundering Technology Laboratories—REDE-LAB, which will be discussed below. Moreover, the Complementary Law 105 / 2001, allowed the RFB direct access to taxpayer’s bank transitions without relying on a court order, as is the case in investigations carried out by police and public prosecutors. This shortcut to carry out global financial analyses, with tax and banking data, gives the RFB a competitive advantage, which helps explain its active participation in significant police operations, being present even in the press conferences held by Lava Jato investigators.

The annual report on the activities carried out by the RFB in 2019 confirms that it operates even before the ostensible phases of the operation, “through crossings and analysis of internal data carried out by the investigation sector” (Brazil, 2020a). Cooperation with criminal investigation agencies also led to the development of Sislava, a data management software for processing and analyzing information shared by criminal justice system. In 2017, there were more than 3.5 million pages of documents containing information on 58.7 thousand people and companies (Brazil, 2017). The RFB also formalized special inspection teams to act in other large police operations: Zelotes, which investigates frauds committed by lawyers and companies within the scope of the Administrative Council for Tax Appeals (Conselho Administrativo de Recursos Fiscais—Carf); Calicute, which has as its object the deviation of resources in the management of the government of the state of Rio de Janeiro; and Greenfield, which investigates pension fund fraud (Brazil, 2020a).

The activities of tracking illicit resources that move through more sophisticated financial networks also count on the relevant performance of the DRCI, created in 2004 under the Ministry of Justice. Among its primary functions, the DRCI coordinates the agencies involved in combating money laundering and transnational organized crime, especially the recovery of assets and acts of international legal assistance in criminal matters. The agency exercises central authority functions in almost all international legal assistance agreements and treaties signed by Brazil.⁵ Intermediation in carrying out acts of international legal assistance allows procedural steps such as depositions and arrests. It also allows the search for evidence of illicit behavior that leaves traces abroad, notably deposits held in bank accounts undeclared to the Brazilian authorities. In 2004, the agency brokered 780 requests for international assistance and 2,439 in 2018. Table 5 shows the values repatriated through the DRCI since 2007, indicating the police operation they refer to (eighty percent of them at the federal level) and the countries involved in the cooperation.

Table 5 Repatriation intermediated by DRCI (2007–2018)

In addition to the essential brokering of requests for international legal assistance, the DRCI hosts the Anti-Money Laundering Technology Laboratory (LAB-LD), created in 2007 to overcome difficulties encountered in money laundering and corruption investigations in the analysis of the large volume of banking, tax, and telephone information. The laboratory works as a model to develop and disseminate the best technological and training practices. This model was replicated to other federal and state agencies in 2009, with the National Network of Technology Laboratories (Rede-Lab), which in 2019 possessed 58 units in operation and five in installation phases (Brazil, 2020b). The network’s laboratories analyzed more than seven thousand cases with traces of illegality between 2006 to 2017 (Brazil, 2018), which materializes a background activity that reinforces the effectiveness in producing more solid evidence about complex financial tracings.

The control of the legality of acts performed by public officials is not limited to that exercised by the justice system since various organs of the federal structure have their departments of internal affairs. Moreover, since 2003, the federal anti-corruption agency, the Office of the Comptroller General (CGU), began its operation. The CGU reorganized the internal control of the federal administration by making it centralized and started to include activities to promote the quality of public management and monitor national public policies carried out by subnational entities with federal funding.

CGU’s mission is to promote the defense of public assets, prevent and combat corruption, and increase management transparency in the federal area by establishing investigations and administrative proceedings or, as the case may be, by pressing charges to the competent authorities to investigate the omission of public officials. Also noteworthy is the innovative function of inducing and strengthening social control through the participation of civil society (Loureiro et al., 2012). Figure 4 shows the number of special operations conducted by the CGU in partnership with other agencies, federal and state, with their calculated potential losses, which gives an idea of the importance of his role in determining unlawful at the expense of public funds.

Fig. 4

Source: Prepared by the author, based on CGU (2020)

Special operations conducted by CGU (2003–2019).

The CGU gained even more relevance after the entry into force of Law 12,846 / 2013, known as the Anti-Corruption Act or Clean Company Act. In addition to providing for administrative and civil liability of companies for acts committed against public administration, both domestic and foreign, this law introduced the leniency agreement for the offenses provided for in the law. It also made CGU responsible for celebrating this agreement within the scope of the Federal Executive Branch. These agreements have become an essential tool for identifying those responsible for wrongdoings that are harder to determine and as a means of imposing more efficient compliance mechanisms in the structure of large corporations.

When it comes to leniency agreements in Brazil, one must highlight the Administrative Council for Economic Defense (CADE). Since 1994, CADE has gained status as a federal autarchy linked to the Ministry of Justice, with structure and instruments that allowed it to exercise more effectively the protection of free competition in the market. It carries out its mission through different kinds of activities: preventive, when deciding on mergers and other acts of economic concentration that may affect free competition; repressive, in the investigation and punishment of the practice of cartels and acts harmful to free competition; and educational, through various activities in a civil society focused on the subject of free competition. The main bridge connecting CADE to the other branches of the anti-corruption institutions is the close connection between the practice of cartels⁶ to circumvent the competitive principle of contracts signed with the government and corruption pacts in the execution of these contracts. This spurious symbiosis appears in the main charges filed by Lava Jato prosecutors and marks the first antitrust leniency agreement entered into in the operation, in partnership with CADE and the MPF. This first agreement narrated the anti-competitive behaviors involving at least 23 companies, practiced in the industrial onshore assembly works market in Petrobras’ tenders, which would have lasted from the late 1990s until at least the beginning of 2012 (CADE, 2015).

Figure 5 shows the history of leniency agreements concluded by CADE, highlighting those that are part of Operation Lava Jato. Since the early 2000s, there are leniency agreements concluded by CADE, but only involving anti-competitive practices, since the leniency linked to corruption was only introduced in August 2013 (Law 12,846). One should note that there was already a growing use of the institute. Still, there is a significant increase after Operation Lava Jato, partially explained by the institutional proximity established between CADE and the MPF, since the first antitrust leniency agreement. This joint experience even guided the role of the MPF in modeling the anti-corruption leniency agreement (Pimenta, 2020).

Fig. 5

Source: Prepared by the author, based on CADE (2020)

Leniency Agreements concluded by CADE (2003–2019).

Finally, mention should be made of the Federal Court of Accounts (TCU), which also is part of the list of institutions that monitor, inspect, and punish deviant behavior of public authorities. Besides occupying the role of auxiliary agency of the National Congress in monitoring the budget and financial execution, TCU performs the external control of the federal government through various competencies. These competencies include the supervision of compliance with federal funds passed on to sub-national entities; the application of sanctions and correction of illegalities practiced by public and private agents who manage the federal assets and resources; and the judgment of the accounts rendered by managers or those responsible for the custody and use of federal public resources. The studies on the performance of accountability institutions in the country usually emphasize that TCU is one of the strongest institutions among its Latin American counterparts. Despite imposing reputational costs to politicians, with repercussions on the elections’ results (Pereira & Melo, 2015; Winters & Weitz-Shapiro, 2013), the TCU audits are technically rigorous. However, it has weak enforcement of penalties, primarily because they depend on political and legal institutions in subsequent phases, with coordination and cooperation deficits between institutions (Speck, 2011; Taylor & Buranelli, 2007).

Unlike what is observed concerning other agencies described in this section, some evidence suggests that there has not been a harmonious and cooperative integration of TCU in the investigations related to Operation Lava Jato. The institution is not even mentioned in the main portal to disseminate the operation results (MPF, 2020a), which possibly expresses the little acknowledgment of TCU’s performance in assessing unlawful at auctions held by Petrobras. This is confirmed by the existence of only one charge of fraud in public bids until December 2018 by the nucleus of Curitiba.

In addition, some Lava Jato investigations reached members of TCU, which may have reduced the trust and accentuated tensions between the institutions, as observed by the following events: i) the investigation before the Supreme Court involving the ministers of the TCU Raimundo Carreiro and Aroldo Cedraz, the latter formally accused in October 2018 (case No. 4075); ii) the charge filed by the MPF in Curitiba against the former Senator and now Minister of TCU Vital do Rego Filho, who allegedly received R$ 4 million in bribes as Senator and President of the CPI of Petrobras (action n. 5,041,210–45.2020.4.04. 7000); iii) the charge filed by the MPF in Rio de Janeiro about corruption involving TCU auditor Cristiano Albuquerque and the influence peddling against several lawyers hired on the pretext of influencing decisions at TCU (action n. 5,053,463–93.2020.4.02.5101); iv) the Office of the Comptroller General obtains an injunction from the Supreme Federal Court preventing the compliance with the TCU decision determining that all information on leniency agreements conducted within the scope of the Lava Jato were to be sent to TCU (procedure n. 340,031); v) an investigation initiated by TCU to assess the dimension of the parallel budget administered by the MPF due to agreements signed (case records 007.597 / 2018–5); vi) a proceeding initiated by TCU to investigate the alleged irregular purchase of telephone interception equipment by the Lava Jato task force in Curitiba (case no. 025.306 / 2020–0).

This diagnosis finds confirmation in the content of messages that have been exchanged between the members of the task force Lava Jato, obtained by hackers and published by the media under the name “Vaza Jato” (Leak Jet). Despite doubts concerning the content’s authenticity, an excerpt referring to the suspicion deposited on the TCU is transcribed in a conversation that allegedly occurred on April 17, 2016⁷:

• Júlio Marcelo (Federal Prosecutor at TCU): My friend, if Gim Argello is going to whistleblow, I would like to make a suggestion/request: include with detail and evidence the TCU ministers. Certainly, Vital do Rego played a vital role in Petrobras’ CPI so that it would come to naught, but I suspect that they both had essential articulations at TCU (Cedraz, Nardes and Carreiro, with the participation of Tiago Cedraz and/or Carlos Juliano Nardes).

• Deltan Dallagnol (coordinator of the Lava Jato task force): We need to clean up the TCU. TCU’s role is too important for it to be infiltrated by bandits. I remember that Nardes supported the departure of Gim Argello to TCU and only changed sides down to the wire.

Except for these more nebulous facts involving TCU, one can say that in recent decades, Brazil has undergone a progressive strengthening of corruption control institutions, which goes beyond the triad traditionally involved with the large police operations that have become routine in the country. There is also a growing integration of other contributing agencies, each with its expertise and focus of action, with the exposure of the intricacies of non-republican practices in the management of public assets and collective interests. On the other hand, Lava Jato shows that the strengthening of these bureaucracies comes up against questions about the legitimacy, limits, and control of anti-corruption institutions, especially when their activities advance to influence electoral competitions or contribute to the delegitimization of party politics, with damaging reflexes for the functioning of democracy.

4 More Rigorous Punishment and Improvement of Investigation Tools

Brazilian legislation has undergone a progressive hardening of the political-electoral consequences resulting from a criminal conviction. Since 1984, sentences exceeding four years for crimes committed with abuse of power or violation of duty towards the public administration entail the loss of public office and elected mandate. This four-year baseline was reduced to one year in 1996, when the electoral legislation from 1990 was already in force, which established ineligibility, for three years, as a consequence of the definitive criminal conviction for several crimes, including crimes against the public administration and the financial market. In 2010, this legal text was hardened, imposing ineligibility for eight years in convictions involving a long list of crimes, in addition to anticipating these effects to the decision rendered by a judicial panel, even without judgment on all instances.

The legislation has also toughened the punishments for corruption, money laundering, and organized crime, which can be considered the main charges of the central core of Lava Jato. Table 6 shows the main laws, the changes promoted and the politicians involved in their approval, highlighted in bold those that were later affected by Lava Jato.

Table 6 Main laws related to criminal anti-corruption operations (2000–2014)

In 2003, the penalty for corruption was increased from one to eight years to two to twelve years. On the same occasion, the duty to repair damages caused by crimes against the public administration was also imposed as a condition for the progression of the regime.⁸ The overall effectiveness of criminal sanctions was increased in 2010, eliminating one of the statutes of limitations instances. The advances on the assets of people involved in acts of corruption and money laundering also stand out in the legislative changes between 2012 and 2013. These advances refer to the blocking of lawful assets equivalent to the benefit of crime; the express authorization to block goods of illicit origin in the name of interposed persons or stooges (“laranjas”); and the maintenance of blockages even with proof of the lawful source of the assets, in amounts sufficient to compensate the victim and to pay the economic obligations fixed in case of conviction. These changes not only lead to asphyxiation of the financial flow that is expected to exist in contexts of systemic corruption or organized crime, but somehow increase the costs associated with the practice of illegal acts, since the blocking measures are enacted in the investigation phase or at the beginning of the criminal action, before the rigorous procedure of verifying the guilt of those involved. As an example, Odebrecht executives, including its president at the time, were the target of a judicial measure to block bank accounts in the amount of twenty million reais, which took place about a month before the first indictment against them.

Brazil criminalized acts of money laundering only when the resources were the product of a closed list of offenses, which changed in 2012 when the list was removed, extending the criminalization of concealment of gains derived from criminal enterprises. The following year was marked by the expansion of the criminal association crime, which instead of four started to require a minimum of three participants. Besides, a criminal organization started to be considered under the terms of the Palermo Convention, accompanied by the provision of a comprehensive list of investigative measures, including controlled action, infiltration of agents, and more comprehensive regulation of the cooperation agreements, which can be considered the apple of the eye of Operation Lava Jato.

The award-winning collaboration (“delação premiada”) is one of the bargaining institutions introduced in the Brazilian legislation by Law 8,072 / 1990, which regulated the possibility of sentence reduction for a criminal association member. The benefits may be granted to those who confess and divulge their accomplices involved in heinous crimes, allowing the dismantling of the association. The same institution was later provided on several legal texts regulating specific criminal situations perpetrated by a group of people, namely: crimes against the financial system and tax order (Law 9080 / 1995); extorsion through kidnapping (Act 9269/1995); crimes committed by criminal organizing (Act 9034/1995); the money laundering (Act 9613/1998); the law that regulates protection of victims and cooperating witnesses (Law 9807 / 1999); drug trafficking (Law 11,343 / 2006); crimes against the economic order and cartel practice (Law 12,529 / 2011); and environmental crimes (Law 12,651 / 2012).

The actors in the criminal justice system had already made use of the cooperation agreement involving crimes of corruption since at least 2003, when the first plea agreement was signed in the country, within the scope of the Banestado Case,⁹ making use of the law to protect victims and cooperating witnesses. Controversies over the possibility of widespread use of the agreement were closed in 2013 with the law on criminal organizations (Law 12,850), introduced in the same year the so-called anti-corruption law (Law 12,846) was passed. This law provided for civil and administrative punishments to companies that practice acts related to corruption, in addition to introducing the leniency agreement on these issues.

The coexistence of cooperation agreements from the criminal area with the leniency agreements of the anti-corruption and the antitrust laws, which are essentially civil and administrative, started to generate some conflicts between the agencies of accountability. These conflicts exist because the leniency agreement can exclude the possibility of filing criminal charges against those who sign it. Still, the law is unclear on how to share the control of institutions that operate in different fields. Besides, it is expected that people and companies interested in concluding a cooperation agreement are also interested in ensuring that the facts described are not used to impose other sanctions beyond those already agreed upon, a possible setting considering the independent and concurrent action of the institutions of the accountability in the country.

The Odebrecht case illustrates this trajectory of inter-institutional conflicts derived from the multi-agency anti-corruption system. The company’s executives met with the swift and rigorous action of the criminal justice system, in addition to the pressure exerted by Citibank in the USA, threatening to block the company bank accounts in the country, due to the application of the FCPA. Faced with little success in court contesting the charges and arrest warrants, in December 2016, the Odebrecht Group agreed to simultaneous leniency with Brazilian, North-American, and Swiss authorities, followed by almost eighty cooperation agreements signed by executives of the group’s companies. The Brazilian leniency agreement only counted on the participation of the MPF, which led the Attorney General’s Office (AGU) to successfully challenge the legitimacy of the MPF (case no. 5 023,972–66.2017.404.0000). This challenging took the company to a new negotiation process that culminated in signing a leniency agreement with CGU and AGU that provided for the payment of indemnity equivalent to R $ 2.7 billion (CGU, 2018). The TCU entered the dispute, requesting the suspension of negotiations on the Brazilian agreement signed by Odebrecht, for alleged violation of Normative Instruction 74/2015, produced by TCU itself and which attempted to introduce the mandatory participation of the agency even in the negotiation phase (TC file 035 857 / 2015–3). TCU judged the request for suspension unfounded, but the general dispute entered the judicial and legislative arenas. This dispute generated the questioning of the legality of TCU’s normative instruction before the Supreme Court (Direct Unconstitutionality Action n. 5294); obtaining a preliminary injunction from the STF to suspend a decision by the TCU that obliged the CGU to provide information on all ongoing leniency agreements (writ of mandate n. 34,031); and the edition of Provisional Measure no. 703/2015, which lost its effectiveness for lack of approvement by Congress and which provided that the agreements would only be sent to TCU after conclusion and signature.

The process of accommodating institutional disputes over leniency agreements took another step forward with the Technical Cooperation Agreement on the subject signed by the AGU, CGU, TCU, and the Ministry of Justice, on August 6, 2020, with the participation of the Supreme Federal Court. This agreement came at a time of great conflict in the political arena over the direction of Operation Lava Jato, with disputes over narratives about the legitimacy of the criminal justice system’s role in fighting corruption. This dispute possibly explains the lack of participation by the MPF in the Cooperation Agreement, which led the institution’s Anti-Corruption Chamber to publish a technical note. It questions several points of the agreement, highlighting the depletion of the MPF’s role in these agreements (MPF, 2020b). Although the trajectory of interinstitutional conflicts associated with leniency agreements has not ended, it can be said that the competition among the accountability agencies has not prevented its use by some companies, as can be seen in Table 7, which shows the leniency agreements signed by CGU until August 2020, when there were another twenty-two under negotiation. The two reimbursement columns refer to the total amount provided for in the agreements and the amount paid up to August 2020 due to clauses on installment payments.

Table 7 Leniency agreements signed by CGU (until August 2020)

Leniency and cooperation agreements enable the discovery of illicit facts that would otherwise be difficult for the authorities to know. They also enable the introduction of more stringent compliance mechanisms in the companies’ structure since integrity programs are taken into account in calculating penalties. The first leniency agreement signed by Odebrecht, for example, was responsible for the significant increase in the work of the Lava Jato task force in Paraná. This signing led to creating an Agreement Management Unit (Unidade Gestora de Acordo—UGA) to oversee the more than 250 facts narrated in more than a thousand pages of agreement related to illegal activities practiced in at least eleven countries besides Brazil (MPF, 2020c).

It is crucial to note that the importation of these negotiated justice instruments, typical of the North American common law, has generated intense debates in academia and the legal community, with criticisms that point to their inadequacy to the country’s legal culture, generally associated with the already high incarceration rate of the poorest and most vulnerable population, as well as the lack of control over the exercise of the discretion of the Public Prosecution Service.

One should note that the progressive advancement of technological tools has greatly facilitated the investigation of illicit activities related to corruption and money laundering. The changes include the progressive digitalization of court proceedings, fully electronic since 2010 in the Federal Court responsible for the main core of Lava Jato, and the development of several software programs that allow online enforcement of court orders, such as the blocking of resources held in financial institutions (2001), obtaining tax data (2008), and blocking vehicles (2008).

Last but not least, in parallel with this process of institutional advances promoted by the political class itself, the Supreme Federal Court has contributed on its own initiative to shape the anti-corruption institutional design. One can observe this modeling activity when the Court formulates new paradigms deciding concrete cases involving high-level corruption, as occurred in the judgment of Mensalão. It also occurs when the STF carries out new interpretations of the Constitution in subjects that can decisively influence the outcome of significant investigations underway. In Mensalão trial, we can say that STF expanded the possibilities of criminal liability of high-ranking authorities by developing a theory of position domain (Leite, 2014), appropriating in a very criticized way the Theory of Final Domain of Fact developed by jurist Claus Roxin.

STF also acted strategically in two opposing scenarios related to Lava Jato. In the first moment of support for the operation, the Court exercised no veto activity over almost any aspect of the performance of the actors of the Lava Jato main unit. One can see this support by looking at the low number of preventive arrests decisions overturned by the STF and, especially, by the change in the constitutional interpretation of the presumption of innocence. Reviewing its position adopted in 2009, in 2016, the Supreme Court started to authorize the execution of the sentence before the judgment of all appeals, even without the decree of preventive detention (called prison before the res judicata). The change possibly contributed to the results of Lava Jato, as the prospect of anticipating the beginning of the execution of the sentence encourages the search for collaboration agreement, especially given the strategic time management in the processing of actions in the main core of Lava Jato (Rodrigues & Arantes, 2020).

Still in a scenario of strong public support for the operation, in May 2018, the STF remodeled the constitutional interpretation of the “privileged forum”. The Court significantly restricted the cases of authorities with the prerogative to be prosecuted before the Collegiate Courts, transferring this jurisdiction to first instance judges. The measure has an immediate effect on reducing the political exposure of the Collegiate Courts, specially the STF, which exercised criminal jurisdiction over several federal authorities. It also has the potential to encourage the protagonism of the lower levels of the justice system through police operations against political agents. This institutional modeling is still ongoing in the Court, which maintained the privileged forum in some cases of crossed mandates in a trial in May 2021 (procedure No. 4846).

In a scenario in which Lava Jato became the target of more intense criticism, with its image tainted when ex-judge Sergio Moro assumed the position of Minister of Justice in Jair Bolsonaro’s government, the STF restricted the competence of the Federal Justice, in March 2019, by excluding it in cases of corruption that are associated with an accusation of electoral crime. The Court also resumed the previous position of prohibiting the execution of the sentence before the final decision (res judicata), but it did so only in November 2019. Here there was a deliberate choice not to rule the judgment of this constitutional issue when the STF maintained the arrest of the ex-president Lula, in April 2018. In this instance, there was already a majority formed on the thesis that would have prevented his imprisonment for 580 days, derived from a conviction later overturned in two STF collegiate trials. These trials recognized the partiality of Judge Sergio Moro (March 2021) and the incompetence of the Federal Court in Paraná (April and May 2021).

The actors and institutions involved with Lava Jato used the incremental process of improving the mechanisms for controlling corruption and the institutional loopholes that make their activities less accountable. Although this institutional dimension was not sufficient for the operation results, it is difficult to deny that it will continue to impact the strategic choices of politicians and businesspeople operating in the country, as well as modulating the incentives and constraints of control bureaucracy.

5 Final Considerations

The data presented in this chapter provide a general map of the institutional design that was built and remodeled in Brazil in the years preceding Operation Lava Jato. This design shows the scenario in which businesspeople and politicians decide their strategies on establishing economic relations that interconnect private interests and public morality and resources. Brazil assumed international commitments to fight more effectively not only the practice of corruption but mainly the acts of occultation and concealment of assets from illicit sources. These commitments were internalized by the approval of more rigorous legal rules, strengthening of control institutions, intensification of international legal assistance and domestic inter-agencies cooperation, in addition to the improvement of mechanisms for monitoring the traces left by illegal financial activities.

These incremental advances can make the practice of some types of corruption more costly insofar as they provide signals about the political costs of being involved in the practice of some corrupt behaviors (Levi, 1999). They mainly alter the incentives and constraints imposed on the actors, which possibly occurs in parallel with the reshuffling of the behavior of politicians and businesspeople to enable the realization of their interests. It is also important to highlight that a broader definition of corruption does not only include the traditional exchange relationship (quid pro quo) between a public agent and a private agent. This definition also covers several less explicit forms of appropriation of public assets using direct or indirect relations with people in positions within the state structure. These may refer to institutional characteristics of the relations between the State and economic agents, which will not always be subject to the control mechanisms developed in recent decades. In addition, one cannot disregard that the engagement of accountability institutions and the patterns of interaction between them are also a reflection of self-interested movements, aimed at the search for institutional affirmation and preventing their activities from being subject to accountability (Arantes & Moreira, 2019).

The institutional framework summarized in this chapter and the specific issues related to Lava Jato show the complexity of political relations that drive the country’s anti-corruption and anti-money laundering institutional design. On the one hand, the progressive strengthening of control institutions involves an apparent paradox since the political class promoted most of these advances. There were politicians affected by Lava Jato who played a decisive role in the legislative process described in this chapter. On the other hand, the interests that drive the members of the control bureaucracies are not very clear. They secure personal, institutional, economic and reputational gains from the strengthening of the accountability mechanisms of the political class. There is also little certainty to affirm that the centrality given to the anti-corruption policy by the criminal justice route adopted by Lava Jato has some effect of discouraging corruption in the future. However, it seems reasonable to believe that the incremental process that preceded Lava Jato will continue to produce the impact derived from the constraints and incentives it generates, in addition to keeping open the possibility of intense activity of accountability institutions in the country, with all the consequences that the deficit of control over some of these institutions can produce on democracy.