How Sérgio Moro is tackling Brazil’s corruption

How Sérgio Moro is tackling Brazil’s corruption

Sérgio Moro is quickly becoming a household name in Brazil and neighboring countries. His strong stance against corruption has led this Brazilian federal judge to lead historic investigations that have uncovered multibillion-dollar corruption schemes within the Brazilian government and private sector. With an economy in quick decline, Moro’s fight against corruption is an important step towards helping the country boost its economy and restore confidence in investors.

 Who is Sérgio Moro?

 Sérgio Moro became a federal judge in Brazil at the young age of 24; since then, he has participated in several courses and training programs to detect money laundering and dismantle corruption, he has published books and articles about these topics and led multiple money laundering, bribery, and corruption investigations. In 1998 he participated in a training program for lawyers at Harvard Law School and later obtained a Doctorate in Law from the Universidade Federal do Paraná.

Despite his multiple accomplishments since taking office many decades ago, his recent popularity in Brazil and the Latin American region stems from his leadership in the Lava Jato Operation and the multiple criminal sentences that resulted from his investigations and prosecution efforts. In the past, Moro had uncovered several other important corruption and money laundering schemes including the Banestado case and the Operation “Farol da Colina”.

 Brazil’s economic progress

In 2008 Brazil was awarded the rating of investment grade economy by Standard and Poor’s rating services. As member of the BRIC group of countries, Brazil had been on a stable path of economic growth spurred by a global high in commodity prices, including oil exports. After years of stable development and a prosperous investment market, recent global economic changes, as well as local corruption scandals and changing government policies, have contributed to the stalling of the Brazilian economy.

After taking office in 2010, Brazilian President Dilma Rousseff seemed to enjoy the same popularity as her predecessor and mentor, Luiz Ignacio Lula da Silva. But recent corruption scandals in relation to Brazil’s national oil company (which at one point was chaired by Rousseff herself) as well as the government’s administration of the federal budget have led to further crisis and economic trouble for Brazil.

The cost of corruption

 Brazil currently ranks 76 out of 167 on Transparency International’s Corruption Index and 123 out of 190 in the World Bank’s Ease of Doing Business Index, making it one of the top 10 worst countries in Latin America for establishing and carrying out a business. Corruption at both the level of private and public sector carries many negative implications for economic development; these implications become even direr in developing countries and those already affected by economic crisis, such as Brazil.

The cost of corruption can take many faces, including deadweight losses from artificially hiked prices, loss of trust by foreign and local investors, as well as lowering the quality of products and investments made by the government and the private sector.

In Brazil, state-level corruption has greatly affected local businesses, the quality, and quantity of public investment, as well as the international reputation of the country. With the uncovering of the Petrobras corruption scheme thanks to the Lava Jato (Car Wash) investigation, led by Sérgio Moro, it became even clearer how corruption was taking a toll on Brazil’s economic progress.

Operation Lava Jato

The Lava Jato investigation revealed a corruption scheme in which executives from Brazil’s state-run oil company worked in conjunction with the executives and owners of large construction companies to purposefully overcharge Petrobras in multiple contracts and then funnel said gains to fund politicians, political campaigns, and private bank accounts.

Meanwhile, the Brazilian economy was and is undergoing a recession; unemployment has been steadily rising since 2014, the GDP has been falling, and consumption and investment continue to decrease. The government of Rousseff started cutting down on government spending and hiking interest rates, all the while the Real’s value (Brazil’s currency) keeps dropping.

Despite Rousseff’s claims that the global economic panorama is to blame for the economic woes of Brazil, the Petrobras corruption scandal reveals the immensely negative economic impact that corruption carries about for Brazil and the Latin American region as a whole.

One study conducted by the Getulio Vargas Foundation estimates that approximately R$87 billion have been lost in GDP thanks to the Petrobras corruption scandal; these losses come in the form of reduced investments by Petrobras and private firms who hold contracts and work with Petrobras, as well as layoffs in said companies due to the financial hardships consequence of the Petrobras scandal.

Even after Moro’s efforts against corruption are bearing its fruits, Brazil’s economy continues to be in recession and business for the average Brazilian is not yet prosperous; however, the long-term effects of uncovering corruption schemes and ‘cleaning’ the government and its agencies of corruption, will eventually translate into further economic competition, innovation, investment, and progress in Brazil and other Latin American countries plagued by corruption.

In the words of former Brazilian President Fernando Henrique Cardoso “we [Brazil] have a culture that is not exactly democratic yet; it is still tolerant of corporatism, privileges, and clientelism.” With his continuous fight against corruption, it is leaders like Sérgio Moro that will drive the Latin American region towards progress and stability. Aside from its moral implications, the fight against corruption is a necessary requirement for the region’s economic prosperity and stable development.

About Author

Astrid Hasfura

Astrid Hasfura Dada is currently pursuing a Masters Degree in Security Policy at The George Washington University’s Elliott School of International Affairs. She focuses on risk analysis and transnational security with a special interest in Latin America.