Brazil’s World Cup corruption challenge

All eyes are on Brazil as the World Cup kicks off on 12 June. Unfortunately, the focus is not just the football. Accusations of corruption and mismanagement are multiplying as more stories surface about how budgets tripled for the construction of some stadiums and how the companies that won construction contracts donated large sums to political campaigns.

This is bringing people from many parts of Brazil out onto the streets to protest. They want to know how the estimated US$15 billion price tag for the competition was used and misused. They are angry the money did not go to fund schools and healthcare.

Rio's Maracanã stadium has been
upgraded for the World Cup

They are also angry at FIFA, football’s world governing body that is facing its own corruption allegations regarding the hosting of the 2022 World Cup in Qatar, for exploiting Brazil and pressuring its government.

The anger is not surprising. Brazilians do not trust their politicians – 81 per cent think political parties are corrupt according to the most recent Transparency International Global Corruption Barometer – and the country still lacks a strong anti-corruption infrastructure.

The good news is that there is progress towards a better anti-corruption framework. It was the new pro-transparency legislation (an Access to Information Law and the Fiscal Responsibility Law) that let citizens and journalists track public expenditures which helped expose the alleged corruption in World Cup construction projects, for example. But those responsible may in the end escape punishment thanks to a slow justice system and the statute of limitations.

Here’s where Transparency International thinks Brazil is making progress and where it is not, and what we think the government has to do next.

Thumbs up

1. More and better anticorruption and pro-transparency legislation in the past five years

Recent milestones include:

• Fiscal Responsibility Law (2000) and its addendum (2009) which impose controls on public spending and debt levels, increase managerial accountability and give more transparency to public accounts
• Clean Slate Law (2010), which prohibits people with criminal convictions running for public office
• Access to Information Law (2011), which regulates the citizens’ rights to request information from all levels of government, the legislature and the judiciary. It also forces the publication of financial data online in machine-readable formats. The federal government, for example, uses the Transparency Portal.
• Clean Company Law (2013), which imposes heavier sanctions for corrupt acts and extends administrative and civil liability to companies.

2. Independence and autonomy of the Supreme Court in the “Mensalão” case

When the Supreme Court convicted some of the country’s best-known politicians in a political bribery scandal and sent them to jail it sent a strong message that the judiciary can act independently. The Court proceedings were also televised..

3. Reform of the Federal Police

The restructuring of Brazil’s Federal Police started in 2003 and has resulted in an increasing number of investigations and arrests related to corruption and money laundering. Operation “Own goal”, for example, led to the arrest of businessmen and officials for their alleged involvement in misusing credit lines designated for World Cup infrastructure projects. In another high-profile case, a former director of state-run oil and gas giant Petrobrás and other businessmen were arrested for alleged corruption involving the acquisition of an oil refinery in Texas.

4. Free and active media

The media is a strong force against corruption in Brazil, uncovering a huge number of corruption cases. The media has also monitored government expenditures related to the World Cup as well as exposing corruption and abuses in the construction of stadiums and other infrastructure projects.

5. An increasingly active civil society

Participatory democracy is alive and well in Brazil with a growing and increasingly active number of organisations fighting corruption at all levels in the country. An interesting example of civil society engagement and active coordinated participation can be seen through the project Jogos Limpos, which monitored World Cup spending.

Thumbs down

1. Lack of regulation and limited enforcement of the Access to Information Law

Although this important piece of legislation is now passed, it needs greater investment in both data infrastructure and enforcement, especially at the state and municipal levels.

Brazil's Supreme Court

2. A slow and inefficient judiciary system

One of the major causes of impunity in Brazil comes from the country’s underperforming judiciary. Its limitations range from an obsolete Code of Civil Procedures to a lack of proper penalties for corrupt judges. Excessive opportunities for appeal cause endless prolongation of cases and it can give certain government officials and politicians the prerogative to be judged only by the Supreme Court.

3. Lack of controls on political campaign financing

In Brazil the rich have a disproportionate amount of power over the political process from local council level to the presidency because there is lax oversight and a weak sanctions regime for breaching the official donation limits. Campaign financing is also a major driver of corruption in the public sector. According to the Federal Police, at least 50 per cent of the investigations into diversion of public resources reveal that all or part of the money ends up paying for political campaigns

4. Too many appointed positions in the public administration

More than 23,000 government jobs are appointments, meaning that there is no competition. This compares with 5,600 in the US and 4,800 in France. Politicians can nominate supporters or business partners to government jobs, often with ties to campaign donors.

5. Concentration of media ownership

Although the media enjoys freedom, only six families own the most important media companies in Brazil.