Converting Lava Jato fines into public works investments proves controversial

The possibility of converting fines handed to construction conglomerates linked to the Lava Jato anti-graft probe into public works investments is meeting resistance.

"That doesn't seem like a good idea to me. Ideally, this current government should not get involved in issues related to the already signed leniency agreements to avoid a resumption of past political discussions, where the ruling party was the focus of public opinion complaints," Carlos Fernando dos Santos Lima, who was a leading Lava Jato prosecutor and is now a compliance consultant, told BNamericas.

According to dos Santos Lima, projects eligible for these leniency agreements will be scrutinized by controlling bodies. "There will be many attentive eyes on how these biddings will take place."

The topic gained ground after chief-of-staff Rui Costa told a TV broadcaster that converting the fines could “accelerate [works] without depending on the direct federal government budget because they are resources that are not released in the budget and that could come to these works quickly because they are executed by the debtor companies, as a result of the leniency agreements.” 

But the comments even led to some pushback within the administration. 

"This issue is far from being unanimously accepted by the current administration and the comptroller general and the public prosecutor’s office have shown resistance to this idea," a business leader, requesting anonymity, told BNamericas.

LAVA JATO 

In 2014, Brazilian authorities launched the Lava Jato operation, which focused on irregular contracts within federal oil company Petrobras and uncovered a vast corruption network affecting other sectors in Brazil and beyond.

Several politicians and executives of construction conglomerates were arrested.

Overall, 17 leniency agreements were signed with companies involved in wrongdoings, agreeing to pay 12.7bn reais (US$2.5bn).