CORRUPTION, INC. | LEVEL 03

Shadow budget

Odebrecht was not the original focus of prosecutors in Curitiba. Lava Jato, the corruption case that's enveloped Brazil - putting some of the rich and powerful, including ex-president Lula, behind bars - began in 2014 as a money-laundering investigation.

Focus shifted to Petrobras, Brazil's state oil company, where top managers were appointed by political parties in power. Investigators uncovered evidence that a "cartel" of engineering corporations - including Odebrecht - was rigging bids and paying bribes to secure contracts at inflated prices.

Petrobras had become a colossal piggy bank for its executives, politicians and political parties to raid. It's estimated more than $2bn was paid in kickbacks, while Petrobras lost about $14bn through over-pricing while the scheme existed.

So in 2014, prosecutors began to investigate the most influential member of that cartel, Odebrecht.

The company's bribery department, known by the rather prosaic name of Division of Structured Operations, managed its own shadow budget.

In plea-bargain testimony, Marcelo Odebrecht told prosecutors that everyone at the top of the company knew that 0.5% to 2% of the corporation's income was moved off-the-books.

"We're talking about a company that billed 100bn reais a year. If we're talking about 2%, that's about 2bn reais," he said.

In other words, up to about $600m was committed to undeclared payments. Structured Operations paid bribes through a complex and often multi-layered network of shell companies and offshore finance.

In Brazil, cash was delivered by doleiros - black market dealers. Or by "mules", who travelled with shrink-wrapped bricks of banknotes concealed beneath their clothing. Brazilian politicians were usually paid in cash. Others had secret bank accounts.
LEVEL 04