The Carwash investigation in Brazil got some cred here last week. It was announced that the state oil giant company, PetroBras, will pay $3 billion to settle the US lawsuit against the company on behalf of US banks and investors(pension funds,etc). This amount finally has reached the level of pain that causes one to turn away, to seek help, to avoid repeating the mistake(s). Brazilian officials who have been ensnared in the Carwash web will no doubt be displaced from their positions of influence, if not imprisoned, or both.
The massive bribery schemes were part of a business model that has flourished in Latin America for generations. If one wanted to do business, palms had to be greased every step of the way. And so it was in Brazil where oil executives used the state company to bribe other country's executives to make business deals both lucrative and many. The influence on the central government was easily detected as once modest wealth became fabulous wealth among politicians whose short stay in power seemed to coincide with the rise in their wealth. Mr. Luis De Silva is one example as is that of his chosen successor, the ousted Dilma Rousseff.
The low price of oil per barrel has not been kind to Venezuela and others, and Brazil has not been exempt. The anticipated bonanza has not materialized due to a lack of foreign investment. This may change as new government regulations will allow more foreign investment in exploration and development, both precursors to future returns.
There is some hope in Brazil-look at Boeing's offer to buy aircraft builder Embraer. But this single move does not necessarily mark an overall surge from without. The Carwash effort will continue to catch scofflaws within the largest Latin American economy, but much more has to be done before a land rush begins.
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