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Corruption allegations stagger troubled Brazil

March 4, 2016 at 8:06 PM EDT
As Brazil reels from an economic recession and the Zika virus epidemic, new troubles have emerged regarding one of the nation’s most popular political figures. Luis Inacio Lula da Silva, president of Brazil from 2003 to 2010, was detained by police Friday morning as part of a wide-ranging probe into government corruption. Hari Sreenivasan talks to Simon Romero of the New York Times for more.
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JUDY WOODRUFF: The nation of Brazil was already reeling from economic woes and the onset of the Zika virus, when, this morning, a popular former president was detained in a wide-ranging corruption probe.

We go to Hari Sreenivasan for more.

HARI SREENIVASAN: Luiz Inacio Lula da Silva was the wildly popular president of Brazil from 2003 to 2010.

But this morning, Lula, as he’s known, was brought to a police station in Sao Paulo for questioning by officials, while a large crowd of his supporters formed outside. Lula was questioned as part of a major political corruption scandal involving the country’s gigantic state oil company, Petrobras.

All this comes as the country faces the threat from the Zika virus, a damaging recession and hosting duties for the Summer Olympics.

I’m joined from Rio by Simon Romero of The New York Times.

So, just to get our audience up to speed, what’s this investigation all about?

SIMON ROMERO, The New York Times: Well, it’s a sprawling inquiry into the bribery and kickbacks that took place around Petrobras, which is company of incredible importance to the Brazilian economy.

It made Brazil’s huge offshore oil discoveries about a decade ago and really contributed to Brazil’s rise as a developing world powerhouse, but it turns out that politicians and executives at huge construction companies and contractors were looting the company for years, creating this vast scheme of hundreds of millions of dollars of bribes.

And now it’s engulfing one of the country’s most towering political figures, who is Lula.

HARI SREENIVASAN: Is it the quantity of money being that was pushed off the books? Because, unfortunately, corruption is a reality in lots of parts of the world. Brazil is not immune to it before. So why is this one such a big deal?

SIMON ROMERO: In some cases, yes, it does have to do with the quantity of money. One executive at Petrobras, a relatively obscure, mid-level manager, managed to take almost $100 million in bribes himself, and he’s had to give back almost all of that money as part of a plea deal.

So, the amounts involved are just astonishing. So, even in a country like Brazil, which had been hardened in a sense to stories of corruption throughout various levels of government, the Petrobras scandal has just been astonishing for many people.

HARI SREENIVASAN: Put this in economic context for us. What’s happening to the economy now and why are people paying more attention to this scandal?

SIMON ROMERO: Well, the memories of Brazil’s incredible boom of the previous decade, when, you know, the country really emerged on the global stage and won its bids to host the Olympic Games and the World Cup, are really a thing of the past.

The figures which were released just this week show that the economy shrank 3.8 percent in 2015. That’s the worst economic plunge in 25 years, and some economists are claiming that it’s going to be the worst and most severe recession in the country in nearly a century.

So it’s just a huge dilemma that the country’s leaders are now facing, and in part it’s one of their own making. You know, they put into motion these policies which are creating the crisis they’re experiencing today.

HARI SREENIVASAN: This is also happening at a time when everyone around the world is concerned for Brazil because of the Zika virus.

SIMON ROMERO: That’s right.

The epidemic around the virus is yet another blow to Brazil at a very delicate time for the country. It’s been spreading very quickly throughout Northeast Brazil, a poverty-stricken region, and now you’re finding more and more cases of birth defects which are linked to Zika here in the big cities, in the southeast, more industrialized part of the country here in Rio and Sao Paulo.

HARI SREENIVASAN: That’s also having a ripple effect on the Olympic Games, which are going to start in a few months. There are Olympic teams around the world wondering whether or not that they should bring their athletes to Brazil, and ticket sales are down a lot more than they were projected.

SIMON ROMERO: It’s been yet another disappointment in Brazil’s preparations for the Games.

They’re already dealing with a polluted bay here in Rio where the sailing competition will take place, and Zika is presenting a dilemma to the athletes who are going to compete in Rio and to many of the fans who are going to consider coming.

The CDC in the United States just issued a warning advising pregnant women about coming to Rio at this time, so the risks are very clear to a lot of people.

HARI SREENIVASAN: Simon Romero of The New York Times joining us from Rio via Skype, thanks so much.

SIMON ROMERO: Thank you for having me.

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