Opinion by Michael Royster

RIO DE JANEIRO, BRAZIL – The Supreme Court (STF) in Brazil has recently been doing a lot of thinking outside the box (“caixa” can mean box in Portuguese), taking a very activist stance against Brazilian corporate culture.

Michael Royster, aka The Curmudgeon.
Michael Royster, aka The Curmudgeon.

In 2015, it prohibited campaign contributions by corporations to individuals, on the grounds that corporate contributions always come with a “quid pro quo”.

Last week, the STF went even further. A panel of five Justices held that a sitting Senator can be charged with corruption and money laundering, even though a campaign contribution made by a corporation to his party was legal and was declared to TSE (the electoral court which oversees campaign financing).

The STF panel adopted the reasoning of lower court Judge Sergio Moro, whose investigations have shown that, in many cases, the source for the legal and declared corporate campaign contribution was the illegal massive and pervasive corrupt practices engaged in by the corporate donor.

In other words, corrupt donors who received dirty “off-book” payments (“caixa 2”) effectively recirculated them to corrupt politicians, through clean “on-book” payments (“caixa 1”). In two words, money laundering.

Congress was appalled by this decision, because it means that not only are the “caixa 2” campaign contributions going to be investigated, but even some of the “caixa 1” contributions, which they all thought had been immune from scrutiny.

Lawyers for corrupt legislators have long argued that “caixa 2” campaign contributions are not punishable, because there is no specific article in the Penal Code that refers to them. Courts have almost uniformly rejected that argument, so Congress has come up with another idea to save its collective bacon.

The idea is both counter-intuitive and diabolically simple: amend the Penal Code by adding a provision that specifically criminalizes “caixa 2” campaign contributions in the future!

By doing so, Congress would ratify the argument that before the amendment, “caixa 2” was legal, and that criminal charges against the thousands of politicians who received “caixa 2” campaign contributions in the past would be an unconstitutional ex post facto application of the law.

Congressional leaders, all of whom have hugely benefited down the years from “caixa 2” campaign contributions, have tried to promote this legislation, but the public outcry has been huge. Having no shame but tons of chutzpah, the leaders are now trying to tack a provision that would amnesty their prior corruption onto a piece of anti-corruption legislation.

Congressional leaders now face a worse problem — how to avoid prosecution for “caixa 1” campaign contributions, when the source of the contribution is proven to be funds deriving from corrupt practices. Corrupt politicians all deny they knew that their donors had been engaging in any corrupt practices—but they all lie in their teeth. They knew. Oh, indeed they knew.

Next week Chief Federal Prosecutor Janot will send the STF the names of hundreds of federal and state politicians who were involved in corrupt activities, according to the plea-bargaining testimony of 78 Odebrecht managers and directors. Janot will also request the STF to publish the names of these politicians, which is their worst nightmare.

The Curmudgeon hopes the STF approves the publication of the names, and that the people of Brazil continue to protest and reject the politicians’ attempt to whitewash the illegal “caixa 2” campaign contributions.


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