Oil, war, and corruption in Brazil: understanding “Curitiba’s conspiracy”

The seemingly never ending number of cases of corruption within the oil industry can help explain Curitiba's conspiracy in Brazil. Português, Español

José Luís Fiori William Nozaki
4 September 2019, 12.01am
Demonstrators protest in defense of Lula da Silva, in Sao Paulo, Brazil, on July 12, 2017. Lula was sentenced to nine years in prison for his involvement in a corruption ring that embezzled billions of U.S. dollars from Petrobras
Photo: Rahel Patrasso/Xinhua News Agency/PA Images. All rights reserved.

Americans usually celebrate the two great generations that have marked their history: the generation of their founding fathers, responsible for the creation of their political system, in the second half of the 18th century; and the generation of robber barons, responsible for the creation of their monopolistic capitalism in the second half of the 19th century. John D. Rockefeller stands out as the greatest figure within the generation of the “robber barons”, he was strongly associated with oil and the creation of the Standard Oil Company, the first of the “Seven Sisters” to control the world oil market up until the end of World War II, and still occupy a prominent place among the 15 largest capitalist companies in the world.

Standard Oil was created shortly after the Civil War in 1870, but by the end of the 19th century, Rockefeller's company was the largest oil company in the United States, and the largest supplier of the kerosene, which lit up the largest cities around the world. According to his biographers, Rockefeller was a godly man and used to travel accompanied by two Pastors who gave him religious assistance, but at the same time he ran his company with merciless methods, with an unrestrained pursuit of capitalist greed, whilst even destroying his competitors whenever it was necessary. Maybe this was why his brother William Rockefeller used to refer to competition in the oil market as an exercise of "war and peace." As capital centralization advanced, and oil became the most important and strategic commodity in the world, John Rockefeller's behavior became a kind of universal "ethical paradigm" in the world oil industry.

In the early 20th century, the oil industry joined the war industry and oil became the "energy" that moved the ships, tanks and airplanes of the military forces of the Great Powers, especially in World War II, and in all conflicts that followed until the 21st century. Oil played a decisive role in the Pacific War, triggered by the Japanese attack on Pearl Harbor in 1941, and was the central reason for the German attack on the Soviet Union in 1941, which wanted to reach Azerbaijan, in order to extract oil from the Caucasus and the Caspian Sea. After that, oil was decisive for the US and British-sponsored coup d'état in Iran in 1953, and also for the 1956 Suez Canal Crisis. It again played a central role in the Yom Kippur War in 1973, the Iran-Iraq War of the 1980s, the Gulf War, 1991, the Iraq War, 2003, the Libyan War, 2011, and the Syrian War that continues to this day.

In 1945, shortly after the end of the war, the United States signed its main strategic alliance, an alliance that remains strong to this day, with Saudi Arabia, which at that time had the largest oil reserve in the world. In 1979, after the Islamic Revolution in Iran, President Jimmy Carter established his famous strategic doctrine that anything involving control of Persian Gulf oil (and the world’s oil, it might be added) would be considered a matter of US national security. A doctrine established with the full awareness that oil is also a matter of strategic security for all other powers in the world vying for the same world reserves that are concentrated in two thirds of the territory of only 15 countries, of which 13 are reserves controlled by their own national States and their State-owned oil companies.

The collective awareness that oil is an indispensable resource for the strategic security of countries has consolidated an indissoluble partnership between States and their oil companies in the struggle to expand and monopolize oil resources and markets. This is also true of the large US private corporations that operate alongside the US government and their military and intelligence agencies. It is this close alliance, and the vision of oil as a “geopolitical commodity”, that explains the use of any means necessary to ensure control of new resources and markets that appear, even if that means regimes and government are forced to change or corrupt rulers, politicians, and executives are used, or even judges, prosecutors, religion is required. Whoever necessary to achieve their strategic goals.

Of the 141 cases filed between 1977 and 2013 by the Security and Exchange Commission (SEC) and the US Department of Justice (DoJ), 41 – virtually one third – anti-corruption actions related to the oil and gas sector.

Let us recall a few recently reported cases in the international press, when favors have been bought, changes in government have been promoted or even civil wars have been motivated by major oil issues, or directly funded by the major oil corporations.

i) In the 1990s, Mobil and other US oil companies reportedly paid a bribe of $ 80 million to Kazakhstan President Nursultan Nazarbaev's Swiss bank account in an operation with the US Central Intelligence Agency (CIA);

ii) Between 2000 and 2002, Chevron would have paid surcharges to corrupt the UN's Oil for Food Program at a time when Condoleezza Rice was an advisor to that company;

iii) In 2003, Exxon reportedly paid $ 500 million to the President of Equatorial Guinea, Teodoro Obiang Nguem Mbasogo, deposited in a private and personal bank account in the United States;

iv) Also, in 2003, Norwegian oil company Statoil would have paid $ 2.9 million to secure contracts in Iran.

v) Between 2004 and 2006, Gazprom, Russia's largest natural gas company, reportedly paid bribes in the construction of the Yamal pipeline, which connects Siberia with Germany;

vi) In 2005, an independent inquiry led by Paul Volcker denounced a regular system of bribes, surcharges and payments to individuals with access to Iranian oil under the Oil for Food Program, including the French oil company Total, which was charged with bribery, complicity and influence peddling between 1996-2003, although it was later cleared by a Paris criminal court.

vii) In 2006, the French company Total would have bought the support of Italian politicians and businessmen to secure below-market concessions, in a coup estimated at 15 million euros;

viii) In 2009, Exxon would have won a competition in Nigeria with a much lower bid than its competitors by bribing local authorities;

ix) In 2011, Exxon reportedly became embroiled in corruption in Liberia's oil sector in attempt to buy an oil bloc that involved other companies, including Viscount Astor, father-in-law of former British Prime Minister David Cameron;

x) Also, in 2011 Shell and ENI would have paid over $ 1 billion as a bribe to Nigerian oil executives;

xi) That same year, 2011, Statoil was denounced for having systematically paid bribes to consultants in Libya and Angola for US $ 100 million, since 2000;

xii) In 2017, in Saudi Arabia, after a long investigation of corruption in the oil world dozens of prominent princes and entrepreneurs were arrested;

xiii) More recently, in 2019, Guyana has continued to investigate the use of bribery by government officials by ExxonMobil and Tullow Oil in an attempt obtain the right to exploit the world's newest Deepwater oil region;

xiv) And going back to 1994, Halliburton, which was chaired by Dick Cheney between 1995 and 2000, would have paid a bribe of $ 182 million to Nigerian rulers to participate in the Bonny Island Liquefied Natural Gas Project. In this case, it is worth adding the important confession of Pedro Barusco, former manager of Petrobras Services, who participated in negotiations with Halliburton for the delivery of platforms P43 and P48. According to the engineer, Brazilian oil executives had been receiving bribes, since at least 1997, the same ones that were later paid by Brazilian companies – such as Odebrecht, OAS, among others – which replaced foreign companies as Petrobras suppliers.

Let’s stop here, as there are seemingly an endless number similar cases; suffice it to say that a study by political scientist Paasha Mahdavi at the University of California found that of the 141 cases filed between 1977 and 2013 by the Security and Exchange Commission (SEC) and the US Department of Justice (DoJ), 41 – virtually one third – anti-corruption actions related to the oil and gas sector.

The "world oil market" has never had anything to do with what orthodox and liberal economists call "free competition",

There is no doubt that the most emblematic recent case of the world’s oil dispute is still the case of the 2003 Iraq War, conceived by Vice President Dick Cheney, which was fought in the name of combating weapons of mass destruction. While it did serve as a way to change Iraq's government and political regime, the ultimate goal was to impose the supremacy of US companies on Iraqi oil, including the scandalously favoring of the US company Halliburton, which was chaired by US Vice President Dick Cheney himself between 1995 and 2000.

All of these stories allow us to draw at least three conclusions that can help us understand recent events in Brazil:

  1. The "world oil market" has never had anything to do with what orthodox and liberal economists call "free competition", instead it has always been a "war field" between big corporations and big powers;
  2. Within this "war field," what pastors, jurists, and the "common man" call "corruption” has always been seen as normal in competition between the major oil companies and in their disputes for new resources and new markets;
  3. Finally, there is strong evidence that these same bribing and “corrupting” corporations often accuse their competitors of “corruption” and any and all competitors or adversaries that stand in their way.

If this has always been the “oil ethic”, Mr. Pedro Barusco's confession is not surprising, that the major oil companies and suppliers of Petrobras have been paying bribes to company leaders, since at least 1997, during the administration of Mr. Fernando H. Cardoso, and probably long before. On the other hand, knowing the rules of this extremely violent game, it could have been the American oil companies themselves that passed on information about their “bribe” to the US Department of Justice, when they were harmed by Lula administration policy, protecting Petrobras' national suppliers, and even more so, after the announcement of the discovery of pre-salt oil reserves in 2006. And lastly, it makes sense to think that the US government has passed this information on to its Brazilian subordinates: law firms, judges, prosecutors, journalists, military, and all who participated in the “Curitiba conspiracy”. Anyway, due to the presidential performance of that pathetic figure generated by the conspiracy, it is likely that Americans themselves will soon reveal the details of this story, as has already happened with the documentary “The Hacked Privacy” (“A Privacidade Hackeada”).

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