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Campaign Slush Funds | “50% of Corruption Cases”


Source: Jornal O Globo.

BRASÍLIA — Director for Organized Crime at the Brazilian Polícia Federal, Oslain Santana, the third-ranking official at the agency and traditionally reluctant to speak publicly, says that at least half the cases of corruption in Brazil are related to election campaign finance.

Santana has coordinated all the major operations against fraud in public auctions, overbilling of contracts and the hiring of nonprofit front organizations since 2011.

Can we talk about the relationship between corruption and political campaigns?

Fifty percent of federal police operations against corruption have campaign finance as a backdrop. When you investigate a case of corruption, or misuse of public funds, you eventually discover a relationship with political fundraising. If they would decide to carry out political reform, it would diminish corruption significantly. In a normal investigation, it is often a mayor misappropriating money, some of which goes toward his personal interests and some toward financing his campaign. This is the current reality. A mayor, a congress member, a governor, and so on. It cannot be stated precisely in numbers, but it is a fact. That is the sense we get from the various cases we work. And this occurs in every party. There is no moral superiority for this one or that. All of them. The various investigations of the PF and the Public Ministry (PM) bear out what we are saying.

What can be done to diminish this type of problem?

This is my personal opinion as a technician. There has to be political reform. The current campaign finance model, if left as it is, this type of crime keeps happening: They will continue to misappropriate public money to finance campaigns. What is the best model? I don’t know. Exclusively public financing or private financing only by individuals up to a certain limit, and placing spending limits on candidates? If you run for the presidency you can spend x. If you run for governor with a substantial GDP you can spend. I am not affiliated with any party, and I do not work for the electoral tribunal, but the current system is not working. It only leads to further corruption. We remain stuck in the mud. Police will continue to investigate, the PM will continue to indict and prosecute, and judges will continue to convict and sentence, but the problem will remain. We failed to learn the lesson of 1989, with the Collor government. Why was he impeached? Over surplus campaign funds. This led to his impeachment 20 years ago. Other cases followed but the system remained. Every year, various political parties say that election reform is necessary. Bills are sent down to the legislature and fail to pass. The problem is that a corporation, with no limit on spending, we have no way to monitor this situation. The electoral tribunal (TSE) lacks structure. The police lack structure. The system we have today only facilitates the formation of campaign slush funds.

Are there members of the police and the TSE preparing changes?

We are meeting with the TSE and the federal elections prosecutor (MPE) — the three actors in criminal cases involving elections — to discuss suggestions, ranging from administrative changes at the TSE that would make electoral crimes easier to prosecute to proposals to change the law. For example, we could register all campaign managers, and ensure that all expenses are paid from a single account. This would make campaigns easier to audit. On the legislative side, Congress is debating a bill that deals with financing. One proposal I though was quite useful was placing a limit on the donations of individuals while providing public funding. It would be much cheaper for the federal union to spend on campaign finance than to suffer the embezzlment of public resources through fraudulent public contracts at all three levels of government. The losses are much greater. I assure you: if R$ 1 billion is spent on financing campaigns with public funds,  the funds misappropriated are much, much greater than R$ 1 billion.

Can you describe the changes being studied by this group inside the TSE?

People who work for the campaign would have to register with the elections authority. When you carry out an inspection on elections day, you look to see if that person is working for that particular candidate, or not. You look to see what he is spending and receiving. These are changes that could be enacted through a resolution. The election authority could institute a series of rules that make corruption more difficult, making elections more transparent. As it stands, if there are no changes, we will continue to see misappropriation of funds for political ends.  “Slush funds” will continue to exist. Do we want this? No. Party leaders have reached a consensus on the TV talk shows, but in Congress, nothing happens. A lot of people have an interest in blocking this reform.

Would you say that political campaigns are at the heart of all these major scandals?

What I can say is that in our experience at the PF, 50% of cases in which public funds were misappropriated, 50% have to do with raising cash for political campaigns, if not more. You start to investigate a municipality where funds are being siphoned out of the Ministry of Health’s school lunch program. Why? To raise campaign cash. You see a governor investigated in a given state for fraud in a public works auction.Why? To raise campaign cash. And so part of the money goes toward the campaign and another winds up in someone’s pockets. The politician embezzles in order to maintain power, so he can continue stealing. Some goes into his own pocket, some goes to the staff and the rest finances the campaign. If he did not do this, he would not be reelected. A campaign is expensive.

Do you think public financing will solve the problem?

It would be naive on my part to believe it will. But it has decreased substantially. I would take it further. There are people who want to become politicians. They are idealists, they hope to effect change. Now, when this person enters politics — this could even be a colleague of mine — he will say, “look, I do not want to know where the campaign funds came from. Someone raised the funds and now they are funding my campaign. I am not going to [look a gift horse in the mouth]. I am not going to ask where the money came from. He wlll not ask because if he does, he is not going to like the answer. At a minimum,. this money flows from tax evasion amd tje “slush fund” of a corporation. Tax evasion is a crime. When it comes to money not stemming from this scheme, bribes are paid. And so an ethical candidate. with the financing of the campaign from party funds,  ends up partially funded from the parallel ledger.

Why do these political reform measures and changes to campaign funding rules never succeed?

I remeber watching  a debate between a PT leader and a representative of tje PSDB, in 2009 or 2010.  Both  sides favored public financing of election campaigns. The system would have to be changed, however.The journalist serving as mediator, asled,  “Your party is in power for eight years now and failed to change the system. After seven years in power, you have not been able to change the rules. Why?”

At a certain point, the policemen made a crude gesture with his arm…. It will not pass Congress. The House and Senate are aware of the need to change the system,which encourages corrution and embezzlment. But why don’t they just past the bill … ?

What are the Consequences?

Retired judge Walter Maierovitch wrote a paper with Italian police and prosecutors about the situation in Italy. The symbiosis between politics and organized mafias there is extensive. Campaign finances face the same difficulties as Brazil. The mafias who fund political campaigns commit white collar crimes, involving fraudulent public auctions, as in Brazil. And now, when you observe what is happening under the Italian system, which deals with stronger mafia groups,  the importation of the Italian system is visible in Brasil.

Have you discussed campaign financing by the drug trade?

You see this in border areas. In Rio, you find militias financing the campaigns of city council members. The bicho lottery produces the cash. The bicho numbers racket is a crime, and not mere innocent  entertainment. Police have infiltrated these criminal organizations. When there is public financing of elections, the scheme grows more difficult.

Do  these groups continue in operation, mixing public and private interests?

Under the current system, the politician needs money. The campaign is expensive. And so candidates will accept donations from all and everyone. We have seen it in border states and in various situations in Rio: a candidate for elected office who received drug and smuggling money. All this without taking into account my belief that tax evasion is also criminal. The current model is an empty bucket. We set out to combat white collar crime and corruption, and on an expanded scale, as in Italy. Under the pr model, we will pull even with Italy in 15 years.