Home Corruption Brazil’s Bank BNDES invested billions to finance the corruption

Brazil’s Bank BNDES invested billions to finance the corruption

The BNDES paid at least $37.5 billion to corrupt companies and infrastructure projects


Brazil’s National Economy Development Bank, the BNDES, represents the main investor in the Latin American economy. However, despite its importance in the national economy, the bank often refuses to provide basic information about its investments. In the past, the bank has neglected to provide information to the Federal Attorney General and Court of Auditors. Moreover, the bank has gone unscathed in the investigations of Operation Car Wash.

But an unprecedented survey of internal tables of loans and investments more than implicates the bank in corrupt infrastructure dealings. According to the documents, the BNDES loaned at least $37.5 billion to companies investigated in Car Wash. This amount surpasses that of the entire public health budget, the largest in the federal government (set at $36 billion).

The new data corresponds to a period within the Lula and Dilma administrations, between 2003 and 2015. During this time, the bank had five different presidents. One of them, ex-Finance Minister Guido Mantega, was temporarily arrested last September after Eike Batista (also in prison) accused him of asking for $2.3 million in bribes for the Workers’ Party.

Where’s the money

The accounts included infrastructure operations in the energy sector and construction projects. For example, the bank funded the construction of gas ducts, petrol refineries and ships, as well as hydroelectric plants. In addition, accounts included private business deals in the ethanol sector and the distribution of fuel.

Finally, the bank financed the reform of stadiums for the 2014 World Cup as well as infrastructure projects abroad with the contractors Andrade Gutierrez and Odebrecht. The projects were conducted in Angola, Mozambique, Ghana, Peru, Venezuela, Argentina, and the Dominican Republic. These international projects alone summed up to $12 billion in loans.

These investments were not only expensive but often disastrous. Infamous stories of problematic ships, poorly built equipment, and broken shipyards have crippled the bank’s reputation. Furthermore, the bank made many loans to friends of the president, whose companies would go bankrupt shortly afterward. One example is the businessman José Carlos Bumlai, a personal friend of Lula’s. Bumlai’s sugar and alcohol plant in Mato Grosso do Sul received about $125 million in loans, but still went bankrupt with $376 million in debt.

And the bank’s questionable business dealings extend further than just the energy and construction sector. The BNDES also loaned money to companies implicated in the rotten meat scandal, such as the Brazilian meat producer JBS. Moreover, the bank loaned money to Brazilian phone company Oi, which recently declared bankrupcy with a debt of $20 billion.

Hidden deals

Until recently, the bank’s dealings benefited from a wall of protective legislation against transparency. Dilma Rousseff herself vetoed a law that would have obligated the institution to open up its data sheets, back in 2015. However, that same year, the Supreme Court (STF) overruled Rousseff’s veto, forcing the bank to publish its accounts.

Investigators have more than enough ammunition to question the bank’s administration about its investments in corrupt business deals. Many were extremely expensive for the country. Almost all of Andrade Gutierrez and Odebrecht’s international construction projects are under investigation for bribes and money laundering.

“The bank loaned cheap, public money to big companies or on the capital market. Through this, the bank took money away from those who needed it and gave it to those who didn’t,” said the engineer Adriano Pires, owner of the Brazilian Infrastructure Center, a consulting agency specialized in petroleum and energy.

Indeed, who’s to say what Brazil could have done with the billions lost on corrupt big companies.