Leaked documents have revealed the cosy relationship between Brazilian prosecutors and the FBI in the Lava Jato (Car Wash) investigations – including a meeting kept secret from the Dilma Rousseff administration
Translated by Tom Gatehouse, as part of LAB’s ongoing partnership with Agência Pública. You can read the original article (in Portuguese) here.
In a career spanning more than 20 years in the FBI, special agent Leslie R. Backschies has been to Brazil on several occasions. A fluent Portuguese speaker, Backschies has been visiting Brazil since at least 2012, when she helped to negotiate agreements regarding training of police forces to respond to terrorist threats ahead of the World Cup in 2014.
Since then, her career has taken a different path. Having previously specialised in weapons and terrorism in the FBI’s National Security Branch, she began investigating corruption and money laundering in Latin America – and particularly in Brazil.
In 2014, the FBI gave her a role assisting the Operation Car Wash investigations, led by Brazil’s Federal Police (PF). She became an expert in the Foreign Corrupt Practices Act (FCPA), an American law which allows the Department of Justice (DOJ) to investigate and punish in American courts acts of corruption by foreign companies – even when no crime has been committed on American soil.
This provided the legal basis for the American government to investigate and punish – with fines amounting to billions of dollars – Brazilian companies caught up in the Car Wash investigations. These included the oil company Petrobras and the construction firm Odebrecht, which were forced to pay more than $4 billion in fines to the U.S, Brazil and Switzerland.
Today, Backschies leads the FBI’s International Corruption Unit, which in March last year opened the Miami International Corruption Squad, an office in Miami dedicated to investigating corruption cases in South America.
This is the fourth such squad specialising in international corruption. All were created in the last five years, roughly the same period in which the repercussions from Car Wash – the biggest corruption investigation in Brazilian history – have been felt throughout South America.
Five years on, Backschies appears very satisfied with the results. ‘Our relationship with Brazil is a model for collaboration for countries fighting financial crime,’ she said at an event in São Paulo.
Car Wash taskforce concealed FBI visit from Brazilian government
In October 2015, Backschies was part of a committee of 18 American agents who visited the headquarters of the Public Prosecutor’s Office in Curitiba to meet with Car Wash prosecutors and the lawyers of some of the businessmen under investigation.
For four days, the Americans met with lawyers of defendants who had struck plea bargains in Brazil, opening negotiations between them and American courts. The Car Wash investigators told the Americans to convince the defendants to testify in the United States, meaning they would not be subject to the limitations of Brazilian law or the decisions of the Brazilian Supreme Court.
This visit was organised in secret, without the knowledge of the Brazilian Ministry of Justice. According to a bilateral agreement signed in 1997, the Ministry of Justice should mediate in any matter of legal assistance with the United States.
As Brazilian law does not stipulate standard procedure for international cooperation, the members of the Car Wash taskforce exploited grey areas which allowed the Americans to pursue their investigations – all without the knowledge of the Dilma Rousseff administration.
When questioned by the Ministry of Justice and the Attorney General, the prosecutors chose to conceal the details of the visit and the names of the participants. ‘I can send you the list, but I’d urge caution, because it could cause some tension with the Americans,’ wrote Deltan Dallagnol, the prosecutor who led the Car Wash taskforce.
José Eduardo Cardozo, then minister of justice, says he was surprised to discover the presence of the Americans in Curitiba. ‘The PF asked me if we had authorized the visit. I hadn’t the slightest idea about it,’ he said. Cardozo then sought clarification from the Ministry of Foreign Affairs and the then Attorney General, Rodrigo Janot. ‘He replied saying that the visit was exclusively non-functional, that it had some academic purpose,’ he recalls.
The contact with the FBI raised questions within the Attorney General’s office and was particularly sensitive given that it concerned Petrobras, a company in which the Brazilian state is the majority shareholder.
At the beginning of June this year, following a series of publications by Agência Pública and The Intercept Brasil about the collaboration between Car Wash and the FBI, the Order of Attorneys of Brazil – the Brazilian Bar Association – filed a request with the National Council of the Public Prosecutor’s Office for an investigation into the Car Wash prosecutors. The request was accepted just a few days later.
Using conversations and documents leaked to The Intercept Brasil and investigations using open sources, Agência Pública has identified 12 FBI agents who participated in the Car Wash investigations on Brazilian soil with the PF and the Car Wash taskforce, as well as Agent Backschies.
The presence of FBI agents in Brazil was key to the American government concluding its investigations into corruption in Brazilian companies, as a former prosecutor at the American DOJ told Pública.
By law, no American agent can conduct any kind of inquiry or investigation on Brazilian soil without the explicit permission of the Ministry of Justice, as the agents have no power of jurisdiction outside their countries of origin.
Responding to a request for comment, the Brazilian embassy said: ‘The FBI collaborates with Brazilian authorities, which lead all investigations in Brazil, including those involving Brazil and the United States’ – but gave no further details.
However, the cosy relationship between the FBI and the Car Wash taskforce was such that Backschies and other FBI agents posed with a banner expressing support for a bill entitled ‘10 Measures Against Corruption’. A project of the taskforce, particularly Dallagnol, the bill ultimately failed to make it through Brazil’s National Congress.
In an exchange of messages with Dallagnol dated 18 May 2016, which features in the archives leaked to The Intercept Brasil, the former coordinator of the Car Wash taskforce in São Paulo shared the photo, explaining: ‘The FBI agents have got on board with it. But you can’t publish the photo, OK? They won’t let us.’ Dallagnol responded: ‘Nice photo! Leslie’s in all of them lol.’
The image was later deleted and does not appear in the files leaked to The Intercept. If it were published, it could be very damaging for the Public Prosecutor’s Office, given that it shows foreign authorities intervening in Brazilian legislative business.
There are dozens of references to the FBI and its agents in the conversations leaked to The Intercept Brasil. What comes across most clearly is that the closest relationship is between members of the Brazilian PF and the FBI agents.
‘It’s not a question of practicality. It’s about legality.’
A conversation from 11 February 2016 between Dallagnol and Vladimir Aras, the Secretary for International Cooperation at the Attorney General’s Office, reveals just how close the PF were to the FBI – and how much they distrusted the Dilma Rousseff government. So much so that Dallagnol admitted that the PF preferred to deal with the Americans directly than to follow formal procedure.
Dallagnol had sent an email to a contact in the American Department of Justice, containing an informal extradition request for a suspect in the Car Wash investigations. It had been sent directly to the Office of International Affairs (OIA) at the DOJ, bypassing both Aras’ department and the Department of Asset Recovery and International Legal Cooperation (DRCI) at the Ministry of Justice, which, according to the bilateral agreement, is the relevant government authority in such cases.
The dialogue suggests that an arrest warrant had yet to be issued by Sergio Moro, then the presiding judge on the case. It is not clear who the suspect was.
In the conversation, Aras warns Dallagnol several times of the potential for legal problems arising from direct collaboration with the FBI. Dallagnol’s response is clear: ‘Thanks Vlad, but the PF have made it clear that in this case it’s not practical to go through the executive.’ ‘It’s not a question of practicality,’ Aras responds. ‘It’s about legality, Delta. The agreement has the power of an ordinary federal law and it requires the Ministry of Justice to mediate.’
The FBI knew the Odebrecht investigations inside out
Several months later, the relationship with American law enforcement again became a matter for debate amongst the Brazilian prosecutors, this time in an exchange discussing a leniency agreement with Odebrecht, Brazil’s biggest engineering company and one of those most heavily involved in the Car Wash investigations. In June 2019, the company filed for bankruptcy protection.
The subject of the conversation was the IT system My Web Day, developed by Odebrecht to administer a system of bribes to politicians from various countries. The Car Wash investigators made an informal request to the FBI for help in breaking the system’s encryption.
The prosecutor Paulo Roberto Galvão explained to his colleagues in a Telegram chat that he had asked the FBI to ‘break into’ My Web Day or to ‘put us in touch with a hacker’ who could do the job. In response, the prosecutor Sérgio Bruno, the Car Wash coordinator in Brasília, said that the Attorney General, Rodrigo Janot, had been to a meeting at the American embassy to ask for help with Odebrecht’s encrypted IT systems.
‘Without a doubt, the channel with the FBI is much more direct than going through the embassy. The FBI also has total knowledge of the investigations, which the embassy may not,’ said Paulo Roberto. ‘For my part, I think it’s useful to keep both channels open.’
The FBI’s role in the investigations into Odebrecht led to one of the biggest agreements hitherto signed between the DOJ and an international company – $2.6 billion in compensation for acts of corruption which occurred outside the United States.
As Odebrecht is not a publicly listed company and its shares are not traded on the U.S stock exchange, the plea agreement highlights situations when its actions fell within American jurisdiction. For example, Odebrecht is alleged to have used bank accounts in New York to transfer money to offshore accounts in Belize and the British Virgin Islands, which would ultimately be used ‘in part’ to pay bribes in Latin American countries.
Responding to a request by Pública for comment, the Car Wash taskforce responded as follows: ‘This does not concern a working partnership, but cooperation between law enforcement authorities in their respective countries, corresponding to various international agreements of which Brazil is a signatory. The exchange of information between countries follows both international norms and Brazilian law.
‘Besides formal requests made through official channels, it is highly advisable that authorities maintain direct contact. Even before announcement of a request for cooperation, this involves maintaining contacts; holding meetings, both online and in person; and discussing strategy, with the aim of exchanging knowledge on the information to be requested and received.’
After its involvement in Car Wash and the signing of the plea deal with the U.S, Odebrecht became a target for investigations in various countries where it had business in Latin America.
According to the Miami Herald, the creation of the International Corruption Squad in Miami last year was based on the belief that money laundered by members of the Chávez government in Venezuela had ended up in the south Florida real estate market – money which supposedly included bribes paid by Odebrecht. This squad is subordinate to the Investigation Unit led by Backschies.
‘We saw presidents toppled in Brazil’
The expression used by Backschies to describe FBI investigations into foreign corruption is ‘politically sensitive’.
‘These cases are very politically sensitive, not just in the U.S. but overseas,’ she explained in an interview with Associated Press. ‘I mean, look, in Malaysia, the president wasn’t re-elected. We saw presidents toppled in Brazil. These are the results of cases like this. When you’re looking at high-level government officials, there’s a lot of sensitivities.’
It is because of these ‘sensitivities’ that unlike other criminal cases, all FCPA cases are led by the special unit in the Department of Justice in Washington. The head of the DOJ is the Attorney General of the United States, who is appointed directly by the president.
According to the Associated Press report, the FBI supervisors meet lawyers from the DOJ every 15 days to assess potential investigations and their possible political consequences.
The change in Backschies’ career path reflects a change of focus in the Department of Justice and the FBI in the last decade. Based on the belief that money laundering was financing terrorism, the American agents began to focus increasingly on cases of transnational corruption and money laundering using the FCPA legislation, which has extended jurisdiction for the whole world. Today however, most FCPA cases have nothing to do with terrorism.
The change has brought dividends to the DOJ and has facilitated renewed partnerships with police forces and public prosecutors throughout the Americas. And it is here to stay: in 2017, for the first time, the U.S National Security Strategy – as formulated by the Trump administration – includes ‘counter[ing] foreign corruption’ as a priority for the internal security of the United States.
In March 2015, the FBI opened three squads working on international corruption in New York, Los Angeles and Washington, tripling the agents investigating FCPA violations and ‘kleptocracy crimes’ – from 10 to 30. By the end of 2017, resources allocated to the FBI for investigating transnational corruption had increased by 300%, according to George ‘Ren’ McEachern, former head of the FBI’s international corruption squad.
The official announcement explained the focus on investigating ‘kleptocracies’: ‘foreign officials [who] steal from their own government treasuries at the expense of their citizens’, and stated that the FBI agents will have ‘undercover operations, informants, and sources’ at their disposal, as well as ‘partnerships with our overseas law enforcement counterparts—facilitated by our network of legal attaché offices situated strategically around the world.’
In July 2019, Backschies participated in another event to discuss international corruption, this time in Washington DC, where she revealed another ‘sensitive’ tactic of American law enforcement abroad. According to the website Market Insight, the special agent said that the FBI works with members of foreign governments to investigate FCPA cases.
She also explained that when there is a change of government in other countries, the incoming administration will sometimes ask for assistance in investigating corruption in the previous government. There may also be officials present from the previous administration who are willing to report corruption.
The FBI has been widely criticised for its intervention in cases outside the United States by legal experts, who have argued that the U.S is behaving like a ‘global policeman’.
‘In many cases, when the American government pursues these corruption cases, the suspects admit guilt because they’re scared. They negotiate a good agreement, and so the government guarantees jurisdiction over things that are in fact very tenuous. As nobody questions it, it becomes increasingly common and the jurisdiction extends further and further,’ said Adam Kauffman, an ex-prosecutor for the district of New York, in an interview with Agência Pública in June 2019, before the leak of the Car Wash taskforce conversations.
‘Because jurisdiction is like pregnancy,’ said Kauffman. ‘You either have it or you don’t. You can’t just have a little bit of jurisdiction, the same way you can’t be just a little bit pregnant. So where’s the limit?’
Agência Pública approached Leslie Backschies for an interview but had not received any response at the time of publication.