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Brazil’s workers face the consequences of corruption scandal

First Published      Last Updated Jun 19 2017 04:29 pm

Sao Paul • Ricardo Coelho was a 50-year-old engineer at the peak of his career when he traded his calculator for a pair of eyebrow tweezers.

Once a top executive at the Brazilian construction giant Odebrecht, he found himself stranded with no prospects two years ago when the firm's chief executive was arrested and jailed, triggering the loss of 100,000 jobs. With his savings dwindling, Coelho opened a hair removal salon, Eyebrow Design, in a mall on the outskirts of Sao Paulo.

"I had 27 years of experience and a diploma from Brazil's best university, but I couldn't even get an interview callback," he said.

Coelho is one of thousands of skilled workers trying to navigate Brazil's wrecked economy in the wake of Operation Car Wash, a sprawling investigation that has used plea-bargain deals to trace corruption from a Brasilia gas station to the highest levels of government.

The investigation has resulted in prison terms for many politicians, as well as executives in Brazil's construction, petrochemical and meat industries, on charges of trading bribes involving lucrative government contracts. Three years in, the industry purges have sparked mass layoffs, hollowing out companies that were once world-renowned.

Brazilians overwhelmingly support the Car Wash probe and say they hope it will end systemic graft and usher in a new culture of transparency. But although the investigation is expected to pave the way for stronger accountability and governance over the long term, the progress has not been pain-free.

Many Brazilian workers who had no direct involvement in the scandal have paid a steep price. And as top executives negotiated plea deals with authorities, their employees found themselves trapped under crumbling empires, with whole sectors of the economy gutted overnight.

"Working at Odebrecht was an engineer's dream. I was on track for retirement," Coelho said.

Five years ago, Odebrecht and other big firms were riding a commodities boom to international prominence, soaking up the country's top engineering talent to build highways across the Andes, airports in Miami and World Cup stadiums across Brazil.

That dream came crashing down in June 2015, when chief executive Marcelo Odebrecht was arrested and sentenced to 19 years in prison for bribing officials in return for millions of dollars in government contracts. The company imploded overnight, firing more than half of its workforce.

Because Operation Car Wash has relied so heavily on plea-bargain agreements, with prosecutors granting defendants shorter sentences in exchange for information on other suspects, the executive ranks of some of Brazil's leading industries have been decimated. Investigators struck such deals with 77 former employees at Odebrecht, along with dozens of others at the competing construction firms of Andrade Gutierrez and OAS.

The blow to the reputation of those firms and others has left the companies struggling to obtain new domestic and international contracts. As their revenue dries up, their workers have been getting pink slips.

Coelho had no experience in the beauty industry and had never held a pair of tweezers before opening his store. But he learned on the job and put the negotiation and management skills he learned at Odebrecht to use in the salon, a sleekly designed black and white room with a row of reclining chairs.

Coelho makes more money than he did as a civil engineer. "I'll never go back," he said.

He is one of the lucky workers who landed on their feet. After 20 years working for Petrobras, Brazil's state oil company, Silvia Boccagini, a 52-year-old pipe technician, was among 170,000 employees sent packing when police charged top executives with bribery and corruption. Two years later, Boccagini has yet to find another job and is surviving with help from relatives.

"The Brazilian engineering industry is finished," she said. "Everything has stopped."

Brazil's economy has started showing signs of growth again in recent months, after two years of agonizing contractions — the worst depression in the country's history.

But experts worry that the sudden brain drain from Brazil's most lucrative sectors will have a lasting impact on the country's global competitiveness. When skilled workers such as Coelho or Boccagini leave their field, they take their expertise with them. By the time the country's economy recovers, the next generation of Brazilian engineers may not have seasoned mentors to guide them.

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