By Odebrecht’s admission in U.S. District Court in Brooklyn last December, Structured Operations doled out some $788 million in bribes in Brazil and 11 other countries, securing more than 100 contracts that generated $3.3 billion of profit for the company. Odebrecht and petrochemicals affiliate Braskem SA agreed to pay $3.5 billion in fines to Brazil, the U.S., and Switzerland tied to the activities of the division in Miami and beyond. It’s the biggest corruption-related fine ever levied on a company, eclipsing a $3.16 billion fine in Brazil tied to corruption allegations against another target of the Car Wash probe, Brazilian beef giant JBS SA.

For decades, Odebrecht has cultivated a certain corporate lore. It goes something like this: The company’s ascent to the upper ranks of the world’s engineering and construction companies came from an obsession with hard work, expertise, and customer service. Top executives imbibe the teachings of the company’s founder, the late Norberto Odebrecht, via his three-volume guide to best practices, the Odebrecht Business Technology system. But last Dec. 13, when Emílio Odebrecht, Norberto’s 72-year-old son, took a seat before a microphone in a 1970s-era attorney general’s building in Brasília, Brazil’s capital, he described a family empire built on graft.

 

Eoin Treacy's view

The “Car Wash” scandal has enmeshed just about everyone in public office in Brazil including both sitting and past presidents as well as officials in a slew of neighbouring countries. Everyone has always known that corruption was part and parcel of doing business in the region but it has now been quantified and put on display for the world to see which has resulted in a blow to sentiment. 

Brazil in particular now has a political crisis because there is almost no one inside government or in the opposition who has not benefitted from graft. The Brazil Real has been subject to two major stabs to the downside over the last six months; suggesting the impressive advance posted from the 2015 low is under threat. It needs to sustain a move back above the trend mean to signal a return to demand dominance beyond short-term steadying. 

The iBovespa Index has also returned to test the region of the trend mean. 

Meanwhile the iShares Brazil ETF has a similar pattern to the Real. 

All three of these charts are in need of a bullish catalyst to reinvigorate the bulls.