Abstract:
This case explores Brazil’s Operation Car Wash (Lava Jato in Portuguese), the largest public corruption investigation in history, which led to indictments and convictions of some 359 business executives, government officials, and political leaders from the ruling elite in Brazil. The case describes the evolution of the investigation and the fallout from it, both political and economic, between 2014 and 2022. Operation Car Wash was an example of a so-called “Big Bang” approach to addressing endemic corruption—a major shock to the system rather than a more gradual approach. But the probe also resulted in the suspension of several huge development projects, shrank the construction industry, worsened the economic pain of a global recession, and led to a broad cynicism about politicians and democracy. When evidence emerged suggesting that, at least in part, the Operation Car Wash investigation had been tainted by a domestic political agenda, the news further demoralized and polarized an already divided electorate. In fact, the question of whether Operation Car Wash had ultimately been a force for good or ill in Brazil would be debated for many years, along with a set of related questions. How were the tools of democracy supposed to function in the face of government corruption? How well did they do in Brazil? Did Operation Car Wash, with its strengths and imperfections, lend support to the “Big Bang” theory, or cast doubt on it? What lessons should anti-corruption activists in Brazil take from the Car Wash story—and, most important, what should they do next? An issue brief, “Giant of the Region, Microcosm of Latin America: The History and Political Economy of Brazil” (HKS 2291.0), developed as a companion document for this case, provides students with a high-level summary of Brazil’s history, emphasizing aspects that have shaped its present-day status as a large, democratic, middle-income country with high economic inequality and weak political institutions.
Learning Objectives:
The case allows students to grapple with the limits of democracy in preventing or curtailing endemic corruption, and the economic, political, and societal costs and benefits of a “big bang” crackdown on corruption in a country that, at least during the timeframe of the case, was trying to pull itself out of the “middle-income trap” faced by many developing countries.
