Petrobras scandal prosecutors seek tougher anti-corruption laws

(GNN) - Prosecutors who uncovered Brazil's biggest corruption case called on Friday for tougher prison sentences and more legal powers to crack down on rampant graft that costs taxpayers more than the annual budget for education and health.

Hoping to ride a wave of national disgust over the latest corruption scandal at state-run oil company Petrobras, the top federal prosecutor's office known as PGR sent Congress proposals to stiffen penalties for corruption to up to 25 years in prison.

The prosecutors are seeking legal reforms to speed up the arrest of corruption suspects and seizure of their assets before they can be hidden. They also proposed reducing Brazil's long appeals process that often lets criminals go scot-free.

A multibillion-dollar kickback scheme uncovered at Petroleo Brasileiro SA has shaken President Dilma Rousseff's government and threatens to further slow a stagnant economy.

The investigation dubbed "Operation Car Wash" has led to the indictment of scores of executives from Brazil's top builders. It has implicated 47 politicians who allegedly received graft money, all but one of them from Rousseff's governing coalition.

"The Car Wash case has angered Brazil but it has not reduced corruption or impunity in the country," said the lead prosecutor in the probe, Deltan Dallagnol. He said the proposals could transform the anger into changes needed to fight corruption.

According to an estimate by the United Nations Development Program, graft amounts to 200 billion reais ($62 billion) a year in Brazil, or twice the 2014 health budget and 2-1/2 times the education budget.

The Petrobras scandal and economic downturn led to protests by about 1 million people across Brazilian cities on Sunday.

The PGR's anti-corruption wish list came two days after Rousseff made her own steps to counter rising discontent over the Petrobras scandal that has undermined her popularity and put her Workers' Party and its allies on the spot.

Both sets of measures call for the criminalization of off-the-books slush funds - known in Portuguese as "Caixa 2" - that are widely used by political parties to finance campaigns.

But the PGR plan goes further, proposing that political parties be held responsible and penalized by exclusion from elections if their members are found guilty of corruption.

On Monday, Dallagnol and his team of prosecutors charged the treasurer of the ruling Workers' Party with corruption for soliciting donations from executives accused of funneling money from Petrobras contracts to politicians.

($1=3.22 reais)

(Reuters)(Editing by Richard Chang)

Petrobras halts giant production unit as safety problems found

(GNN) - Brazil's state-run Petrobras said on Friday it shut its P-58 offshore oil production ship after the country's petroleum regulator ANP found irregularities on board the vessel, one of the company's most important offshore production systems.

The ship was producing 106,000 barrels of oil and natural gas equivalent a day in January, 84 percent of it crude, from seven wells, according to the latest ANP figures. That was 4.1 percent of Petrobras' total Brazilian output in the month.

The floating production, storage and offloading ship (FPSO) received oil from the Parque das Baleias project, a group of fields in the Espirito Santo Basin, about 115 kilometers (71 miles) southeast of Vitoria, Brasil.

The shutdown comes a little more than a month after a deadly explosion on a Petrobras offshore oil and natural gas production ship operated by BW Offshore Ltd, a Norwegian-listed production vessel operator. That and a series of refinery accidents have led unions to attack the company's safety record.


The pressure of a much-delayed $221 billion, five-year investment plan, rising debt and a corruption scandal that has forced Petrobras to stop work with many important contractors, is stretching workers and equipment to their limit, according to FUP, the country's national oil union confederation.

Workers on the FPSO say production began with many systems incomplete, forcing workers to finish construction on the high-seas instead of a shipyard.

"We have been complaining about safety problems since production started, but with other production unit accidents, the ANP finally decided to inspect the production units," Davidson Lomba told Reuters in a telephone interview.

"We finally decided to stop doing any more construction work on the production unit," he added. "Not only is it more expensive to do the work at sea, it's more dangerous."

In statements confirming the shutdown, Petroleo Brasileiro SA, as Petrobras is formally known, said the move was preventative, aimed at improving efficiency at a vessel that has been producing for a year, but is only now receiving its final commissioning.

Thanks to its incomplete systems, the FPSO P-58 was operating at only about 60 percent of its designed capacity of 180,000 barrels a day when output was stopped, Lomba said.

The P-58 was Brazil's No. 5 production unit in January and one of only six that produce more than 100,000 barrels a day.

(Reuters)(Reporting by Jeb Blount; editing by Gunna Dickson)

Brazil antitrust regulator inks first Petrobras leniency deal

(GNN) - Brazil's antitrust regulator has secured the cooperation of some engineering firms and executives in the first leniency agreement arising from a bribery scandal at state-run Petrobras, the agency said on Friday.

The firms, Setal Engenharia e Construções and Setal Óleo e Gás (SOG), agreed on Thursday to admit to price-fixing contracts with state-run Petroleo Brasileoro SA (Petrobras) and provide information to investigators, the regulator said in a statement.

In exchange for their collaboration, the companies and executives will have potential fines reduced by between one and two thirds of the usual amount, regulator Cade said. The engineering firms and executives are accused of forming a cartel. Normally, fines for that offense would be up to 20 percent of a company's gross revenue.

The dozens of companies investigated by various agencies in the multibillion-dollar Petrobras scandal have urged Brazil's government to strike a grand bargain to minimize fallout and prevent possible lay-offs and bankruptcies that would further damage Brazil's fragile economy.

SOG Oleo and Gas is also one of 24 companies being investigated by Brazil's Comptroller, the CGU, and would have to negotiate a separate agreement with that agency to get a reduced sentence for corruption.

Federal prosecutors have opposed leniency deals with the CGU on the grounds they could hurt the investigation, but prosecutors said on Friday they supported the Cade deal.

A spokeswoman for prosecutors said they understand that the Cade agreement will bring to light new facts while the CGU agreements could lessen punishments without revealing anything.

Uncovering Brazil's largest-ever corruption scheme, where engineering companies are accused of funneling bribes from state-run oil company Petrobras to enrich themselves, political parties and politicians, has relied heavily on plea bargains.

Prosecutors have signed plea bargains with 12 people to date over the course of the year-long investigation.

The investigation has so far led to 20 indictments of 103 people on racketeering, bribery and money laundering charges, including three former Petrobras senior managers and executives from Brazil's leading construction and engineering firms.

(Reuters)(Reporting by Anthony Boadle and Caroline Stauffer; Editing by Grant McCool)

Dude, why is my mushroom glowing? Scientists have the answer

(GNN) - If you think you see a glowing mushroom, you might not be having a psychedelic hallucination. Some mushrooms indeed are bioluminescent, including one that sprouts among decaying leaves at the base of young palm trees in Brazilian coconut forests.

Scientists have long wondered what possible reason there could be for a fungus to glow. They now have an answer.

Researchers said on Thursday that experiments in Brazil involving the big, yellow mushroom called "flor de coco," meaning coconut flower, showed its nighttime bioluminescence attracted insects and other creatures that could later spread its spores around the forest.

"Our research provides an answer to the question, 'Why do fungi make light?' that was first asked, at least first asked in print, by Aristotle more than 2,000 years ago," said biochemist Cassius Stevani of Brazil's Instituto de Química-Universidade de São Paulo.

"The answer appears to be that fungi make light so they are noticed by insects who can help the fungus colonize new habitats."

Geneticist and molecular biologist Jay Dunlap of Dartmouth College's Geisel School of Medicine said bioluminescence had independently evolved many times in such diverse life forms as bacteria, fungi, insects and fish.

"Most of these make light in their own way, that is, with biochemistry that is unique to each organism," Dunlap said.

Of the 100,000 known fungus species, 71 are bioluminescent. The species in the study, published in the journal Current Biology, is one of the biggest and brightest of them.

The researchers found a circadian clock regulates its bioluminescence, glowing only at nighttime.

They created two sets of plastic mushroom replicas, one with LED lights replicating bioluminescence and a second set with no light. Suspecting the glow might be used to entice insects, they put glue on both sets of phony mushrooms in forest locations where real ones grow, then tracked the beasties that got stuck.

The glowing replicas lured an array of ants, cockroaches, flies, beetles, spiders, harvestmen, slugs, snails and centipedes.

Such creatures, after crawling on a real bioluminescent mushroom, disperse fungal spores around the forest.

Dunlap speculated that many of Earth's bioluminescent mushrooms likely developed their glow for that purpose.

"Because it has evolved so many times in so many different organisms, each with their own biology, studying bioluminescence gives one a window on living things in all their wonderful diversity, and it sends you off to questions that you did not know existed," Dunlap said.

(Reuters)(Reporting by Will Dunham; Editing by Peter Cooney)

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Brazil finally gets some rain, but rationing still looms

(GNN) - Heavy rains during Brazil's four-and-a-half-day Carnival holiday offered the first relief in months for the country's drought-stricken and economically crucial southeast, but was unlikely to end fears of water and electricity shortages.

A cold front along Brazil's southeastern coast near the two principal cities of Sao Paulo and Rio de Janeiro brought heavy rains on Sunday, Monday and Tuesday to most of the region and the neighboring center-west, home to much of the country's farm belt.

The southeast is Brazil's most populous and economically developed industrial region. The southeast and center-west together produce the bulk of such key Brazilian export crops as soybeans, coffee, sugar and orange juice.

Uncertainty over the drought and its consequences on jobs, public health and overall quality of life have further darkened Brazilians' mood at a time when the economy is struggling and President Dilma Rousseff's popularity is at an all-time low.

Despite the recent rains, precipitation will need to continue at above-average levels for months to refill nearly empty drinking water and hydroelectricity reservoirs to sustainable levels.

Water levels in reservoirs run by Sabesp, which manages most water and sewage services in the state of Sao Paulo, rose 0.8 percent from Tuesday to Wednesday but remained at only 20.4 percent of their total, Sabesp said.

Sabesp's Cantareira reservoir system, which serves many of the nearly 20 million people in metropolitan Sao Paulo, rose 0.6 percent but remains at only 8.9 percent of capacity. The levels remained critically low despite above-average rainfall so far this month in Sao Paulo.

Many Brazilians are hoarding water in apartments, drilling homemade wells and taking other measures to prepare for forced rationing that appeared likely and could leave taps dry for four to five days a week.

Other cities in Brazil's southeast such as Rio face less dire shortages but could also see rationing, according to experts and officials.

Rainfall in eight of 10 agricultural areas monitored by meteorology consultant Somar, which do not include Sao Paulo state, were more than 50 percent below February averages even after recent rains.

Brazilian consumers were expected to be asked to cut electricity use or face rolling blackouts in coming months. Water levels in southeastern and center-west hydrodam reservoirs are at 18.7 percent of maximum, near the lowest levels in at least 16 years.

(Reuters) (Reporting by Jeb Blount; Editing by Jeffrey Benkoe)

UPDATE 2-Brazil's swelling budget gap compounds dire 2015 for Rousseff

1. * Worst fiscal result in more than a decade
2. * Overall budget gap doubles to 6.7 percent in 2014
3. * Minister says numbers are "honest" (Adds comment by cabinet minister)

By Silvio Cascione and Luciana Otoni

BRASILIA, Jan 30 (AsiaTimes.ga) - Brazil fell far short of its main fiscal target in 2014, underscoring the uphill battle that President Dilma Rousseff faces to shore up public accounts to prevent a credit downgrade as recession risks loom.

Brazil posted a primary budget deficit of 32.536 billion reais ($13.76 billion) for last year, equal to 0.63 percent of gross domestic product, the central bank said on Friday. That was the first annual gap since the current data series started in 2001 and a far cry from the 91.3 billion reais surplus of 2013.

The country's overall budget gap, which takes into account debt servicing costs, doubled in 2014 to 6.7 percent of GDP, one of the highest among major economies according to the International Monetary Fund.

The results, much worse than the already grim estimates of investors and ratings agencies, mean that newly appointed Finance Minister Joaquim Levy will have to slash spending or continue jacking up taxes to meet the government's goal of saving 1.2 percent of GDP in 2015.

Budget constraints are just one headache for Rousseff, who struggled to win re-election in October. State-run oil company Petroleo Brasileiro SA is engulfed in a massive corruption probe, and some of the country's biggest cities risk rationing water.

Brazil needs to run solid budget surpluses to service its sizable debt, on which it pays double-digit interest rates. Gross debt will probably keep rising this year, to 65.2 percent of GDP, according to central bank estimates.

Brazil's currency, the real, dropped nearly 3 percent on Friday, while interest rate futures <0#2DIJ:> spiked.

On condition of anonymity, a cabinet minister acknowledged the figures were "very bad," but said they reflected the true state of Brazil's finances.

The December results are the last under former Finance Minister Guido Mantega and Treasury Secretary Arno Augustin. Both left office at the end of the year after investors accused them of using "creative accounting" to bolster budget results.

"We can have a true start from 2015 onwards," the minister told Reuters. "The plan was that there should be no skeletons in the closet for Levy."

The Rousseff administration originally aimed for a primary surplus equivalent to 1.9 percent of GDP in 2014. It later abandoned that target as tax revenues dwindled and public spending surged ahead of the October election. (GA, Reuters, ATimes)(Additional reporting by Anthony Boadle; Editing by Todd Benson, Chizu Nomiyama and Lisa Von Ahn)

Germany, Brazil push the U.N. to be tougher on digital spying

GNN Brazil - Germany and Brazil are pushing the United Nations to be tougher on spying by beefing up an earlier U.N. resolution raising concerns that mass surveillance, interception of digital communications and personal data collection could harm human rights.

In a follow up to a U.N. resolution adopted last year, the two countries have drafted a new text that now includes metadata. The draft says unlawful or arbitrary surveillance, interception of communications and collection of personal data, including metadata, are "highly intrusive acts."

Metadata is detail about communications such as which telephone numbers were involved in a call, when calls were made and how long they lasted, when and where someone logged on to an email account or the internet, who was emailed and what Web pages were visited.

The draft text circulated to the 193 U.N. members says these acts "violate the right to privacy and can interfere with the freedom of expression and may contradict the tenets of a democratic society, especially when undertaken on a mass scale."

It calls on states to provide an effective remedy when a person's right to privacy has been violated by individual or mass surveillance.

The draft also asks the Geneva-based U.N. Human Rights Council to consider appointing a special rapporteur to identify and clarify standards protecting privacy rights.

The U.N. General Assembly's Third Committee, which deals with human rights, will vote on the draft later this month, and the resolution is then expected to be put to a vote by the General Assembly in December.

Resolutions passed by the General Assembly are non-binding, but can carry political weight.

"As the universal guardian of human rights, the United Nations must play a key role in defending the right to privacy, as well as freedom of opinion and expression in our digital world," Germany's U.N. Ambassador, Harald Braun, said in a statement.

He added that the draft resolution would "help pave the way towards better protection standards."

Last year, the General Assembly adopted a resolution by consensus that called for an end to excessive electronic surveillance and expressed concern at the harm such scrutiny might have on human rights.

That resolution, also drafted by Germany and Brazil, came after former U.S. National Security Agency contractor Edward Snowden exposed a global spying program by the NSA, sparking international outrage.

The United States, Britain, Australia, Canada and New Zealand - known as the Five Eyes surveillance alliance - supported last year's resolution after language suggesting foreign spying could violate rights was weakened.

A senior U.N. diplomat, speaking on condition of anonymity, described the draft this year as "highly contentious" and said it could be put to a vote instead of being passed by consensus.

"There's issues that a number of countries are concerned about," he said. "It's trying to create a stronger environment against possible intelligence agencies activities than exists in existing treaties and we don't think that's justified."

(GNN,AIP,Reuters,ga)(Reporting by Michelle Nichols. Editing by Andre Grenon)