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5 things you need to know about the $2 billion corruption scandal roiling Brazil

For years, executives at Brazil’s state-owned oil giant, Petrobras, took $2 billion in bribes as part of a massive scheme that implicated hundreds of middlemen, congressmen and politicians, prosecutors allege.

Last week, the company made a rare move and issued a $2.5 billion 100-year bond. It appears to be paying off. Today, two Brazilian prosecutors said Petrobras is the victim in this scandal.

Still, the scandal has unraveled Brazil’s economy and undermined its government.

Here’s what you need to know:

1. A Land Rover brought the scandal to light.

For years, Brazil’s largest construction companies routinely overcharged Petrobras and funneled bribes back to the company’s top executives and to politicians in the ruling Worker’s Party in return for massive infrastructure contracts, according to prosecutors. Even in Brazil, a country where corruption is rampant, prosecutors had never seen a scheme of this size.

Making matters worse, at the height of the scheme, Brazil’s current president, Dilma Roussef was Petrobras’ chairman (2003-2010). She denies any involvement.

Investigators first caught whiff of the scandal in mid-2013 when a senior manager at Petrobras, Paulo Roberto Costa, received a Land Rover from a man suspected of running a black market bank. After he was arrested, Costa went from the state’s main suspect to its star witness. In return for a more lenient sentence, he exposed the details of the scheme, turning in colleagues and executives at Brazil’s largest companies.

2. 100 people have been accused of involvement, including more than 50 congressmen.

Since March of last year, more than 100 people have been accused of financial crimes associated with the scandal. One of the suspects took a private jet to turn himself in, while another enjoyed his last, precious hours of freedom at a Rio de Janeiro Hotel Suite before being arrested, according to Bloomberg. Four former executives at Petrobras and 23 construction companies are being investigated, while more than 50 congressmen are under investigation, facing charges or jailed.

3. The scandal is tainting Brazil’s economy.

By some measures, Petrobras is now one of the world’s most indebted companies. It has written down $17 billion due to losses from corruption and overvalued assets; stock has fallen 40 percent from a high in early September.

But no one has suffered more by the widespread theft than Brazil’s working class. Tens of thousands of people have lost their jobs as a result of the scandal, which has delayed Petrobras’ paychecks and pushed back investments. Hundreds gather daily at Petrobras’ headquarters demanding the money the oil giant still owes them.

Many of the construction companies implicated in the scandal were the cornerstone of Brazil’s impressive growth over the last decade, building everything from roads and airports, to stadiums for the World Cup and the Olympics. Now, Petrobras has frozen contracts and stopped payments.

4. Brazilians are calling for the President to resign over the scandal.

Millions of Brazilians have taken to the streets, calling for the impeachment of the president and the arrest of corrupt congressmen, in the largest protests the country has seen in decades. As of March, Dilma’s approval ratings hover at a dismal 13 percent and the majority of the country wants her impeached, according to Reuters. The numbers stand in stark contrast to her predecessor, Luiz Inácio Lula da Silva, who was by some measures the world’s most popular president, with a record high approval rating of 83 percent.

5. Brazil’s economy has gone from riches to rags.

Brazil’s economy, held up as an example of successful and sustainable development just four years ago, is now in the gutter. A slowdown in China’s economy last year all but evaporated demand for Brazil’s natural resources, and the country faces rising unemployment, mounting inflation and a devalued currency.

The economy is suffering the worst four-year slump in 25-years. Investors are turning up their noses at Brazil’s once treasured bonds, and the Finance Minister is desperately trying to avoid a downgrade of Brazil’s credit rating. Forced budget cuts have slashed funding for hospitals, schools and the social programs Brazil’s burgeoning middle class had enjoyed for more than a decade.

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