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GROUP REPORT

MPKT A
ANALYSIS OF THE CORRUPTION IN BRAZIL FROM MULTIPLE
PERSPECTIVES

HOME GROUP 4
Laksamana Zakiy Ramadhan

1306436754

Mohammad Ridho Nugraha

1306436760

Narayana Yuliandono Radiawan

1306436773

Natasha Chandri Egieara

1306436741

Widoseno Nur Sukma Atri

1306437372

Zain Zahran Azzaino

1306437044

FACULTY OF ENGINEERING
UNIVERSITY OF INDONESIA
2016

and the past and present political situation in Brazil. social and culture.Abstract This paper examines the case of corruption in Brazil through various perspectives. The aspects that are taken into a consideration in addressing the problem consist of the psychology of corruption. A case study regarding the effect of mass media and public opinion is also included in order to provide a better comprehension of the situation . .

................ 2 Introduction ............................................................ 5 Society and Culture in Brazil .......................................... 4 Psychology of Corruption ......................................... 8 Conclusion ........................... 5 Political Situation in Brazil in the Present and Past ......................................................................................................................................... 4 Issues .......................................................................................................... 4 Background ......................................................... 11 ......................... 4 Objectives ...................................................................................................................................................................................................................................................................................................... 6 Case Study: Effect of Mass Media and Public Opinion ................................................................................................................................. 9 Bibliography ..................................................................................................................................................................................................................................Table of Contents Abstract .......................

are lured by the advantage of their power in the system. Brazil is an example of a corrupt country which is ranked in 76th among 168 countries. The effect of organization structure and society’s perception in job recruitment. The root and loopholes of corruption in Brazil. and eventually poverty. society and culture. It is very important to stress that this problem can be ceased by implementing stricter punishment for the corruptors and providing a public access to budget allocation information. such as misallocation of resources. .Introduction Background Corruption is defined as a fraudulent act that is conducted for personal gains rather than for public’s interest. This scandal has a ripple effect on the life of Brazilians that once benefited from the prosperity of national oil producer. The purpose of using multiple perspective in analysing this case is to create a constructive criticism that is fair and not biased and a case study regarding the effect of mass media and public opinion is provided for better comprehension of the corruption in Brazil. infrastructure. This issue exists in all countries and is caused by the lack of transparency in public-sector budgeting in which the executants. alteration of income distribution. Issues The issues that are being addressed in this paper include: 1. Objectives This paper aims to analyse and explore the cases of corruption which have tarnished Brazilian politics and businesses. The existence of biological gratification from corruption. and education. such as health care. Corruption significantly impacts child mortality rate due to poor sanitation and education and economic development. The most recent corruption scandal regarding state-run oil company named Petrobras brought a major rank downfall to Brazil in the Corruption Perceptions Index. and extractives are secretly being allocated for personal expenses instead of for public services. 3. The arbitrary usage of power by the corruptors fuels many problems. Various perspectives are taken into consideration in the analysis: psychology behind corruption. The recent discovery regarding the involvement of former and current president in the diversion of money obtained from Petrobras also causes turmoil in the country and sparks riots in the streets on Brazil. who commonly are the people of authority. aid. The government incomes obtained from taxes. 2. and current and former political situation in Brazil.

it is first necessary to analyse the actual mind set of those who delve into corruption. And the scientist need to find out the reference brain to be compared with the corruptors’ brain. or if they would refuse the offer entirely. Chinese scientists say that the part of the brain responsible for a corrupt person might lie in part of the left brain. regardless of the amount. Scientists have searched for an explanation on why people differ from regular behaviour’s. but the conclusion is that people with more active gyrus had a stronger tendency to be easily bribed. Society and Culture in Brazil According to Sérgio Buarque de Holanda. And with each offer the volunteers would be asked whether they want to share it with others. In . The volunteers are then placed inside a Magnetic Resonance Imaging (MRI) machine and their brain activity is recorded. Brazilians make no distinction between private and public environment (Holanda 1936). The volunteers would answer the conditions explained earlier with a simple “yes” or “no” button. The study researched by the neuroscientists focused on a region of the brain located slightly above the temple called the left inferior frontal gyrus. getting an amount of percentage. According to Professor Li this situation is almost the same as bribery. A corruptor has their own way of mind set compared to the common people. found out that the brain has an increase in activity when a person is accepting bribe along with the increase of the amount of money. the scientists argue over whether drugs or therapy could fight the tendency for corruption. their left inferior frontal gyrus was activated more intensely than the other regions.Psychology of Corruption In order to understand the origin of the corruption within Brazil. A team led by Professor Li Shu from the Institute of Psychology at the Chinese Academy of Sciences. The researchers discovered with a cash offer. This discovery is of course a breakthrough in understanding the human brain especially the corruptor’s brain. but yet it faces political challenges where to carry out this experiment on the real corruptors requires government agreement. Of course the volunteers will provide different results. would stimulate the “feel good” areas of the brain: the right lateral prefrontal cortex and the bilateral insular cortices. it all leads back to their brain and the effects of the parts of brain. There the scientists found out that that play a “critical role” when people prefer to choose wealth over moral responsibilities. the more activity seen in the gyrus. which are at the front and sides of the brain respectively. where each was offered a gradually increasing amount of money from 8 Yuan to 3000 Yuan. this discovery still faces much more challenges. it is considered inappropriate to employ a relative instead of providing an opportunity for those who had already been in the company or have undertaken a selection process. For example. The higher the amount of money. in regards to working in Brazil. When the volunteers decide to accept the offer. The researchers carried out an experiment involving 28 volunteers.

people will start the meeting with a discussion on the weather or stereotypes of different cultures. However. requiring a percentage kickback from government contractors to insure disbursements for services and public works already executed. There are also several cases in Brazil that consider the judging of appearance to be racism and intimidating. which leads to the current political and economic situation in Brazil. but it also includes several other aspects of appearance. such “detours” of public funds to local “pork barrel” projects. or for other parties or institutions. In the society of Brazil. Thus. During a meeting in Brazil. usually the decision makers involved receive some material benefit in return. there are still several groups of ethnicities that are not concerned with appearances. In general. Brazilians tend to close deals with people that they consider to be a friend. allocation of funds to local governments for public works and services never executed. It is also significantly difficult to obtain the maximum effectiveness from each employee as the work load is unevenly distributed. nails and body shape. Political Situation in Brazil in the Present and Past The practice of political corruption in Brazil has a long history since the colonial period. The First dimension involves private economic gains for the decision makers themselves. it is logically easier to climb the “corporate ladder”. many workers are subcoordinate with someone else. for their own use or for campaign finance. Regardless of how serious the meeting is. People in Brazil believe that the appearance of a person directly reflects the job position. However. the culture encourages the start of the meeting with small talk. In essence. there is a low emphasis on society and a greater importance on friendliness. this hierarchical organization form indirectly encourages the promotion of corruption. meaning there are few or no levels of management between staff and managers. . this structure also enables the bosses to force their workers to undertake the majority of the corporate work while exempting them from responsibility. along two dimensions: first one is the manipulation of political decisions to favour private economic gains. In some cases. “no-show” public employees. over-invoiced public contracts with “rigged” bidding procedures. In the latter case. This is very different compared to the majority of European companies which have adopted a flat organizational structure. The society of Brazil also has a heavy emphasis on appearance. including haircut. In the hierarchal organization form. skin. and then the illegal appropriation and “detour” of public funds by politicians and/or their designates (persons or institutions). Brazilian relates to each other according to the concept of neighbourhood and friendship.addition. This judgment is not restricted to what the person wears. the educational level. The second dimension is more complex and involves a large variety of schemes and strategies: “sweetheart” loans from public financial institutions. etc. and therefore is considered to have good communal relation within their society. diversion of public funds to “philanthropic” foundations linked to the decision makers. Brazilians do not deal very well with an excess of formality. Many companies in Brazil still use the traditional organization structure in which there is still a hierarchical organization form (Holanda 1936). Finally. the age and even the personality. the friendliness during diplomacy is an important factor to a successful negotiation.

The External factors are due to the influence of political system. and tries to bring the case to the attention of the . In the latter case. Usually. especially the system of supervision. Even checkmate cases involving the president's family strengthens weak surveillance system on the use of public funds. Case razor operation involving the Minister of Energy of Brazil and 50 staff clearly is systematic.” of federal resources ranged near US $40 billion in early 1994. involving the claimant’s lawyers. misuse. This money was usually divided among the conspirators. As might be expected. Source emergence of corruption can be sourced from internal factors which are factors desires and external factors that are associated with opportunities derived from the weakness of a system. This form of corruption may occur because of laws weak or when the surveillance system is not working. and have not been extended to other states. As a result of the real corruption is the loss of function of state services. The lack of control was one of the reasons that government estimates of “waste. bodies under UN office for Drug Control and Crime Prevention to enter the form of contributions illegal. As said by Mario Osava. massive fraud plagues the system. with few convictions to date. often to Miami. and urgency. Also. social security officials and lawyers. the existence of the state budget expenditure items confidential undermines access control so many cases of misappropriation of public funds occurred in Brazil. One reason is the combination of early retirement rules (30 and 35 years of service for women and men.fraudulent and/or exorbitant workmen’s compensations claims/judgements for permanent disability (accident or sickness). with only some US $ 20. and .There is a tendency that the practice of corruption in Brazil occurred due to the weakness of the bureaucratic system. commissions. levels unheard of even in the first world. fraud. which in turn re-legitimize the perpetrator to continue to maintain the behaviour of corrupt because simple state is not able to provide other alternatives to improve the lives Centre for International Crime Prevention (CICP. without regard for age). The investigations and prosecutions continue. Internal factors are usually derived from the aspect of moral factors. respectively. etc. education. Brazil’s social security system totters on the verge of bankruptcy. As in many nations. economic and social culture of a country. through use of forged birth and social security documents. Several individual judgements ranged upwards of US $25 million. judicial and CPI investigations uncovered massive conspiracy rings in the State of Rio de Janeiro. The theory of supply and demand on the rise of corruption will be able to predict how often a combination of motivation (willingness) and chance (opportunity will produce outcomes in the form of corrupt practices. fraud or misuse of funds. The high involvement of executive and legislative officials is an indication of the weakness of transparency and accountability for the use of public funds. coupled with an aging population. If by chance an internal control IG in a ministry or federal agency discovers a case of corruption. One of the reasons that political corruption is practiced with relative impunity in Brazil is a near total lack of effective internal and external control mechanisms.000 attributed to the “humble” claimant. politicians. and abuse of authority as a form of corruption. prosecutors and judges. such fraud takes two forms: Retirement pensions for non-existent persons. constantly necessitating increases in levels of contributions and direct injections from the National Treasury. One of the first acts of the new Collor administration in 1990 was to trash the already ineffective internal control agencies. these investigations suffered heavy pressures (including death threats) and corporate obstruction and many of the accused have fled Brazil with their assets.

many which directly target the corruption within the country. and although the “seven dwarfs” have been banished from the Joint Budget Committee. The recent 1992 and 1993/94 anti-corruption CPI revelations merely exposed a very small tip of the iceberg threatening governability in Brazil. June 26. iron ore and soya (BBC 2016). with the same old vices and corrupt practices (Jord do Brad. one solution to the impasse of Constitutional Revision by the political class.) but refrained from any “political reforms” to address the situation described above. It is clear that the people and mass media of Brazil need to directly influence the future of Brazil into the proper direction. most of the accused continued to submit their budget amendments in a normal fashion. . p. If the IG does not head this advice. might be able to achieve major change. and.Congressional] constituent assembly”. equal treatment for foreign capital. usually the superior requests the IG to “cease and desist” for reasons of political convenience. 3). only long term measures to reorganize and upgrade the public service generally. Brazil’s economy is going through its worst recession in more than three decades following a drop in prices for Brazilian commodities such as oil. and carry out a necessary political reform without consideration for the “political survival” of Senators and Deputies. the STF and federal courts will take years to prosecute the politicians and their co-conspirators. campaign finance. because the IGs have no political independence/autonomy. etc. Case Study: Effect of Mass Media and Public Opinion History has continuously shown that corruption in developing countries hinders the development of the country. white collar crime. Apparently. When politicians are called to pass judgement on their peers. As such. Presently in Brazil. sophisticated “damage control” was practiced and only a few “smaller fish” were actually expelled from Congress. reorganizing federalism. Although new tough legislation (internal/external control. In spite of the massive accusations generated by the CPI investigations of the “Budgetgate” scandal. bidding regulations on public contracts. As a result of corruption. June 26. countries face greater chances of riots and protests due to the decreasing quality of life of its people. Brazil has been continuously in a state of protests. Brazil is considered as one of the most corrupted countries in the world.) would certainly help matters. p.respective minister or agency head. only a few federal judges have the courage to use existing laws to prosecute corruption cases on the basis of the most blatant violation income tax fraud (Buono & Bentivoglio. budget process. reform of the public service. while infusing it with the concepts of public trust and accountability. if criminal charges are brought against some of the latter. social security reform. as is the case in Switzerland (Fob de So Paulo. This proposal also involved transfer of power to amend the Constitution away from the Congress to a popular referendum. etc. The latter would be elected directly by the people and sit independently of Congress and the politicians. he or she will be sacked. l-7). external control of the judiciary. rarely are the investigations taken to an exhaustive full conclusion. which in the first semester of 1994 defeated all proposals for “political reform”. election system. In the above cases. 1991). 1994. The 1995 Constitutional Revision process considered significant changes (privatization of state enterprises. fiscal reform. respectively. the latter continued to “do business as usual” in 1994 and 1995. 1994. is an ever increasing popular clamour for an “exclusive [non.

and functional factors. Correlation between the case and the roles of perception and communication is that the people receiving the information could be biased due to the different perception interpreted in the mass media. mass media can be considered as a reliable source of information. was found to have been engaged and involved in corruption. Brazil has implemented The Clean Companies Act. meaning a company can be liable without the need to search for faults (Presidencia da Republica 2015). including illegal political campaign funding. which is considered as one of the toughest anti-corruption laws in the world. Based on the research of a Chinese research team. Tankard and Werner J. president of Brazil. As mentioned above. it is found that left inferior frontal gyrus is responsible for a decision making process regarding wealth over moral responsibilities. a large-scale corruption scandal holds the state-run oil company Petrobras at the centre. direct and indirect acts of bribery and attempted bribery of Brazilian public officials and of foreign public officials are illegal. For example. Tax administration. One of the biggest effects of corruption in Brazil is its negative influence on business. However. According to James W. The practice of corruption in Brazil dates back to the colonial era in which illegal appropriation of public funds for private gains was conducted .The public has a great influence on the laws of Brazil. in the eye of the public. Severin. admitted that the allegations are not direct and there is no ‘money in her pocket’. This shows that one will experience gratification during bribery as indicated by brain activity record in which a certain part of the brain is activated during the experiment. However. Overall. Brazil still employs hierarchical organisation structure which enables people in higher positions to run the company and yet be exempted from their responsibilities due to uneven workload. however. Factors such as appearance and relationship influence the way Brazilians perceive other people hence formality is commonly not found within the working environment. The public is aware that funds that were provided to the election of the current president and her party were not obtained entirely legal. public procurement and natural resource sectors are more likely to be affected by corruption. or influences from physical stimuli. the law makes no distinction for facilitation payments. people must remain aware that mass medias is also like a narrow lens where it can focus on one thing but we do not get to see the whole thing. but the enforcement is inconsistent. Fortunately. Petrobras. Only when the truth and facts from mass media is completely distilled can the people change the course of Brazil. the public is keenly aware that she benefited from these networks of corruption. In addition. Brazil’s oil giant and the largest company in Latin America. people must continuously communicate in the usage of mass media and constantly cross check information. Conclusion The deep-rooted case of corruption in Brazil has inflicted many problems upon its citizens over the years and recently reached its worst. to the amount of estimated 30 to 40 billion dollars. bid rigging and fraud in public procurement. perception is a complex process that involves structural factors. The Act holds companies responsible for the corrupt acts of their employees and introduces strict liability for those offences. Those are one of the example of most corruption cases that occurs in Brazil. or psychological influences from the perceiving organism (Tankard and Severin 2001). Therefore. Dilma Rousseff.

by politicians and since then. These factors indicate the lack of transparency and accountability for the use of public funds which in turn trigger corruption. Weak bureaucratic system and high involvement of executive and legislative officials are the roots of the tainted politics and businesses in Brazil. well-thought and slick schemes have been produced in order to gain more personal benefits. .

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