As Petrobras scandal spreads, economic toll mounts for Brazil

Mon Apr 20, 2015 11:51am EDT
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By Jeb Blount

ITABORAÍ, Brazil (Reuters) - For the 20 men hanging on at the Pousada do Trabalhador, a 600-bed boarding house on the dusty outskirts of this boom town northeast of Rio de Janeiro, the dream that Brazil's oil wealth would bring a better life was over.

Their jobs at Comperj, a $15-billion oil refinery being built here in Itaboraí by state-run energy giant Petrobras PETR4.SA, are gone, and their employer - a mid-sized engineering company - bankrupt.

The men are the latest victims of Brazil's biggest-ever corruption scandal, a multi-billion dollar graft scheme involving Petrobras, engineering companies and politicians that is battering the world's seventh-largest economy.

As the scandal has deepened in recent months, key infrastructure projects have been suspended or scrapped, some suppliers have sought bankruptcy protection and job losses are mounting by the tens of thousands.

Petrobras' size - it is Brazil's biggest company - amplifies the scandal. Each year it invests double the government's entire discretionary infrastructure budget, giving it enormous power to shape Latin America's largest economy.

All told, economists expect the chain reaction set off by the scandal will tip an already weak economy into its worst recession in a quarter century, a harsh reversal for a country that was booming just a few years ago.

"Our employer went bankrupt, then bankrupted us," Ediney Morão, 38, an equipment operator from São Paulo told Reuters as he prepared to leave the boarding house earlier this month.

"I took leave for Christmas and New Year, came back and suddenly, there's no work."   Continued...

Laid-off workers of Comperj are pictured at a room of the Pousada do Trabalhador (Workers Inn), which closed down after the scandal involving Petrobras, on its last day of operations, in Itaborai March 31, 2015. REUTERS/Ricardo Moraes