Corruption in Brazil exists on all levels of society from the top echelons of political power to the smallest municipalities. Operation Car Wash showed central government members using the prerogatives of their public office for rent-seeking activities, ranging from political support to siphoning funds from state-owned corporation for personal gain. Specifically, mensalão typically referred to the practice of transferring taxpayer funds as monthly allowances to members of congress from other political parties in consideration for their support and votes in congress. Politicians used the state-owned and state-run oil company Petrobras to raise hundreds of millions of reais for political campaigns and personal enrichment.
Corruption was cited among many issues that provoked the 2013 protests. Corruption reduced public investments in health, education, infrastructure, security, housing, among other essential rights, expanding social exclusion and inequality.
All types of corruption exist. Clientilism, cronyism and nepotism are widespread in Brazil, and many critics mention how some of the members of Brazilian Supreme Court are seen openly mingling with politicians. Bribery (called propina or suborno in Portuguese) is also rife in the police force and throughout the Brazilian bureaucracy. But one of the most common types of corruption in Brazil is embezzlement of public funds through overbilling, called superfaturamento in Portuguese (literally "super invoicing"). This technique allows individuals to make financial gains, and also finance political campaigns (as seen in the Petrobras scandal), and is closely linked to public contracts with private enterprises. Construction is a prime example, for example in building roads, sewage, and public buildings. It is estimated that 30% of all Brazilian public funds are embezzled this way each year. Petrobras president Aldemir Bendine in 2015 estimated the companies losses to corruption scandals at $2 billion US. The company's stock declined, although it later began to recover.
The scale of corruption in Brazil is immense, but largely under-reported in the media and historically not investigated, prosecuted or punished, so it is difficult to estimate just how large the problem is. The Car Wash (Lava Jato) investigation may be changing this trend. Corruption in Brazil increases the already enormous Brazilian shadow economy which some sources estimate at 16.1% of the gross domestic product, a number that probably needs to be adjusted up considerably if corruption as such is included as part of the shadow economy. Transparency International's 2016 Corruption Perception Index ranks the country 79th place out of 176 countries
Political corruption is widespread in Brazil at the national level and at the state and municipal level. The national level involves the executive, the ministries, the Senate and the Congress in addition to state-owned companies. The state and municipal level includes all 27 states and their administrations, plus all city councils.
Petrobras and its involvement in Operation Car Wash and the Mensalão scandal serve as important examples of the close links between Brazilian politics and political corruption in Brazil. Politicians and political parties use it to finance elections, get votes, get a political base in congress and personally enrich themselves. A broad spectrum of congress members from all the major political parties, but controlled by central figures in the government, interfered with internal buying procedures in Petrobras and distributed contracts to private firms in return for a "commission". Virtually all major contracts for the state-owned oil company passed through this process, so Petrobras regularly overpaid for services. This money was distributed to the political parties as well as to individual politicians and to key Petrobras employees.
This type of corruption is called "superfaturamento"—overbilling—in Brazil, and is a very common practice for politicians and civil servants in charge of contracting and buying for public institutions. You can see examples of this even in small primary schools where products like pencils and notebooks are bought with padded invoices, as well as in grand-scale construction such as public buildings, roads, power and sewage systems, metro-systems, football stadiums(not least in connection with the World Cup in 2014), etc. A particularly symbolic example is the city of Brasilia itself, which historians believe was systematically overpriced when built in the early 1960s.
While Lula was in office reports surfaced of payments made to deputies in return for a pledge to support the government with their votes in Congress. According to investigators more than a dozen construction companies bribed or gave kickbacks to corrupt politicians in return for profitable contracts with state-owned petroleum company Petrobras. Former president of Grupo OAS Jose Aldemario Pinheiro and OAS executive Agenor Medeiros each were sentenced to 16 years incarceration on 6 August 2015. Three other OAS employees received shorter sentences.
Operation Car Wash is an investigation being carried out by the Federal Police of Brazil, Curitiba Branch, and judicially ordered by Judge Sérgio Moro on March 17, 2014. Initially a money laundering investigation, it expanded to cover allegations of corruption at the state-owned oil company Petrobras, whose executives took kickbacks for awarding contracts to construction firms at inflated prices. The operation has issued more than a hundred search warrants, and ordered temporary and preventive detention and coercive measures in its investigation of a money laundering scheme suspected of moving more than R$38.1 billion" (approximately US$11.3bn) as of November 22, 2016. Because of the unusual nature of its actions, defendants' lawyers accuse the operation of "selectivity" and "partiality", and of being "a criminal case that violated minimum rules of defense for a large number of defendants".
Throughout the investigation, former Brazilian president Dilma Rousseff, who chaired the board of Petrobras from 2003 to 2010, denied knowledge of any wrongdoing  The Brazilian Supreme Court authorized the investigation of 48 current and former legislators, including former president Luiz Inácio Lula da Silva, in March 2016.
Operation Car Wash has greatly impacted Brazilian politics, resulting in the arrest of many important political figures, including:
To counteract widespread corruption in the private and public sector, Brazil enacted the Clean Company Act 2014 (Law No. 12, 846), which held companies responsible for the corrupt practices of their employees and liable without a finding of fault. Bid rigging and fraud are prohibited in public procurement, as well as bribery of Brazilian public officials. If found guilty of corruption the companies can be suspended, dissolved or fined.