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CORRUPTION-BRAZIL: ‘Life or Death Duel’ Inconclusive

Mario Osava

RIO DE JANEIRO, Aug 3 2005 (IPS) - Former cabinet chief José Dirceu testified late Tuesday before a lower house ethics committee, facing off against lawmaker Roberto Jefferson, whose allegations launched the corruption scandal that forced Dirceu to step down.

Dirceu’s appearance before the committee had been touted as a "life or death" duel between the two men. The former cabinet chief resigned from his influential post on Jun. 22 and returned to his seat in Congress in the face of Jefferson’s claim that he had masterminded "the biggest corruption network" operating in the country.

According to Jefferson, Dirceu oversaw a scheme through which the ruling leftist Workers Party (PT) paid bribes to legislators from allied parties to ensure their support in Congress.

Jefferson himself is personally implicated in numerous cases of purported corruption. But it was his explosive accusations in early June that set off the acute political crisis currently engulfing the government of President Luiz Inácio Lula da Silva.

Investigations by a congressional inquiry commission, the federal police and the public prosecutor’s office revealed that former PT treasurer Delubio Soares had overseen a fund of at least 50 million reals (21 million dollars) handled by advertising executive Marcos Valério, who paid out varying sums in cash to leaders of the PT and allied parties.

Much of the PT top leadership has been forced to step down as a result of the revelations. Nevertheless, both the PT and Valério maintain that the money involved was obtained through bank loans and used to pay off campaign debts from the 2002 elections for state governors and federal and state legislators, and to finance campaigns for the 2004 municipal elections.

They say the money was withdrawn from the bank in cash because it arose from undeclared income and expenditures, in violation of Brazil’s election laws.

For many observers, this explanation is highly suspect, since the withdrawals were made at regular intervals, and some of the beneficiaries were not candidates in any election.

Some have accused the PT of confessing to the lesser crime of illegal campaign financing to avoid answering for the greater crime of corruption in connection with the alleged bribery scheme.

During his testimony before Congress, Dirceu insisted that he was fully unaware of these operations. He stressed that he could not be held responsible for the actions of the PT leadership, given that he was serving as cabinet chief in 2003 and 2004, the years in which these illicit financial transactions were carried out

He also reiterated several times that there was no objective evidence or proof of his involvement in corruption or any other illegal activities.

Dirceu, formerly viewed as Lula’s right-hand man, further denied any responsibility for the designation of the directors of state-owned companies currently targeted with allegations of siphoning funds, including the postal service, the Reinsurance Institute of Brazil, and the Furnas power company.

Dirceu’s and Jefferson’s roles were apparently reversed, since the former cabinet chief should have been testifying against Jefferson, who is facing charges before the same congressional ethics committee that could lead to his being banned from public office for eight years.

Jefferson, leader of the Brazilian Labour Party (PTB), a PT ally, is implicated in various illegal schemes involving state-owned companies and agencies, and has confessed to receiving four million reals (1.7 million dollars) in illegal campaign contributions from the PT.

Nevertheless, it was Dirceu who was obliged to defend himself from his accusers during several hours of testimony.

Worse still, Jefferson used the opportunity to launch a fresh accusation against Dirceu, claiming that the former cabinet chief had authorised the sending of emissaries to Lisbon in January to obtain financing from Portugal Telecom to pay off the campaign debts of the PT and Jefferson’s own PTB. In exchange, he claimed, the Lula administration would promote the interests of the Portuguese company.

Dirceu firmly denied Jefferson’s claim, saying that it was just "another one of his lies," then went on the offensive by pointing to the many charges against Jefferson himself.

For its part, Portugal Telecom issued a statement denying any contributions to political parties in Brazil.

In the end, the eagerly awaited face-off between the two lawmakers failed to clear up many of the questions still unanswered by the congressional and police inquiries, such as the role played by Dirceu and Lula in the incidents currently under investigation.

Dirceu’s responses to the questions put to him by other lawmakers on the ethics committee also failed to shed any new light on the matter.

According to some observers, Dirceu’s claims of total innocence are difficult to believe. As a former president of the PT, between 1995 and 2002, he exercised considerable influence over the party’s leadership, and as Lula’s cabinet chief, he wielded a degree of power comparable to that of a prime minister, they say.

Moreover, evidence has been uncovered that apparently links him to the scandal. One of his closest associates was shown to have received 50,000 reals (21,000 dollars) from the bank accounts under investigation. In addition, his ex-wife obtained both a job and a bank loan with the help of Valério, the advertising executive responsible for managing the PT’s "unofficial treasury."

Dirceu categorically stated that he would not resign from his seat in Congress, despite rumours that he would follow the example set by Liberal Party leader Valdemar Costa Neto, who stepped down on Monday to avoid possible impeachment and a subsequent eight-year ban from office.

Costa Neto acknowledged that he had received illegal payments from the PT, but stressed that the money was used to pay off campaign debts, and in no way represented bribery in return for support on key votes in Congress.

The fear of many political leaders, particularly from opposition parties, is that more of the lawmakers accused of involvement in the bribery scheme will resign from Congress. This would weaken the case for continuing the hearings begun in the ethics committee, as well as the investigations into various allegations of corruption being undertaken by three congressional inquiry commissions.

Nevertheless, resigning is not enough to avoid a ban from office for those who are already facing charges in the ethics committee, such as Jefferson.

The PTB called on the ethics committee to bring charges against Dirceu and Liberal Party deputy Sandro Mabel as well, which means there are now three lawmakers who cannot opt for resignation as a means of eluding a ban from public office.

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