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CORRUPTION-BRAZIL: Lula Remains Bullet-Proof as Scandal Rages On

Analysis by Mario Osava

RIO DE JANEIRO, Aug 1 2005 (IPS) - Despite growing evidence of corruption in Brazil’s ruling Workers Party, there is little doubt that President Luiz Inácio Lula da Silva will remain safely in power until the end of his term in January 2007, especially now that even the opposition is striving to shield him from the fallout of the ongoing scandal.

Party leaders from one end of the political spectrum to the other have begun working together to keep the crisis under control, because it has reached such a dimension that "from this point forward, everyone would lose," said political analyst Wanderley Guilherme dos Santos.

Even the chief justice of the Brazilian Federal Supreme Court, Nelson Jobim, has joined the efforts to seek conciliation. During informal talks with a group of political leaders, Jobim warned of the dangers involved in seeking to impeach the president, whose leftist Workers Party (PT) is facing a host of allegations of corruption, from bribing members of Congress to illegal campaign financing.

According to the chief justice, initiating impeachment proceedings in Congress would create an untenable climate of confrontation, given Lula’s continued personal popularity and strong base of support, making the country ungovernable for years to come.

Jobim speaks from his own experience as a former lawmaker and minister of justice. He has also been identified by many as a likely presidential candidate for the 2006 elections, one who would be able to unite various centrist forces around the Brazilian Democratic Movement Party, of which he was an influential member before leaving politics for the judiciary.

In the meantime, the right-wing opposition Liberal Front Party (PFL), which had been threatening to pursue impeachment proceedings against the president, has now backed down and adopted a more conciliatory attitude.

"No actions will taken to interrupt Lula’s term and worsen the crisis," pledged Senator Heráclito Fortes, a PFL leader.

Efforts by diverse sectors to seek a consensus aimed at riding out the crisis were stepped up after an alarming drop in both the Sao Paulo stock exchange and the real (the local currency) early last week. These were interpreted as warning signs of the potentially disastrous effects of the corruption scandal on the financial market.

The threat of economic turmoil, capital flight and a freeze on productive investment has shaken up those who continued to believe that the economy was immune to the scandal hanging over the PT, a number of allied and opposition parties, and the Brazilian Congress.

Moreover, as investigations into what has become a spate of alleged wrongdoings continue to move forward, numerous opposition parties have been given even more reason to hold their fire against Lula and the PT.

The ongoing investigations – which now involve three congressional inquiry commissions, the Federal Police and the Attorney General’s Office – have revealed that leaders of the opposition Brazilian Social Democratic Party (PSDB), and particularly its president, Eduardo Azeredo, were among the recipients of illegal funds from advertising executive Marcos Valério, who has emerged as a central figure in the current crisis.

Valério is believed to have channelled hundreds of millions of dollars through his advertising companies in backdoor business deals with political parties, public companies and government officials since 1998.

He has admitted to obtaining 16 million dollars in bank loans that were funnelled to the PT, but the investigations show that much larger sums were diverted and handed over in cash to dozens of lawmakers and political leaders.

Many have come to suspect that the huge sums involved included funds diverted from public companies and undeclared political contributions from the private sector, which Valério’s companies were subsequently used to "launder" and distribute.

PSDB president Azeredo is alleged to have received at least 3.7 million dollars through these channels to finance his unsuccessful bid for re-election as governor of the southeastern state of Minas Gerais in 1998.

In addition, one of Azeredo’s closest aides was named financial director of SMPB, an advertising firm owned by Valério and used for many of the illegal financial operations now under investigation.

José Pimenta da Veiga, another PSDB leader and former minister of communications under the previous administration, also received money through the scheme managed by Valério.

In fact, there is growing evidence that this intricate network of illegal campaign financing and purported corruption on the part of state company officials and party leaders actually originated with the PSDB in Minas Gerais, and subsequently expanded when the PT took power.

And if the ongoing investigations reveal that the corruption extended to pension funds from public and privatised companies, as many suspect, both parties could be implicated in even further irregularities.

It was during the administration of Lula’s predecessor, Fernando Henrique Cardoso (1995-2003) of the PSDB, that a large number of state-owned companies were privatised, and the pension funds from these firms are now managed by banks with close links to the PT.

At least one lawmaker from the PFL, the country’s second most powerful opposition party, has been revealed as a beneficiary of the illicit financial scheme, while two other PFL deputies were caught earlier this month trying to smuggle large sums of cash out of the country on an airplane.

The two claimed that the money belonged to the Universal Church, a Protestant denomination in which they are both "bishops", and had come from tithes paid by parishioners. This justification, however, did not spare them from being expelled from the party.

The blot of corruption has come to stain so many parties in Brazil that it is clearly in everyone’s best interest to find the least traumatic solution possible to the current crisis.

Moreover, a Congress weakened by evidence of corruption that could take down dozens of lawmakers would obviously lack the credibility and political capacity to pass judgement on Lula.

As a result, the president appears to be shielded from this hail of corruption allegations, thanks to a combination of his continued personal popularity, the fear of economic upheaval, and the severely compromised moral authority of those who might have challenged him.

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