POLITICS-BRAZIL: Anti-Corruption Investigations in Final Phase

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Nov 17 1999 (IPS) - Parliamentary commissions investigating corruption in Brazil’s justice and financial systems are reaching the last stage of their inquiries, which could topple a senator and lead to legal action against a former Central Bank director and several judges.

The legislature, which in the past few years has impeached and removed a growing number of lawmakers found to be corrupt or implicated in criminal activities, is the driving force of an anti- corruption campaign aimed at purging Brazil’s institutions.

On Wednesday, the parliamentary commission investigating irregularities in the judiciary approved its first report, which accuses Senator Luiz Estevao of embezzlement of public funds, illicit enrichment and forgery of documents.

The lawmaker, the owner of a construction firm in Brasilia, is allegedly among those who benefited from the diversion of 87 million dollars earmarked for the construction of a Regional Labour Court in Sao Paulo.

Judge Nicolau dos Santos Neto and another construction firm will also have to answer for the fraud which drove up the projected cost of the project, led it to be abandoned before completion, and turned it into a symbol of corruption nationwide.

The parliamentary commission urged the Public Ministry (public prosecutor’s office) to launch a legal investigation of Estevao, Dos Santos Neto and others. As a result, Estevao could be impeached.

The number of lawmakers removed from the legislature due to “lack of decorum” has risen in the past few years.

Meanwhile, the parliamentary commission investigating the financial system is in the final stage of drawing up its reports. The rapporteur of the commission, Senator Joao Alberto Souza, announced that he would push for legal action against former Central Bank president Francisco Lopes and other officials.

Souza concluded that irregularities existed in the Central Bank’s bail-out of two banks on the verge of collapse due to the Jan 13 crash of the real. The assistance granted by the Central Bank was based on the argument of a risk of a “system-wide collapse” of the banking sector.

The bail-out led to losses of around 1.18 billion dollars. Class action has been filed demanding that the former Central Bank officials and bankers involved in the operation reimburse the State for the losses.

Senator Souza expects to submit his report to the parliamentary commission before the end of the month. Besides citing a number of irregularities and identifying those responsible, the report will suggest a number of measures aimed at making Brazil’s banking system more sound and transparent.

The proposals include the creation of a Senate commission to oversee activity in the banking sector, stripping the Central Bank of its function of overseeing banks in order for it to focus on its tasks as the country’s monetary authority, and the regular mandatory publication of balance sheets by all large companies in Brazil.

The two Senate investigative commissions were set up in March, on the initiative of two political parties, in response to a series of scandals involving judges and the changes implemented in the government’s exchange policy, which led to a more than 30 percent devaluation of the real.

The commission investigating the judiciary will present its conclusions on high-profile cases, such as the irregular release of drug traffickers and rulings ordering excessive indemnifications to be paid by the government, as well as the case of a judge who forced dozens of women to put their children up for adoption by foreign nationals.

But the investigative commission that has presented the most spectacular results, and has been compared to Italy’s “Clean Hands Operation”, was created by the Chamber of Deputies seven months ago to investigate drug trafficking.

The activities of the commission, which revealed connections between organised crime and parliamentarians, judges, the police and exchange bureaus involved in money laundering, were extended until April, and the commission may even be made a permanent fixture.

The discovery of a national network involved in drug trafficking, arms dealing, truck theft, murders and other criminal activity, found to operate in 14 of Brazil’s 26 states, led to the imprisonment and proscription of a member of the Chamber of Deputies – the same fate that is said to await another five members of the federal legislature and state parliaments.

Following up on the activity of the parliamentary commission, the Public Ministry sought the preventive detention of 55 suspects in the state of Acre, a gateway for drugs on the border with Bolivia and Peru.

The government has decided to create a high-level group comprised of legal and monetary authorities, prosecutors and other officials, to fight impunity and organised crime, which according to President Fernando Henrique Cardoso has penetrated the State even deeper than can be imagined, and threatens democracy itself.

The commission’s rapporteur, Deputy Moroni Torgan, who has become a national hero, estimated that some 200,000 people were involved in drug trafficking in Brazil.

The parliamentary commission investigating the drug trade is now conducting an inquiry in Campinas, a city of one million located 100 kms from Sao Paulo, believed by the deputies to be the headquarters of the kingpin of the national network, the chief money laundering centre in Brazil, and the connection with Colombian drug cartels.