POLITICS-BRAZIL: Corruption Case Cuts Close to President

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Jul 13 2000 (IPS) - The thread of suspicion is running right through the office of Brazil’s president, Fernando Henrique Cardoso, and this week forced him to offer explanations and make statements about the involvement of former officials in the misappropriation of public funds.

The case, originally brought to light by a parliamentary investigative commission last year, involves the disappearance of 169 million Brazilian ‘reais,’ currently the equivalent of 94 million dollars, but worth much more at the time of their illegal transfer from funding meant for the construction of the Labour Tribunal in Sao Paulo, a project begun in 1992.

Judge Nicolau dos Santos Neto was accused for his direct role in illegally elevating the costs of the construction project and is now a fugitive from justice.

Further investigations implicated former senator Luiz Estevao, who was expelled from the Senate in late June due to evidence he was took part in the fraud through his construction companies and because he lied in his testimony before the parliamentary commission.

The scandal has reached the president’s office because it was discovered that former secretary general to the president, Eduardo Jorge Caldas Pereira, who served in that post from 1995 to 1998, took part in at least 117 telephone conversations with judge Santos Neto in the period in question.

Caldas Pereira worked 15 consecutive years with Cardoso, initially as his adviser in the Senate, later in the Foreign Ministry and the Finance Ministry – from late 1992 to early 1994 – , then in the presidential office and finally in Cardoso’s election campaign.

There is no denying that the former official enjoyed close personal ties with the president. So when he left the government in 1998 to head Cardoso’s re-election campaign but did not return to an executive post, rumours began to fly in Brazil’s political circles.

The 117 telephone calls between the judge and the presidential adviser did not become part of the scandal during the 1999 parliamentary investigation, but did take on importance after Caldas Pereira himself granted an interview to ‘Valor Economico’ newspaper.

The former official attributed the calls to “institutional relations,” hoping to obtain a list of names from Santos Neto so that president Cardoso could choose judges for the Sao Paulo labour court who favoured his ‘Plan Real’ for economic stabilisation.

The government, said Caldas Pereira, feared judges would rule to raise wages, linking them to increases of other economic variables, a mechanism that fed inflation in Brazil for nearly 30 years, said the former presidential secretary.

The acknowledgement that a judge accused of corruption had assisted the president’s office revived the issue and sparked new suspicions.

Then, last Saturday, ‘O Globo’ newspaper revealed a surprising coincidence. The calls the judge made to Caldas Pereira were most numerous in the days leading up to the release of new funds from the National Treasury for the Court of Sao Paulo construction.

Other investigations indicate that the Labour Justice system of Sao Paulo has ruled in favour of wage correction in all 1,270 labour union cases presented since the Plan Real went into effect in early 1999.

It is practically impossible that so many telephone calls “involved only the naming” of new judges, commented current president of the Regional Labour Court of Sao Paulo, Floriano Vaz da Silva.

In response to the rising wave of suspicions, president Cardoso released a statement Tuesday in support of a full investigation into the case, “with punishments that set an example and without any exceptions for those responsible.”

The Finance Ministry and the Planning and Budget Ministry stressed that the Executive branch of the government does not interfere in resources earmarked for the Judicial branch.

Because it is approved in the national budget, the National Treasury is obligated to release the funds each month, without the power to “exercise any audits or monitoring of the Judicial branch’s administrative actions,” according to a joint statement from the two ministries.

The official communiques represent an attempt to erase suspicions that members of the presidential office or of the Cabinet have taken part in fraudulent actions in a construction project that has cost the government four times more than the original budget, and remains unfinished.

But these official explanations have not interrupted the investigations or the doubts that have been wearing on the government, putting its approval rating on a downward spiral since early 1999.

The official statements also shift the blame to the upper echelons of the Judiciary, which could generate conflicts between the government branches.

Prosecutors from Brasilia and Sao Paulo hope to question the former presidential adviser, who recently purchased an apartment in Rio de Janeiro for an estimated one million dollars.

The strong indications of Caldas Pereira’s close ties to the fugitive judge, former senator Estevao and the case of the Labour Tribunal construction project must be cleared up, say the investigators.

In Congress, a movement made up of opposition and governing party legislators alike is working on setting up a new parliamentary investigative commission dedicated specifically to the Caldas Pereira case.

The presidential office is manoeuvring to prevent the creation of the commission, which makes Cardoso’s call for clearing up the details of the case “hypocritical,” according to ‘O Globo’ political columnist Tereza Cruvinel.