POLITICS-BRASIL: Corruption Scandal Taints Government

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Jul 15 2000 (IPS) - New revelations about the misappropriation of public funds for the construction of a Sao Paulo courthouse has triggered a crisis in the Brazilian government, with all eyes trained on the planning minister and a close former adviser to President Fernando Henrique Cardoso.

The magazine ‘Isto ’ printed its weekend edition early, and began to distribute it Thursday evening, with transcriptions of conversations recorded by police who wiretapped the telephone of Judge Nicolau dos Santos Neto, the chief suspect in a fraud that cost the state 169 million reals (94 million dollars at today’s exchange rate). The judge remains at large.

Planning minister Marcus Tavares, meanwhile, is signalled as responsible, while deputy minister, for the release in 1995 and 1996 of additional funds not covered by the national budget, for the construction of the Regional Labour Tribunal in Sao Paulo.

But the judge turned to Tavares after receiving the backing of the secretary-general of the presidency, Eduardo Jorge Caldas Pereira, a close adviser who served Cardoso from 1983 to 1998, accompanying his rise from senator to foreign minister, finance minister and finally to president.

The conversations transcribed by ‘Isto ’ also accuse Senator Romeu Tuma, a former federal police chief, of pulling strings in favour of the judge in exchange for the naming of several of his family-members to posts in the justice system.

The magazine published what it promised would be the merest tip of the iceberg — a small portion of 400 hours of wiretapped conversation recorded over a year ago by the federal police and the intelligence agency.

The revelations shot full of holes explanations by the president’s office and two economic ministries, that had denied any possibility that the executive branch interfered in funding earmarked for the judiciary.

Official documents clearly demonstrate that in 1995 and 1996, 36 million reals (20 million dollars today; nearly double that at the time) in supplementary funds not included in the national budget approved by Congress were authorised for construction of the courtroom in Sao Paulo.

The additional funds, requested by the Labour Justice system, were approved by planning ministry authorities, who justified them before Congress as indispensable for preventing losses that would be incurred if work on the courtroom ground to a halt due to lack of financing.

The scandal, which has been brewing since last year, caused a flurry of meetings between members of the cabinet to discuss what was to be done. One of the decisions reached was that Tavares was to stay on as planning minister.

Jitters in the financial market were reflected in a 3.57 percent slump in operations on the Sao Paulo stock market Thursday. Business spokespersons said they feared a new dip in foreign investors’ confidence in Brazil.

Minister Tavares’ technical explanations did little to dispel the suspicions. The minister claimed that his participation in authorising funds was merely formal, and that he was an unimportant link in a chain of paperwork that began in the judiciary, ran through Congress, and ended with the president’s signature.

The leftist opposition is demanding that a parliamentary investigative commission be set up to clarify the president’s role in the whole affair.

According to the leader of the Workers Party (PT), Luis Inacio ‘Lula’ da Silva, Cardoso owes the country explanations, and must acknowledge the illegality of his signing a document approving additional financing for a construction project whose artificially inflated cost had already been loudly protested.

“The honour of President Cardoso is at stake,” declared the PT’s national president, parliamentary Deputy José Dirceu, who is negotiating with other parties to set up a congressional investigative commission.

The scandal, which threatens to balloon into a full-fledged crisis, began last year, with a parliamentary investigation into alleged irregularities in the justice system, which found that funds earmarked for the new courthouse in Sao Paulo had been misappropriated.

A police probe led to legal proceedings against Judge Santos Neto, who disappeared when a warrant for his arrest was issued. But the investigation also pointed to complicity by Senator Luiz Estévao, a construction magnate, who apparently benefited from inflating the cost of the project and was impeached by the Senate.

But the role of Cardoso’s former adviser, Caldas Pereira, who received 117 phone calls from the judge during the years the work was underway, was not clarified. The suspicions focusing on him sparked the latest scandal, which is picking up steam because it goes all the way up to the cabinet, the upper echelons of the judiciary, and to the president’s office itself.

The case has revived memories of the corruption scandals that led to the impeachment of president Fernando Collor de Mello in 1992 and several lawmakers in the following years.

Former senator Estévao may come forth with further revelations, because he swore that he would not “go down alone.” Other potential sources of new details are the fugitive judge and the president’s former secretary-general.

Whatever the outcome, the scandal has already tainted the government and Cardoso himself, whose popularity has been in the dumps ever since the January 1999 crash of the real.