ELECTION IN BRAZIL

Scandal in Lula´s government

Scandal in Lula´s government

What's Lula being charged of?
Short answer: members of Lula's Party, PT (Partido dos Trabalhadores - Worker's Party) have already admitted that they commited a crime: using illegal money to fund the election campaigns; there are accusations and evidences that members of PT have used illegal money also to pay a monthly bribery to legislators; also, there have been cases where it was shown that members of the Worker's Party were collecting money and receiving presents from private companies.
Lula is charged of either being corrupt or being uncapable.
Some say that Lula knew about the scheme (if not all the scheme, at least enough pieces to take an action), and, even if he didn't receive any monies, he endorsed the scheme by keeping quiet. The remedy would be the impeachment of Lula.
Others say to believe that Lula didn't know about the scheme, which would have been setup by some Ministers and members of the Worker's Party; in such case, Lula would be uncapable of governing Brazil. The remedy would be to let Lula linger on until 2006, and beat him in elections.
For a more detailed answer, read below.

How Lula organized his government

President Lula won the Presidential elections in 2002, and was sworn in office on January 1st of 2003, for a term until December 31st 2006.
Lula obtained 56% of votes for Presidency, on second round. Howevever, Lula´s Party, the Partido dos Trabalhadores (Worker´s Party, known in Brazil as PT), had only 17% of seats in Brazilian Parliament (77 out of 513 Federal Deputies and 10 out of 81 Senators). Other leftist parties, like PDT and PSB, had few seats; the oppositionist parties, PSDB and PFL, had about 26% of the seats.
Right after the elections, middle sized parties like PTB, PP and PL didn´t have an expressive share of the Parliament. However, because Brazilian legislation allows it (read more about the Brazilian law on Political Parties), there was a noticeable number of Deputies changing parties in 2003 (read this page about Brazilian politicians changing Parties); as a result, the middle sized parties, combined, gained the power to influence results of votations. It was important for Lula to gain the support of those parties, and he indeed dit it: PL was already with the government, and PP and PTB (who had given support to Lula's adversary, José Serra, in the second round of the 2002 elections) joined in early 2003.
The question is: why? Why medium sized Parties, with ideologies quite different from the Workers Party's, led by people who were openly criticized by Lula and PT for adhering to any government in seek of self benefits, would join the government coalition? Roberto Jefferson (read further below) says that they joined because the Government promised them payments.

One of Lula´s first measures was to expand the Cabinet. With new Ministries and Secretariats (for example, Ministry of Cities, Secretariat of Fish, Secretariat of Women, among others), the Cabinet reached 36 seats. Most Ministries were assigned to members of PT; a noticeable number of Ministers, particularly those appointed to the newly created Ministries, were personal friends of Lula´s who had lost elections in 2002.
From the beginning, a group of Ministries became known as the "hard nucleus" of the government. Finance Minister Antonio Palocci conquered the confidence of investors. José Dirceu, Chief of Staff, was called by Lula himself as "the captain of my team"; the Chief of Staff, among others, has the task to intermediate the relationship between the Legislative and the Executive; also, Dirceu, by decree of Lula, was given the power to fill all the appointable positions in the Government and in the State companies. The other Ministers of the hard nucleus were Luiz Gushiken (Chief of Communication) and Luis Dulcci (Chief of Presidential Advisory).
Read more about José Dirceu.

José Dirceu

The first two years of Lula´s government saw a continuation of the predecessor Fernando Henrique Cardoso. Antonio Palocci maintained the relations with the IMF; he maintained the basics of the economic policy: fiscal surplus, floating currency, inflation target; minimum wage had a modest real increase; the Social Security of the civil service was changed.
The social programs didn´t take off as expected. The most famous of all, the Zero Hunger, had much more marketing than results. The First Job program managed to employ no more than a few thousand youths.
With the continuity of the economic policy and the slow pace of the social programs, a few sectors of PT started to criticize Lula and Palocci.

Lula's first scandal

In February 2003, Lula´s government had a first ethical challenge. Magazine Época published a report showing a case of corruption in the Government.
The affair involved Waldomiro Diniz, the main advisor of Minister José Dirceu, who was in charge of talking to Members of Parliament; these talkings included, among other subjects, the appointment of affiliates to positions in the government, and the releasing of budgets; that´s to say that Waldomiro Diniz was high in the hierarchy of the Government.
Diniz was caught on a tape demanding bribery. The tape was recorded by Carlos Cachoeira, a man in the business of bingos and illegal lotteries. Cachoeira was interested in signing a contract with the Government of Rio de Janeiro to run an instant lottery; Waldomiro was the representative of Rio´s government.
The tape was recorded by Cachoeira himself. Cachoeira said that he recorded the tape because Diniz was demanding bribery. Indeed, the tape shows Diniz clearly asking Cachoeira to make a donation to the campaign of Benedita da Silva, the then candidate of PT to Rio´s government, and also asking a "one percent for myself".
Diniz was fired right away by Lula. The opposition parties, however, didn´t find it enough; they alleged that Diniz might have misused his powers, and only a Probing Comission could investigate all the his acts; moreover, given the widely known friendship between Diniz and José Dirceu, the opposition wanted to investigate how much the latter was aware of Diniz acts.
The opposition managed to collect the number of signatures to create a Probing Comission in the Senate. However, the government employed the strategy of not appointing their representatives for the Comission; this omission was considered legal by the President of Senate, José Sarney (Lula´s ally), and the Comission was not created.
The opposition filed a suit at the Supreme Court, demanding that the President of Senate appointed the members of the Comission. In June 2005, the Court sentence: Probing Comission is a constitutional right of the minority, and as such can not be dodged by the omission of the dominant Parties.

A bribery of R$ 3,000 which changed the country

On May 14th 2005, Veja magazine (the most important in Brazil) published a bombastic denounce, which would change the political scenario in Brazil.
Veja website posted fragments of a tape showing an employee of the Brazilian Post Office (Correios SA, State owned), called Marcos Marinho, talking to two anonymous people. The subject of the conversation was how Marinho could help his interviewers win biddings going on at the Post. The tape clearly shows the moment when one of the men hands over a packet of bills to Marinho, who grabs it and puts it in his pocket, without even counting the money (which, later on, was known to be R$ 3,000.00, or a bit more than US 1,000.00 - one thousand dollars).
According to Marinho, there was a scheme set up inside the Correios ("It's possible to steal anything in the Correios", he said). Contractors could contact key people in the company, make a "contribution" and win biddings. These key people would be those appointed by political Parties; the "contributions" would be passed to the Parties which had appointed those people.
Marinho said more. According to him, the Correios "belonged" to Partido Trabalhista Brasileiro, PTB. This Party appointed the Director of Purchases of the Post, who in turn appointed Marinho to his position. Marinho would have the powers to "help" contractors, and the "contributions" (like the R$ 3.000,00) would be eventually sent to PTB.
Still according to Marinho, the President of PTB, Federal Deputy Roberto Jefferson not only was aware of the scheme, but was its mentor. Marinho said that Jefferson controlled personally the collection of funds not only at the Correios, but also at other State companies in which PTB had appointed directors.
Read more about Roberto Jefferson.

Roberto Jefferson pledges innocence

Roberto Jefferson

The tape came like a bomb.
The Opposition Parties started right away a movement to create a Probing Comission. The government said that Marcelo Marinho was acting all by himself, and denied any corruption scheme within the State companies.
In a much awaited speech at the Tribune, Roberto Jefferson denied all the charges vehemently. He said that some people had shown the very same tape to him and tried to blackmail him, to avoid public exposure of the tape; Jefferson said he refused to pay, and in response the angry blackmailers sent the tape to Veja.
Read more about Roberto Jefferson.
In the first moments, Lula and his government gave full support to Jefferson. Jefferson´s Party, PTB, was an important member of the coalition which supported the government. While the opposition was trying to collect signatures for a Probing Comission, the government was employing all means to persuade Deputies and Senators from supporting further investigation (according to the Government, the Federal Police and the Public Prosecution were doing a good enough job).
Then, the Brazilian media had a fundamental role. The major Brazilian magazines and newspapers looked for (and found) more details about the scheme of corruption mentioned by Marcos Marinho.
Marinho mentioned the Department of Technology of the Correios as a focus of corrution; reporters found out that the Director of that Department had indeed been appointed by PTB. Marinho also mentioned IRB (the State owned Re-Insurance company); not only had the directors been appointed by Jefferson, but it was also discovered that an ex-director had resigned a few months ago, alleging that he could not stand any more "all the pressure to collect money for PTB"; Veja
So, despite all efforts, the government could not stop the Probing Comission; even members of Worker´s Party, who had put themselves in an embarassing situation with the Waldomiro affair, had to sucumb to the public opinion and give support to the investigation.

With the creation of the Probing Comission (which became known as the "CPI dos Correios"), Jefferson was isolated. Lula and Dirceu still declared support to Jefferson, but, for a couple of weeks, all the major magazines and newspapers scrutinized his life. It became public that a nephew of Jefferson´s was gaining lots of money with the Re-Insurance company; next, Epoca published that Jefferson passed the ownership of a radio station to an ex-employee, but never passed him any profit (see Epoca #368). Jefferson tried to talk to Dirceu and other high officials; nobody knows what they tried to achieve, but whatever it was, it failed.

Roberto Jefferson talks

Then, Jefferson talked. On June 6th, he gave an interview to newspaper Folha de São Paulo.
Bowing to the evidences, he admitted that all people appointed by him and PTB to occupy positions in State companies had the obligation to "speak" to contractors and try to get "financial contributions" to the Party. According to him, there was no illegality: contractors should be convinced to spontaneously make the contribution, as allowed by law; there should be no kind of favours in exchange for the contributions.
Jefferson didn´t give names, but he implied that this practice was employed by all Parties of the coalition. Because PT had occupied all Ministries which had large budgets, the Parties were fighting over the big State companies, and trying to get money out of the contractors.
The news that Parties were using state companies to get money should shake the country, but it became pale when Jefferson came up with his next accusation.
Jefferson talked about the mensalão. Jefferson said that Deputies were been paid a monthly amount of money to vote in favor of the government; also, a few Deputies had been paid a larger amount to change Parties and join the government coalition. He gave names of a few Deputies who were receiving the payments: José Janene, leader of PP; Waldemar Costa Neto, leader of PL; Sandro Mabel, from PP.

Roberto Jefferson introduces Marcos Valério and the "mensalão"

Marcos Valério

On June 12th, another explosive interview to the same paper, Folha de São Paulo.
Jefferson introduced a new person to Brazilians: Marcos Valério. Valério is the owner of a few marketing and publicity companies in the State of Minas Gerais. His companies sell services to the government and to big corporations, both public (the publicity of Banco do Brasil, for example, is conducted by Valério) and private. Brazilians had never heard about Valério until then.
According to Jefferson, Valério was the "operator" of the mensalão. He collected money from unknown sources and paid the Deputies.
More: the entire scheme had been created with the approval of Minister José Dirceu, the treasurer of the Worker´s Party, Antonio Delubio, and the general secretary of the Worker´s Party, Silvio Soares.
On June 14th, Jefferson speaks before the Comission of Ethics and reafirms all his accusations. On June 16th, under the impact of Jefferson's statements, José Dirceu leaves the Government.
On June 30th, as though to show that he is the most important voice in the Republic, Jefferson talks yet again to Folha de São Paulo, and says that there is a scheme at giant electricity company Eletrobrás, by which R$ 3 million were monthly paid to the Worker's Party. The very same day, the entire board of Eletrobrás is fired.

The investigations - and the consequences

All through the period, the Brazilian media was investigating the accusations and counter allegations (read the blog for description of the weekly magazines).
Jefferson was investigated by many instances. Besides the Federal Police and the Federal Attorneys, three instances were created within the Parliament: a Comission of Ethics (whose final decision may only be the impeachment of Jefferson), the Internal Affairs (which may apply administrative penalties) and the Probing Comission. According to Brazilian Constitution, a Probing Comission has the same investigatory prerrogatives as of the Judiciay Power; the Probing Comission can break secrecies (banks, phone companies and the Tax Agency must turn any information in to the Comission); the Comission may summon people to talk, and lying to the Comission is a crime (a few people, however, appeared before the comission with a preventive habeas-corpus, which exempted them from being arrested if they didn´t answer all questions).
The Comission requested tons of documents to the banks where, according to Jefferson, there had been large withdraws related to the affair: Banco Rural and Banco do Brasil. Also, the Comission summoned many people: Marcos Valério, Delúbio Soares and his wife, Fernanda Somaggio (ex-secretary of Marcos Valério), a few politicians.
Below, a summary of what the investigations have found so far:

June 14th - in an interview to IstoÉ, Fernanda Karina Sommagio, ex-secretary of Marcos Valério, says that she saw bags full of cash at the office; she says that Valério had frequent contacts with José Dirceu, Delúbio and Sílvio Pereira. This interview put definitely put Valério, until then an anonymous entrepreneur, into the center of the scandal.
June 21st - President Lula says in a public event: "Nobody in this country has more ethical authority than me." Lula refused to talk to the media, and mentioned in several occasions "a conspiration of the elites against the metal worker President". Since this date, Lula has attended more outdoor events, where he talks directly to the (usually poorer classes) public.
June 22nd - the Supreme Court orders the Senate to install a Probing Comission to investigate the Bingos affair.
June 25th - Marcos Valério talks to Veja. He denies all charges. He says that he indeed withdrew millions in cash, but it's because he deals with cattle, and many farmers wouldn't accept cheques. He admits he had met José Dirceu and Delúbio Soares, but only for small talks.
July 1st - preliminary analysis of the bank statements show a strange coincidence: between August and October of 2003, when Valério withdrew large amounts of cash, there was an intense moviment of Deputies and Senators, who moved to PL, PTB, PP and PT, the government coalition.
July 2nd - Veja obtains an important document. The small bank BMG loaned money to the Worker's Party, and the subscribers were José Genoíno, Delúbio Soares and Marcos Valério. This shows that Valério was assuming debts in the name of PT; when the loan was due, Valério paid the interest and renewed the principal. The Worker's Party had not paid back to Valério, but said that the debt was registered in their account books; the Electoral Tribunal said that the Party's account had no such register.
July 6th - Marcos Valério forgets the story about the cattle, and says that the cash was used to pay employees and contractors. He admits that, in some occasions, he undersigned loan operations to the Worker's Party; he said he did so because he had became good friends with Delúbio; he denies he had had any advantage off of these loans.
July 14th - a report by Coaf, an agency in charge of watching cases of money laundering, reveals that the amount of about R$ 326,000 was withdrawn from one of Valério's accounts and paid to Henrique Pizzolato, then director of Banco do Brasil; shortly after the withdraw, Pizzolato bought a flat of R$ 400,000 in Copacabana. Pizzolato was fired the same day.
July 15th - Talking to Jornal Nacional, the most watched news program in Brazil, Marcos Valério admits that he contracted many loans on behalf of the Worker's Party, which were used to pay past expenses of campaign. If this were true, he would be admitting guiltiness of an electoral crime, which prescribe shortly and whose penalties are very light. He denies any payment to legislators, and denies to have had any advantage.
July 16th - Delúbio Soares endorses Valério's declarations. He admits to have commited electoral crimes (collected money without reporting to the Electoral Justice), but nothing more than that.
July 17th - Lula talks. While visiting France, he gave an interview to an unknown Brazilian journalist who works as a free lancer in France. Lula admits that the Worker's Party commited electoral crime, but that this "happens systematically in Brazil".
July 19th - A preliminary report by the Probing Comission shows the names of some Deputies who received money from Marcos Valério's accounts. This report was based on statements provided by the branch of Banco Rural, in Brasília (that's to say: a very preliminary report, to be much expanded). The report includes the names of João Paulo Cunha, ex-President of the Deputies Chamber; José Janene, leader of PP; Paulo Rocha, Josias Gomes and Professor Luizinho (all of PT); Bispo Rodrigues (PL).
July 22nd - after a report by Jornal Nacional, Silvio Pereira, the Secretary of the Worker's Party, admits that he received a Land Rover as a present from GDK, a contractor of Petrobrás whose revenues increased much after Lula took office; both Sílvio and GDK say that it was just a gift. Sílvio resigns from PT.
July 26th - Renilda de Souza, wife of Marcos Valério, speaks before the Comission; she denies all charges against her husband, and says that José Dirceu was aware of all transactions.
July 29th - After analyses of the bank statements, a few more Federal Deputies are listed as having received money from Valério's account. Until then, there were eighteen Deputies whose names had been confirmed as having received money. Also, João Genu, Secretary of PP, and Jacinto Lamas, treasurer of PL, appear as having withdrawn large amounts.
August 2nd - José Dirceu and Roberto Jefferson stay face to face in public for the first time since the start of the affair. Jefferson reaffirms his accusations, and adds another one: José Dirceu authorized Jefferson to send someone to Portugal to accompany Valério in talks with Portugal Telecom; according to Jefferson, Portugal Telecom would give Valério R$ 20 millions (receiving money from foreigner companies is against Brazilian laws), to be shared between PT and PTB; Portugal Telecom would pay that money because the State owned Re-Insurance Company of Brazil would buy US$ 600 million in Certificates of Deposit of Banco Espírito Santo, controlled by Portugal Telecom. Further investigation showed that the trip to Portugal indeed happened, but Dirceu denied any illegality.
August 12th - Duda Mendonça, the publicist who helped Lula win the elections in 2002, admits that the Worker's Party paid him about R$ 15 million deposited in a bank account opened in Bahamas. This is an admission that Lula's campaign was paid with illegal money, and could be grounds for the impeachment of Lula and his vice-President, José de Alencar.
August 13th - Waldemar Costa Neto, President of PL, Party of the vice-President José de Alencar, tells to Época magazine that he charged R$ 10 million to give support to Lula, in 2002. Moreover, Waldemar says that Lula and José Dirceu knew about the deal.
August 13th - Lula talks to the Nation. He denies he had any knowledge of what was going on. He promises to punish all guilties. He says that the government and his Party have to apologize to the Nation.
August 21st - An ex-advisor attacks Antonio Palocci, Minister of Finances. He says that, when he was the mayor in Ribeirão Preto, a large city in São Paulo, Palocci collected R$ 50,000 monthly from contractors to pass on to the Party. Palocci denies the charges and promptly calls an interview, where he answered all questions.
August 23rd - Lula ratings take a dip. The popularity of the President had been seeing a steady decline since the start of the crisis; in July, the ratings remained nearly stable. However, in August, after the investigations developed a little, the ratings had a steep fall. Click to read more about Lula's rating falling.

Update August 24th. The folks at Wikipedia have been doing a better jog in keeping updated news about the scandal. Read more about Brazil's scandal in wikipedia.

Check out more details at the Brazil Blog.

Until 13h25, 1,195 ballot boxes were replaced

Sphere: Related Content