Thursday, March 03, 2016

Brazil’s President Rousseff, Facing Impeachment Effort, Is Deluged by More Bad News
New York Times
MARCH 3, 2016

RIO DE JANEIRO — Just when it seems things cannot get any worse for Brazil’s president, Dilma Rousseff, they do.

An economic slowdown has become a brutal rout, with gross domestic product shrinking 3.8 percent in 2015, the deepest plunge in 25 years, according to government figures released Thursday.

The president’s once-influential campaign strategist has been jailed on accusations that he was paid with funds from the colossal bribery scheme involving the national oil company, Petrobras.

And Ms. Rousseff’s top aides scrambled on Thursday to respond to a report that a senator from her Workers’ Party was negotiating a plea deal in which he would claim that she had maneuvered to appoint a justice to one of Brazil’s highest courts in an attempt to release executives jailed in the Petrobras scandal.

“No leader likes to be on the defensive, but this makes Dilma even more vulnerable,” said Thiago de Aragão, a political risk consultant in the capital, Brasília.

Ms. Rousseff is already facing impeachment proceedings over using funds from public banks to cover budget gaps. The report in the magazine Isto É cast doubt on her insistence that she not only knew nothing about the bribes and kickbacks at Petrobras, but also refrained from interfering in the investigation despite the problems it was causing her administration.

The report described a plea deal by Delcídio do Amaral, the government’s former leader in the Senate, who was arrested in November on charges of trying to obstruct the Petrobras inquiry.

Isto É reported the claim by Mr. do Amaral against Ms. Rousseff, along with explosive accusations that her predecessor as president, Luiz Inácio Lula da Silva, arranged illegal payments to Marcos Valério de Souza, a businessman convicted of operating a vote-buying scheme during Mr. da Silva’s time in office.

Mr. do Amaral, who was released from custody in February, issued a cryptic statement Thursday saying he could not confirm the magazine report or the authenticity of cited documents. Yet he also refrained from denying any of the claims, while proclaiming his “respect for the Brazilian people and the public interest.”

Pointing to Mr. do Amaral’s tarnished reputation and attempts to salvage his political career (he remains a senator, thanks to the relaxed approach in Brazil’s National Congress to expelling members embroiled in scandals), allies of Ms. Rousseff quickly went on the attack.

“Lamentably, Delcídio doesn’t have credibility,” José Eduardo Cardozo, Brazil’s solicitor general, said. “He’s not someone who has excelled at telling the truth.”

Yet even before the report on Mr. do Amaral, Ms. Rousseff was criticized for upheaval in her administration in connection with the Petrobras scandal, which has fueled doubts about her commitment to judicial independence.

Mr. Cardozo became solicitor general just this week after resigning as justice minister because of “political pressure.” Factions in the Workers’ Party had questioned his reluctance to exert more control over the Federal Police, an institution similar to the F.B.I. that investigates government corruption.

In a statement Thursday night, Ms. Rousseff said she remained committed to fighting corruption and strengthening Brazil’s institutions. She also questioned the political motivations for leaking details of plea agreements, contending that doing so was illegal.

“We rigorously comply with the Constitution,” she added.

While the efforts to impeach Ms. Rousseff seemed to flag in recent weeks after political rivals found themselves entangled in their own scandals, the pressure is rising again as her campaign funding is scrutinized and her political mentor, Mr. da Silva, faces an array of legal challenges.

“President Dilma, have the humility to say you cannot remain at the helm of the country,” said Betinho Gomes, an opposition congressman who was among those on Thursday calling for her to resign.

Beyond the turmoil in Brasília, Brazil’s financial markets surged Thursday amid speculation that an impeachment could lead to a retreat from policies that have mired the economy in recession.

Under Ms. Rousseff, the government enhanced the sway of state-controlled companies and increased spending on huge infrastructure projects that went over budget or were never completed. At the same time, critics say, she neglected an exploding pension crisis that has wreaked havoc on public finances.

“A succession of familiar errors provoked the tumble,” said Míriam Leitão, one of Brazil’s most prominent economic commentators. “The warnings were there, but the government still pursued the wrong policies.”

The arrest in February of Ms. Rousseff’s campaign strategist, João Santana, raised questions about how her campaigns in 2010 and 2014 were funded, and spread the scandal beyond Brazil. Mr. Santana’s wife, who was also arrested, testified that the Brazilian construction giant Odebrecht had paid for presidential campaigns managed by Mr. Santana in Venezuela, Panama and even Angola, countries where Odebrecht has lucrative contracts, according to news reports.

The tension around Mr. da Silva, the former president, who handpicked Ms. Rousseff as his successor and remains a towering figure in the Workers’ Party, is also causing problems for her.

Before the Isto É report, prosecutors said this week that they were investigating Mr. da Silva on suspicions that construction companies paid for renovations of a country estate and beachfront apartment, potentially tying him to the Petrobras scandal.

The accusations brought angry rebukes from Mr. da Silva and his supporters. “Lula never participated, directly or indirectly, in any illegal act during or after his government,” a spokesman for his institute said in a statement.

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