Brazil's scandals hamstring reform

Top leaders are accused of stealing billions, as political fallout spreads widening shadow.

Two billion dollars is missing from Brazilian government coffers - part of a trio of scandals shocking even in this country where corruption is commonplace.

Politicians and civil servants are being accused of embezzling the $2 billion from funds that were supposed to help the poor; the head of the Senate is suspected of channeling $10 million of it into his own bank account; and, in a separate case, two of the upper house's most senior figures are accused of ethics violations.

"It's phenomenal," says David Fleischer, the head of the Brazil arm of Transparency International, a Berlin-based organization that studies and measures institutional corruption. "It is very unusual to have three such major party leaders involved at the same time. And that scale of corruption in the agencies is unprecedented. That level of corruption has never reached $2 billion all at once."

Though President Fernando Henrique Cardoso is not implicated in any of the wrongdoing, the affair has tarnished his pledge to run a clean government and threatens to turn him into a lame duck for the last 20 months of his term, political analysts say.

With the economic crisis in neighboring Argentina helping drag the Brazilian real to an all-time low, the Cardoso administration faces tough times ahead. The turmoil in the Senate has made it difficult for the government to get legislation through Congress, and the possibility of a parliamentary inquiry into institutional corruption threatens to further deadlock government. A loss of the senators accused of corruption, who are senior members of Cardoso's five-party ruling coalition, would further hinder Cardoso's ability to rule, experts say.

"The accusations ... have considerably weakened the government's political support in Congress," Fleischer says.

Investigations continue into the disappearance of the total of $2 billion from the Amazon Development Bureau (Sudam) and the Northeastern Development Bureau (Sudene), two government agencies set up to channel funds to regions where per capita income, illiteracy, and life expectancy are all well below the national average.

The more advanced of the two probes, into Sudam, found that bureau officials, politicians, and businessmen in nine states skimmed money from contracts and set up fraudulent companies to attract millions of dollars in development funds.

Dozens of people suspected of participating in the fraud were arrested last week and more are expected to be detained as investigators continue examining phone records and bank statements.

Among those accused are the current Senate President Jader Barbalho, the bureau's former head, and the No.2 man in the Ministry of National Integration. Mr. Barbalho is suspected of transferring $10 million dollars of government money into his own account while governor of Para state.

Although Barbalho has denied any wrongdoing and rejected demands that he resign as Senate leader, it is clear that he and his family are the central targets of the investigation.

Barbalho has come under particular scrutiny because he nominated several former Sudam officials now under investigation to top positions in the Para-based agency. His wife is accused of taking $2 million in Sudam loans to fund a project to raise frogs, and two of her business partners are accused of embezzling tens of millions of dollars.

Meanwhile, in an unrelated ethics scandal, former Senate President Antonio Carlos Magalhaes and Jose Roberto Arruda, until last week the government's majority leader in Congress, face possible expulsion from Congress for tampering with the Senate's electronic voting system.

The corruption and ethics scandals are proof that Cardoso, who has won respect for taming rampant inflation and modernizing Brazil's economy, has failed to deliver on a campaign promise to clean up the dirt in Brazil's government, political analysts say. Since taking power in 1995, several close collaborators and members of his coalition have faced corruption accusations, including a former chief of staff investigated for alleged participation in the disappearance of almost $150 million from a Sao Paulo building project.

Presidential officials maintain Cardoso has acted swiftly to combat wrongdoing and add that he has instituted a code of ethics for senior appointees and named a former federal prosecutor to monitor investigations into corruption.

However, the president is also fighting to stymie a full-scale Congressional inquiry into institutional corruption, and some reports say he has promised pork barrel projects to legislators who vote against the proposal.

By working to prevent the Congressional inquiry, Cardoso is lending weight to critics like Ciro Gomes, a presidential hopeful from the northeast, who last year said "Cardoso does not steal, but he lets those around him steal."

The president's congressional coalition could fall apart if the three embattled senators cannot survive confidence votes expected over the next few weeks, experts say. "It's difficult to see how one of them isn't going to fall because of this. And if one goes, then it's difficult to imagine that the other two won't go with him," says Fabio Wanderley Reis, a professor emeritus of politics with the Federal University of Minas Gerais.

Scandal-weary Brazilians now wonder: If Cardoso, a figure known for personal integrity, cannot or will not reform the country's political system and clean up corruption, who can?

Some recall the words of early 20th-century statesman Rui Barbosa, who decried his country's loss of faith in political virtue after "seeing the triumph of so many nothings, seeing dishonor prosper, seeing injustice grow, seeing so much power concentrated in the hands of the wrong people." "Barbosa famously said that one day Brazilians will feel ashamed to be honest," Fleischer says. "Has that day arrived?"

(c) Copyright 2001. The Christian Science Monitor

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