World Americas Briefing

Brazil's corruption scandals: an update

Putting it in perspective

President Michel Temer was expected to bring stability to a country reeling in the wake of a wide-ranging corruption scandal. But plea-bargain testimony from that case now appears to implicate him, as well, complicating Brazil's road to recovery.

Brazil's President Michel Temer, second left, and the Commander of the Navy Admiral Eduardo Bacellar Leal Ferreira, right, arrive to attend a ceremony in Brasilia, Brazil, on Friday, June 9, 2017.
Eraldo Peres/ AP
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Caption

Brazil’s top electoral court dismissed charges this month of illegal campaign funding that could have unseated the country’s second president in less than a year. But President Michel Temer isn’t in the clear. He’s still under fire for separate charges of corruption and obstruction of justice, and the uncertainty isn’t helping Brazil’s political and economic turmoil.

What’s going on in Brazil?

The recent court hearing questioned whether in 2014 Dilma Rousseff and Mr. Temer, then her vice-presidential running mate, won the presidential race using illegal campaign donations. Ms. Rousseff was impeached last August over charges she manipulated the government’s budget, and Temer took over. But the backdrop for these events is Brazil’s largest corruption scandal in history – the so-called Car Wash scandal. That kickback scheme, involving the state-run oil company, Petrobras, has reached so far and wide that few politicians have been left unscathed. Prosecutors have opened investigations into one-third of senators, 10 percent of those in the lower house of Congress, four former presidents, and members of the judiciary. Top businesspeople have been implicated as well, sending the tentacles of the investigation beyond Brazilian borders.

Last month, Temer came under fire for yet another controversy: Two meatpacking tycoons had alleged in plea-bargain testimony that he took millions of dollars in bribes and encouraged hush money payments to a jailed politician. Although Temer is deeply unpopular with the public, he’s gained the confidence of international investors because of his moves to pass austerity measures, including a proposed reform of Brazil’s costly pension system.

Citizen protests against corruption, which reached their height last year when some 3 million people took to the streets in more than 200 Brazilian cities, have not been as widespread in recent months. Analysts attribute that to corruption fatigue, as more and more scandals are exposed.

What is Temer accused of doing?

Temer may have been given a small reprieve this month with the campaign finance ruling, but he’s still in hot water. As part of the controversy last month, an audio recording emerged that seemed to show he was encouraging payments to the former speaker of the lower house of Congress, Eduardo Cunha, who spearheaded the impeachment proceedings against Rousseff. And one of Temer’s former top aides, now under arrest, was videotaped carrying a suitcase full of cash, which prosecutors say was a bribe from JBS, the company whose executives' plea-bargain testimony implicated Temer. If the aide strikes a plea deal, his testimony could further hurt the president.

Temer denies the charges against him, but the allegations seem to keep rolling in: This month, a weekly newsmagazine reported that he told the country’s intelligence agency to look into the top judge presiding over the Car Wash scandal prosecutions, potentially trying to obstruct further investigations.

Now, Temer’s political future may be in the hands of fellow officials. If he maintains enough support, he could stave off possible impeachment or indictments. A two-thirds majority in the lower house of Congress is required to launch impeachment proceedings.

How did Brazil get here?

Not long ago, Brazil was the darling of emerging markets, with a booming economy and growing middle class. But 2014 ushered in Brazil’s worst recession, with both unemployment and inflation rates reaching about 10 percent. That, coupled with the massive Car Wash scandal, has hurt Brazil’s reputation.

But over the past several years, many have pointed to a bright spot: Despite the overwhelming corruption allegations, Brazil’s institutions have proved themselves independent and strong. Also, the country is starting to inch out of its recession.

And yet, this month’s electoral court decision about the Rousseff-Temer campaign has some people concerned: The 4-to-3 vote to acquit struck many as a political maneuver.

“We cannot be changing the president of the republic all the time, even if the people want to,” Gilmar Mendes, the chief judge of the supreme electoral court, said of the decision. Controversially, the court decided to throw out evidence that came from a plea bargain by engineering firm executives who testified their company had channeled millions of dollars into Rousseff and Temer’s campaign. At least one of the judges on the court faces his own graft charges.

If Temer is removed from office, what next?

Multiple impeachment requests have been filed against Temer, and it’s still possible that he could be booted before his term ends. Next in line for the presidency is the speaker of the lower house of Congress, Rodrigo Maia, a loyal Temer ally who would become the interim president for 30 days. During that time, Congress would choose a caretaker, as the Constitution stipulates if there are less than two years left in a presidential term (the next presidential election is scheduled for October 2018).

Brazilians are frustrated by Temer – a president they didn’t vote for. Many say that whether he’s ousted or not, they deserve early direct elections. At the end of May, as many as 150,000 activists, trade union members, and artists descended on the capital to demand Temer’s resignation and a fresh vote.