Lula in spotlight as Corruption scandal escalates.

It is finally President Luiz Inácio Lula da Silva's turn in the spotlight as the corruption scandal in Brazil continues to escalate, prompting the ruling Workers' Party (PT) and even some opposition forces to work harder than ever to save the government from total collapse.

Salvation could come in the form of a tacit agreement among the country's main political forces to keep Lula and his administration in place until his term ends in December 2006.

The crisis sparked by allegations of vote-buying in Congress and illegal campaign funding reached new heights last Thursday following the testimony of Duda Mendonça, the advertising executive in charge of the PT's election campaigns since 2001.

Mendonça confessed that he had received 15.5 million reals (6.5 million dollars) in illegal, undeclared campaign financing, two-thirds of which was deposited in a bank account in the Bahamas, a Caribbean tax haven.

This revelation reinforced suspicions that Lula's 2002 election victory was helped along by illegal funds. Worse still, it could indicate that the PT received foreign financing, which would be grounds for the party to be disbanded under Brazilian law.

Meanwhile, in an interview with the weekly magazine Epoca published on Friday, Liberal Party president Valdemar Costa Neto maintained that the coalition formed between his party and the PT in the 2002 presidential elections was based on a financial agreement negotiated with the participation of Lula himself.

According to Costa Neto, the PT promised to donate 10 million reals (4.2 million dollars) to help cover the Liberal Party's election campaign costs, but only paid two thirds of this amount in 2003, through undeclared funds.

Vice President José Alencar of the Liberal Party was also allegedly involved in these negotiations, and if this proves true, both he and Lula could face impeachment proceedings.

If both the president and vice president were removed from office, the country's leadership would pass to the speaker of the Chamber of Deputies, Severino Cavalcanti. But Cavalcanti, a member of the conservative Progressive Party, is not free of suspicion either, since his party allegedly benefited from the bribes-for-votes scheme purportedly established by the PT.

In July, Costa Neto became the first deputy forced to resign from his seat in Congress by the corruption scandal, in the face of documentary evidence and testimony of his involvement. By stepping down voluntarily, he avoided impeachment and the eight-year ban from public office it would entail.

While his own guilt could call his credibility into doubt, much of the information he has provided up until now has proven to be factual.

The seemingly endless stream of fresh allegations emerging on an almost daily basis is clearly taking a toll on Lula, both politically and emotionally.

In a brief address to the nation on Friday, in which he apologised to the Brazilian people for the misdeeds of his party, he appeared unusually hesitant and insecure.

”I feel betrayed by the unacceptable practices of which I was never aware,” he maintained. But it is becoming increasingly difficult to believe that he had no knowledge whatsoever of the complex financial scheme set up by the leftist PT's leadership to ensure the support of three allied right-wing parties.

Opposition politicians and even some members of the PT itself have called on Lula to take a more forceful stance, beginning with identifying the ”traitors” and meting out the corresponding punishment to those responsible within his government and his party.

As investigations by three separate congressional inquiry commissions, the federal police and the attorney general's office move forward, and more testimony is heard, it has become clear that those implicated in the scandal - including Lula - have adopted the strategy of confessing only to what has become impossible to deny.

Naming names can be dangerous, because being placed on the defensive can force the accused to play the role of accuser. The current scandal was sparked by allegations made in early June by lawmaker Roberto Jefferson of the Brazilian Labour Party - after he himself was charged with corruption involving the state-run postal service.

Now Costa Neto has become an example of the same phenomenon, with the underlying message, ”If I'm going down, I'm taking you all with me.”

The picture that is emerging is one of a PT leadership determined to ensure Lula's victory at any cost in 2002, even if it meant taking on almost foolhardy costs and risks, resorting to illegal off-the-books funding, forging alliances with the right, and essentially buying support.

There is also growing evidence that the illegal campaign financing scheme involved numerous state-owned and private companies, pension funds, and government contracts for a range of services, including advertising.

In the meantime, testimony from former PT members who have either stepped down or been expelled from the party indicates that some of these illicit practices, such as illegal campaign financing, actually date back several years earlier but became particularly prevalent during the 2002 federal election campaign.

But despite the mounting evidence, it appears highly unlikely that Lula will meet the same fate as former president Fernando Collor de Mello, who was brought down by a corruption scandal in 1992.

On Friday, the new president of the PT, Tarso Genro, announced that the party ”will mobilise its social support base to defend the president” if impeachment procedures are initiated, but the economic and social upheaval that could result from such a move make it a near impossibility.

José Dirceu de Oliveira, Lula's former cabinet chief and the alleged head of the PT corruption network, predicted that any attempt to oust the president would provoke a ”social convulsion.”

Dirceu stepped down from the post of cabinet chief in June to return to his seat in Congress, but is still facing an impeachment hearing that could ban him from public office for eight years.

He was the president of the PT between 1995 and 2002, and is widely viewed as being the driving force behind Lula's electoral triumph.

With over 800,000 members, the PT is Brazil's best organised party, and has close ties to the country's largest trade union federation, as well as a wide range of civil society movements in both urban and rural areas.

[Source: By Mario Osava, TerraViva Europe, Rio de Janeiro, 16Aug05]

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