August 21, 2005

Latest on Brazilian Scandal

Here is an article that gives great background on the scandal currently rocking the Brazilian presidency, as well as the latest details. Brazilian Scandal Threatens President

Brazilian Scandal Threatens President

Associated Press Writer

August 21, 2005, 1:57 PM EDT

RIO DE JANEIRO, Brazil -- The money-for-votes scandal that has engulfed Brazil seems to be reaching the doorstep of President Luiz Inacio Lula da Silva.

In a succession of political earthquakes, high-ranking figures have been forced to quit. They are Silva's chief of staff; the president of the PT, or Workers Party; its treasurer; and its secretary general -- the latter for allegedly taking a $32,000 Land Rover as a gift from a private company.

This month 22 PT federal legislators, outraged by the allegations of bribery and suspect campaign funding, declared "independence" from party ranks -- a step toward a schism that could cost the party almost a fifth of its congressional force.

It all marks a sharp and lurid turnaround from three years ago, when Silva, or Lula as he is universally known, a union leader and high-school dropout of famously humble ways, was elected president in the first of a series of gains for leftists across Latin America.

"The events of the past few days are making the PT unviable as a democratic alternative that took decades to build. It is a tragedy for Brazil and for Latin America," said Inacio Cano, a political scientist at the Federal University of Rio de Janeiro.

The scandal that has transfixed Brazilians entails secret offshore bank accounts, dramatic airport arrests of politicians with suitcases of cash, and an imprisoned money dealer threatening to reveal more explosive details.

On Aug. 11, Duda Mendonca, manager of Silva's campaign in 2002, told congressional investigators that about $4.5 million had been paid for his advertising work through a secret bank account in the Bahamas.

Coming from the man whose catchy slogans such as "Lula Peace and Love" and "Lula Light" helped catapult the former lathe operator to the presidency, the allegation has raised suspicions that Silva knew at least part of his campaign was paid for with illegal money, deposited abroad to evade taxation.

Founded in 1980 during the last years of a 21-year military regime, the Workers Party called for "socialism with a democratic face" and found a following among unions, disillusioned Marxists and Roman Catholic church groups.

Silva, a co-founder, was jailed by the military regime for leading an auto strike that was deemed a threat to national security. After his release, his party emerged as a defiant challenge to the old political order.

But its clean image crumbled in June, when Rep. Roberto Jefferson, a government ally, accused the party of bribing legislators to support its legislation. However, he said Silva personally was innocent.

Then came a series of arrests of politicians leaving or arriving in Brazil with bags and even underwear stuffed with cash -- in one instance $4.3 million in seven suitcases.

On July 30, Silva delivered a speech accusing conservative "elites" of conspiring against him. Two weeks later he was on TV, red-eyed and blinking after an almost sleepless night, and apologizing for any wrongdoing by his government or party.

More details may come from Antonio Oliveira Claramunt, or "Barcelona Tony," an illegal dealer in foreign currency who was arrested a year ago on money-laundering charges and is serving a 25-year prison term.

In letters to his family printed in Veja, a weekly news magazine, Claramunt said he knew how the money was transferred abroad to secret accounts to finance political campaigns and avoid taxes. He said the deposits were made since 1989 -- and he knew who made the transfers.

Brought from his remote penitentiary to Sao Paulo for questioning by congressional investigators, Claramunt said he transferred money abroad illegally for national figures, including Central Bank President Henrique Meirelles and Justice Minister Marcio Thomas Bastos. Both denied the allegation and Claramunt did not substantiate his claims.

Claramunt had told his family he feared assassination because of what he knew. Investigators say they expect him to reveal more information.

Posted by Andrew on August 21, 2005 5:23 PM.