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Fresh round of corruption allegations rocks Brazil’s political establishment

Brazil's president Michel Temer reacts during a meeting in Brasilia, Brazil, on April 11, 2017.

UESLEI MARCELINO/REUTERS

Brazil's beleaguered president Michel Temer is scrambling to hold together his coalition as a fresh round of corruption allegations shakes the political establishment.

A Supreme Court judge has authorized investigations into a broad swath of the country's most powerful political actors, lifting the immunity they enjoy as sitting politicians: the list includes nearly a third of the members of Mr. Temer's cabinet, plus 29 senators, 42 federal deputies, 12 governors and five former presidents.

This is a new phase of the sprawling, and still expanding, Lava Jato corruption case that has shredded the Brazilian political establishment and had knock-on effects across Latin America.

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Justice Edson Fachin stripped immunity from 108 people who now hold office and sent cases against 211 others to lower courts. (Only the Supreme Court can authorize investigation of a sitting Brazilian politician). Some of Mr. Temer's closest allies are on the list; so is Eduardo Paes, the high-profile ex-mayor of Rio, accused of taking bribes related to the 2016 Summer Olympic Games.

The investigations stem from allegations that executives at Brazil's largest construction firm, Odebrecht SA, paid bribes to politicians from all parties in an effort to win lucrative contracts and influence legislation. Seventy-seven senior Odebrecht staffers, including the company's chief executive officer, Marcelo Odebrecht, signed a deal to provide information to prosecutors in exchange for leniency in sentencing.

The Odebrecht plea bargain list has been the subject of intense speculation here for months; pieces of it had leaked to media. And many of the politicians named were in any case already facing charges or scrutiny related to other parts of Lava Jato, which has been under way for three years.

But when Justice Fachin unsealed the Odebrecht testimony on Tuesday evening, scandal-weary Brazilians discovered they could still be shocked.

"Disclosure [of the list] confirms to the public that the corrupt ties between the public and private sectors are not specific to one party – they are a systemic feature of Brazilian politics," Claudio Couto, a political scientist at the Getulio Vargas Foundation, a university in Rio, wrote in the newspaper O Globo on Wednesday.

The list speaks to the degree of institutionalized corruption here, with five of Brazil's six past presidents in the democratic era named on the list. Itamar Franco, who replaced a president impeached for graft, is the only former president not named; he is deceased.

Mr. Temer is named in the Odebrecht plea bargain but Brazilian law says a sitting president cannot be investigated for crimes committed before he took office. (Hearings began last week into a separate case, before the electoral court, in which Mr. Temer is accused of accepting illegal funding for his last campaign for office. That case is not expected to conclude before his mandate runs out next year.)

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The new investigations severely complicate Mr. Temer's situation as he tries to pass an unpopular package of reforms on which he has staked his government. He is seeking to cut the generous pension program and reduce labour protections; the changes are part of an austerity program that the country's business and financial sectors say will be key to ending a sharp recession, and foreign investors and ratings agencies are watching Mr. Temer's ability to get the laws passed.

Finance Minister Henrique Meirelles is predicting the list will delay the passage of the bills, as Congress members shift their focus to the allegations, but that the package will eventually become law, Folha de Sao Paulo reported Wednesday.

Among those on the Odebrecht list is Mr. Temer's chief of staff, Eliseu Padilha, a veteran deal maker who was tasked with getting the votes to pass the pension reform. Rodrigo Maia, Speaker of the lower house and second in line to the presidency, and Eunicio Oliveira, the leader of the Senate, are also now under investigation. Mr. Maia replaced Eduardo Cunha, the once-powerful politician recently sentenced to 15 years on graft charges, while Mr. Oliveira replaced a Senate leader forced out of the job for corruption charges.

Also now investigated: Foreign Minister Aloysio Nunes; Trade and Industry Minister Marcos Pereira; Agriculture Minister Blairo Maggi; the secretary-general of the presidency, Moreira Franco, who oversees the infrastructure investment program; and the ministers of communications, cities, culture and national integration.

The list once against shifts the field of competition for the 2018 federal elections, with leaders of all parties named. Aécio Neves, leader of the opposition Brazilian Social Democracy Party, who narrowly lost the presidency to Dilma Rouseff in 2014, is named in five separate cases.

Mr. Maia, the head of the lower house, was one of the few politicians to respond immediately to the allegations; he said his innocence will be proved during the investigation. The former presidents named, including Ms. Rousseff, Luiz Inacio Lula da Silva and Fernando Henrique Cardoso, have all declared their innocence in the past. They will be prosecuted in the court of Judge Sergio Moro, who has become something of a cult hero in Brazil as he oversees the Lava Jato investigations.

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Mr. Temer took power nearly a year ago, after the impeachment of Ms. Rousseff, who was accused of financial mismanagement. In the first six month of his presidency he was forced to fire and replace six cabinet ministers for reasons related to corruption and abuse of power, including one caught on tape talking about shutting down Lava Jato.

"The most troubling part is that the names on the list are not just names: they are leaders in Congress and in parties," Prof. Couto wrote. "When they are targeted [for investigation], their organizational capacity decreases, which will lead to instability in the near future. Then Congress can react in one of two ways: positively, trying to improve their legitimacy. Or negatively, trying to pass laws that will get rid of their problems. That's the biggest risk today."

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About the Author
Latin America Bureau Chief

Stephanie Nolen is the Latin America correspondent for The Globe and Mail.After years as a roving correspondent that included coverage of the wars in Iraq and Afghanistan, Stephanie moved to Johannesburg in 2003 to open a new bureau for The Globe, to report on what she believed was the world's biggest uncovered story, Africa's AIDS pandemic. More

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