A majority of the supreme court magistrates have voted to convict the former ‘political nucleus’ of the left-wing ruling Partido dos Trabalhadores (PT) for active corruption as the mensalão trial edges towards its conclusion.
The former president Lula da Silva (2003-2010), in whose first term the congressional bribery scheme known as the mensalão (‘big monthly payout’) took place, told PT candidates preparing for the municipal election run-offs on 28 October to walk with their heads held high. At a meeting of the national party directorate in São Paulo, he advised candidates not to allow their opponents to use the mensalão against them in the second round.
It was too late for that. José Serra, the opposition candidate in the most important run-off race, São Paulo’s mayoral contest, was the first to launch an attack on his PT rival and Lula protégé, Fernando Haddad, quipping that Haddad thought that Dirceu was a “little angel”.
The PT state governor of Bahía, Jaques Wagner, broke ranks with the party line to admit in an interview that the mensalão trial had probably weighed on the 2012 municipals, acknowledging that after three consecutive terms in office, the PT is likely to come against “voter exhaustion” in 2014, when President Dilma Rousseff is expected to seek a second term (and a fourth for the PT). The PT still grew its overall support in the 2012 municipals, but its coalition allies have become more emboldened (see lead), which could make for interesting talks about coalition slates for the 2014 general election.
Rather proverbially, on Day 33 of the trial (9 October) Judges Marco Aurélio and Gilmar Mendes found guilty the so-called political nucleus of the PT, comprising the former minister of the presidency, José Dirceu; the former party president, José Genoino; and the former party treasurer, Delúbio Soares. They were both clear that all the evidence to date placed Dirceu at the apex of the scheme, uncovered in 2005, whereby the PT funneled cash donations of siphoned off public money to legislators from both allied and opposition parties in return for their support in key congressional votes.
To date over 20 of the 38 defendants in the trial, including members of four political parties, have been found guilty on charges ranging from passive and active corruption to money laundering and the mismanagement of a financial institution. Dirceu was found guilty by a majority of six to two of the ten sitting judges on the case; Genoino by seven to one; and Soares by eight to one.
The two dissenters in the case of Dirceu were Judge José Antonio Dias Toffoli and Ricardo Lewandowksi. Dias Toffoli noted that while Dirceu might have been guilty of other crimes like influence peddling, there was insufficient evidence to charge him with active corruption. Lewandowksi, who has taken the softest line throughout the trial, made a similar argument and in the case of Genoino said that he was being condemned for the simple fact of being the party president at the time (2003-2005).
The defendants will only be charged at the end of the trial, expected by mid October. In theory, the convicted defendants could face lengthy prison sentences; in reality, few observers expect them to actually serve much time. Defence lawyers are pushing for their clients to serve ‘open time’, whereby they sleep in special prison cells and go out to work every day as normal.
Dirceu on 9 October published on his blog an open letter to the Brazilian people in which he said that he would accept the decision but would not rest until he proved his innocence. He repeated that the mensalão scandal was orchestrated by the PT’s enemies. He accused the supreme court of acting under strong media pressure, complaining that the court found him guilty without any evidence”. He concluded that his search for justice, without vengeance, would be “his reason to live”. Genoino said he was “revolted and furious”.
- Lula remains defiant
Some opposition politicians are pushing for Lula to be investigated for corruption, arguing that he could not have been oblivious to what was going on during the time of the mensalão. Lula has always maintained that the whole scandal was an opposition-concocted conspiracy to smear his government. One of the main convicted defendants (the publicist Marcos Valerio) has alleged that Lula knew all about it. It is unlikely, however, that these opposition attempts will prosper.
Selic falls to new low as Brazil trundles along at bottom
Citing worries about the international economy, Brazil’s central bank monetary policy committee (Copom) cut the benchmark Selic interest rate by 25 basis points to 7.25% on 10 October. For the first time in over a year, the decision was not unanimous, amid some concern about domestic inflation pressures.
The Copom has cut the Selic by 525 basis points since August 2011. The national index of consumer price inflation accelerated in September for the third month in a row, hitting 5.28% year-on-year as food and drink costs rose the most since December 2010. Private economists expect inflation to remain above the central target of 4.5% for the rest of the year but the central bank - and the government led by President Dilma Rousseff – is more concerned with growth. The finance ministry now admits that real GDP growth this year will be a weak 1.5%-1.6%, well down on the 4.0% it predicted at the beginning of the year.
The Brazilian Real has declined 8.6% to date in 2012, as the central bank has stepped up its US dollar purchases in support of exporters. It was trading at R$2.04/US$ on 11 October, after the latest Selic reduction.
In Tokyo to attend the World Bank and International Monetary Fund (IMF)’s annual meetings, Finance Minister Guido Mantega said that the reduction would help contain the renewed appreciatory pressure on the Real from the third round of quantitative easing in the US. Mantega added that the other official measures to dissuade capital inflows had so far proven effective in shielding Brazil’s economy from the global currency war. The ever optimistic minister insisted that the domestic economy was picking up on the back of the Rousseff government’s array of stimulus measures and would be growing at 4.0% year-on-year again by year end.
Mantega, who first coined the term ‘global currency war, also said that the Brics group of developing countries (comprising Brazil, Russia, India, China and South Africa) would meet on the margins of the multilateral meetings to further talks about setting up a emergency currency swap framework, similar to the Chiang Mai Initiative among Asian countries.
Mantega complained that quantitative easing policies had only limited positive effects in the US and Europe, and said that governments should try to stimulate their economies by increasing fiscal spending rather than easing monetary policies. This was later echoed by the IMF’s managing director, Christine Lagarde, who on 10 October warned of the need to loosen fiscal policy in Europe.
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