Shawn Blore
Tel:(55) 21-8102-4706

Shawn Blore
Tel:(55) 21-8102-4706

Shawn Blore
Tel:(55) 21-8102-4706

The Globe and Mail,, Monday, July 18, 2005 PAGE A1



By Shawn Blore | The Globe and Mail

Monthly Allowance Scandal has PT on the skids

RIO DE JANEIRO -- Taking office with such high hopes just over two years ago, the Brazilian government of President Luiz Inacio (Lula) da Silva has been rocked by a corruption scandal that includes tales of political aides sneaking through airports with hundreds of thousands of dollars stuffed in their underwear and corrupt congressmen stopping by the presidential palace each month to pick up their regular payoff.

Testimony before two ongoing congressional inquiries is revealing a massive imbroglio through which high-level operatives from Mr. da Silva's Workers' Party, known by its Portuguese initials PT, skimmed money from Brazil's state corporations in order to pay a monthly bribe to ensure the congressional support of deputies from two old-line right-wing parties.

The payoffs apparently began just after the election in 2002. Although the voters had elected Mr. da Silva President, they had given his party a minority of seats in Congress. In order to govern, he and the PT needed to secure the support of several minority parties.

"Traditionally, this has been done through pork barrelling," said David Fleischer of the University of Brasilia. The President has about 30,000 patronage positions within the federal government and state corporations, Prof. Fleischer said, which he distributes among the various political parties in return for their support in Brazil's Congress.

In addition to handing out jobs, the PT apparently offered to pay a monthly bribe equivalent to $15,000 to congressional deputies from the Liberal and Progressive parties. The amount is about double a deputy's monthly salary.

The ranks of these two parties soon swelled to almost 100 deputies, all receiving their monthly payout that has come to be known as the "big allowance."

The money came from inflated procurement and public-relations contracts with state corporations, approved by party functionaries who had been placed strategically within the Crown corporations' hierarchies. The various ways the money was then kicked back to the PT is now the main topic of the congressional investigations.

In mid-June, Jose Dirceu, Mr. da Silva's chief of staff and the supposed ring leader of the scheme, resigned. Party treasurer Delubio Soares resigned soon after. But the continuing flow of revelations have made it unlikely that such efforts will contain the scandal.

In mid-July, a PT party functionary was caught at Sao Paulo airport with $100,000 (U.S.) in cash stuffed in his underwear. The man served as an aide to the brother of the PT national president. Attempts by the party to characterize the airport seizure as a trap simply didn't wash with the public.

In the aftermath of that, PT national president Jose Genoino resigned. Mr. de Silva then reorganized his cabinet, firing seven ministers and giving three powerful ministries to an allied and so far untarnished left-of-centre party. The President then went on television promising to "cut into the party's own flesh" if necessary to root out corruption.

On Saturday, Mr. Soares admitted on national television that the party had received what he called "loans" to the tune of $20-million from a public-relations company with numerous government contracts, and that the party had used the money for an under-the-table campaign-finance fund, with payments going to candidates from allied parties, supposedly in support of their electoral campaigns.

Rank and file Brazilians, however, share both a remarkable tolerance for corruption among their political classes and an ongoing high regard for their President.

"I've been voting for Lula for the past 20 years," says Rio de Janeiro resident Denise Werneck. "I believed in this party from the beginning. I sort of expected this because power is power, but it'll be okay in the end. I still believe in Lula. I would vote for him again."

Outside the capital, many ordinary Brazilians tend to look at the revelations as an odd kind of progress.
"You don't think with those other presidents there wasn't corruption?" says Joao Lima de Oliveira, a police officer speaking from his post on the Araguaia River. "Of course there was. It's just that now, finally, we're hearing about it."

Mr. de Oliveira said he believes the President knew of the corruption scheme from the beginning. It's a belief shared by a significant portion of the population.

A poll published last week showed that about one-third of Brazilians believe the President knew about the payoffs. The same poll, however, also showed that the President's approval rating had actually gone up since the scandal broke, from 57.4 per cent in early May to a very healthy 59.9 per cent in early July.

"The voters tend to separate Lula the person and Lula the President from what's going on," Prof. Fleischer said. "Lula still has quite a reserve of charisma. We would have to call him a Teflon President."

Shawn Blore is a Freelance Correspondent based in Rio de Janeiro

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