By Larry Rohter
New York TimesMay 6, 2001
The president of the Senate is said to have profited from a $1 billion corruption scheme. Former Senate leaders are accusing each other of tampering with ballots. And that means trouble for President Fernando Henrique Cardoso, even though he is hardly to blame. The scandal, involving the three main parties in his coalition, has paralyzed the Congress and enraged Brazil, a nation of 170 million.
The turbulence is a direct outgrowth of the feud between Senator Jader Barbalho, who became president of the Senate in February, and the man he succeeded, Senator Antí´nio Carlos Magalhí£es. Mutual accusations of corruption prompted press investigations, which turned up evidence that Mr. Barbalho received kickbacks on loans from Sudam, the development agency for the Amazon region he represents. In one instance that has made it the butt of national wisecracks, the agency gave a $4.4 million loan to Mr. Barbalho's wife for a frog farm, but only $150,000 appears to have been invested in the project. The couple were also involved in ventures with a rancher and businessman accused of embezzling $45 million from the development agency.
This week, after nearly a score of Sudam officials were dismissed or indicted, Mr. Cardoso signed decrees abolishing both Sudam and a similar agency that promotes economic development in the northeast, the poorest region of the country. A preliminary audit indicates that at least $1.8 billion is missing from the two agencies, which are to be replaced by new bodies under more direct controls of the executive branch. But even with his enemy in trouble, Mr. Magalhí£es cannot afford to gloat. He and Senator José Roberto Arruda, who was Senate whip for the president's party until last month, stand accused of ordering Senate employees to reprogram the computers that tally votes so they could determine how colleagues voted when the ballot was supposed to be secret.
Congressional hearings into the violation are being broadcast on television, with riveting moments of drama and emotion that rival the soap operas that are the backbone of prime-time programming. Late in April, after denying he had anything to do with the scheme, Mr. Arruda confessed his participation, wept and begged his family, voters and colleagues for forgiveness. The gesture did not work fully, however. Not only has Mr. Arruda had to step down as majority whip, he has also been forced to resign from the governing party, and there is growing pressure on both him and Mr. Magalhí£es, who denies he acted improperly, to resign their seats so as to save the Senate the embarrassment of a divisive and embarrassing impeachment trial.
On Thursday, there was another moment of drama when the two senators met face-to-face with the former director of the Senate's computer service, who said she acted illegally under orders from both men. Brazilian law routinely provides for confrontations between witnesses, but as the daily Jornal do Brasil noted, "This is the first time in the history of Brazilian politics that two legislators" have been involved in such a process.
For Brazilian voters, who will have to pick a successor to Mr. Cardoso next year, the revelations emerging from the capital have a familiar ring. For the third time in less than a decade the country is living through a corruption scandal at the highest level of government.
In 1992, President Fernando Collor resigned in the midst of impeachment proceedings brought about by the discovery of a multimillion-dollar slush fund operated by his chief campaign adviser. A year later, a group of powerful congressmen was found to have taken millions of dollars in bribes and kickbacks in return for guaranteeing the inclusion of pork-barrel projects in the budget.
During May Day ceremonies this week in Sí£o Paulo, the Brazilian flag was publicly washed as a symbolic protest against corruption. At another rally, union members roared their approval of demands that the offending senators be impeached and that a special congressional investigation be undertaken, a key demand of the opposition.
The cover of the country's leading newsmagazine, Veja, referred to the Senate this week as a "house of lies," and even some of the chamber's own members have criticized the body harshly. "The Senate has to cease being a cathedral in the front and a bordello at the back," said Senator Bernardo Cabral. The scandal is a setback for the president. He began the year with the economy expanding briskly, with approval ratings on the rise and with the prospect of an economic burst that would carry his party into next year's elections in a strong position.
But the scandal, combined with a financial crisis in Argentina, appears to have shaken the confidence of investors here and abroad. Both the stock market and the Brazilian currency have fallen sharply, the latter to a series of record lows. In a speech to the Brazil-United States Business Council in Washington this week, the president of the Central Bank, Armínio Fraga, acknowledged the political toll the scandal was taking. While the government hopes to "keep moving with the remaining items in our reform agenda" he said, "the worst-case scenario is that there will be a delay that pushes a few of the reforms into the next administration." But the longer the scandal continues, the more it strengthens the appeal of the opposition, which does not have the same commitment to Mr. Cardoso's economic opening. According to recent polls, if an election were to be held today, the front- runners would be Luiz Inacio da Silva, leader of the leftist Workers' Party, and Ciro Gomes, a former state governor and finance minister who recently defected to the Popular Socialist Party.
