Tapes and ethics scandal back in Brazil to haunt President Temer
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Brasilia/Rio de Janeiro: Brazil’s Michel Temer was dragged into an influence-trafficking scandal after his former minister of culture reportedly told police the president pressured him into authorizing a construction project benefiting another cabinet member.
Marcelo Calero, who resigned last week as minister of culture, told police that Temer urged him to settle an impasse over a construction project in which his top congressional liaison Geddel Vieira Lima has a stake, local media reported. A copy of his testimony to the police leaked to the press, and O Estado de S.Paulo newspaper said Calero recorded his conversation with the president and other ministers.
Brazil’s real fell the most in the world on Friday on speculation that Temer’s possible involvement may derail his government’s reform agenda. The currency was down 1.3% to 3.4422 per US dollar at 10:23 am local time.
The ethics scandal comes at a delicate time for the government, which is pushing for final approval of a key spending cap bill in the Senate. Legislators are already on edge as executives of a leading construction company finalize plea bargains with prosecutors with details on kickbacks to politicians and managers from state-run oil company Petrobras. Leaked tapes and testimonies surrounding the scandal earlier this year heightened political instability that culminated in the impeachment of President Dilma Rousseff in August.
“It all depends on whether a recording will emerge confirming whether Temer really pressured the former minister,” said Luciano Rostagno, chief strategist at Banco Mizuho do Brasil. “The situation would become tough for the debate of reforms.”
Presidential spokesman Alexandre Parola confirmed on Thursday evening that Temer spoke with Calero twice in an attempt to avoid conflict over the construction project. But Parola said that the president “never induced any of his ministers to take a decision that breaches internal rules or convictions.” O Estado de S. Paulo reported on Friday that Vieira Lima intends to step down.
Temer’s approval rating stood at 28% in September, according to an Ibope poll commissioned by the National Industry Confederation. Since assuming the presidency on an interim basis in May, Temer has also lost three ministers over alleged cover ups surrounding a corruption probe.
Opposition lawmakers have already threatened to call for Temer’s impeachment, although the government coalition currently holds a large majority in the lower house. Protests against the president could arise, said Roberto Padovani, chief economist at Banco Votorantim. “But it’s not this scandal that will remove him from the presidency.” Bloomberg
Josue Leonel and Matthew Malinowski also conributed to this story.