By Samantha Pearson and Luciana Magalhaes
SÃO PAULO -- Brazil's Supreme Court has ordered investigations
into one-third of the country's sitting ministers and scores of top
politicians for alleged corruption, delivering a major blow to
President Michel Temer as he struggles to revive Latin America's
biggest economy.
Justice Edson Fachin, who is overseeing cases in Brazil's high
court related to the country's sprawling Operation Car Wash probe,
has given permission for prosecutors to open investigations into at
least eight ministers, the leaders of both houses of Congress, and
more than 50 senators and federal deputies, according to a document
from the court released Tuesday.
The Car Wash investigation, which centers on bid-rigging at the
state-controlled oil company Petróleo Brasileiro SA, or Petrobras,
has led to more than 100 convictions over the past three years and
implicated some of the country's most influential businessmen and
politicians of all major parties.
Tuesday's announcement from the Supreme Court, the only body in
Brazil allowed to open investigations into sitting lawmakers, comes
at a critical moment for Mr. Temer as he struggles to push through
landmark changes to the country's insolvent pension system.
Economists see Mr. Temer's proposal, which would set a minimum
retirement age of 65 years, as the country's best chance of
reducing its gaping budget deficit and emerging from its deepest
recession on record.
"This is hitting at the heart of government, especially as these
are important ministers for Temer," said Rafael Cortez, a political
scientist at São Paulo-based consultancy Tendências.
"This will create even more turbulence and increase the urgency
to pass economic reforms," he said, adding that the president must
act quickly to save not only the economy but also his own career
amid calls for his resignation.
Among the cabinet ministers to be investigated are Mr. Temer's
chief of staff, Eliseu Padilha, and Secretary-General of the
Presidency Wellington Moreira Franco, both of whom are key to the
administration's relations with Congress. Mr. Padilha declined to
comment, and Mr. Moreira Franco wasn't available to comment.
Ministers for trade, foreign affairs and agriculture also will
be investigated, according to the Supreme Court document.
Eunicio Oliveira, head of Brazil's Senate, said he would defend
himself against any accusations. Rodrigo Maia, who leads Brazil's
lower house of Congress, couldn't be reached for comment.
"The list is enormous...it shows that the [political]
environment was rotten," said Thiago de Aragão, with the political
consultancy Arko Advice in Brasília. He said he believed it was the
biggest investigation of politicians ever launched in the
country.
"This could make approving the reforms more difficult but it
won't destroy them," he said, adding that it could take months for
any of the politicians to be formally charged.
Mr. Temer has previously said he would allow members of his
cabinet to remain in their posts while they are being investigated,
meaning that he will now face a race against time to push through
the reforms before any of them could be charged.
The fact that so many investigations were authorized by the
Supreme Court could also work in Mr. Temer's favor, analysts said.
"The list is so wide-ranging, involving all the parties, that [Mr.
Temer] is less affected than many others who are on the list," Mr.
de Aragão said.
For months, Brazil's political establishment has been on
tenterhooks after more than 70 current and former employees of
Odebrecht, Latin America's largest construction company which
admitted to paying hundreds of dollars of bribes in the scheme,
agreed to give testimony, signing what has been dubbed in Brasília
as the "end of the world" plea bargain.
A person familiar with Odebrecht's testimony said Tuesday that
Marcelo Odebrecht, the group's former chief executive officer, told
a judge this week that his company made payments to Brazil's former
President Luiz Inácio Lula da Silva. The same person said payments
were funneled to political campaigns and to benefit the former
president.
Mr. da Silva, who has been accused by prosecutors of
masterminding the Car Wash scheme, was indicted five times last
year on corruption-related charges. He has denied wrongdoing.
With huge swaths of Brazil's political establishment now
implicated in the Car Wash scandal, analysts said the Supreme
Court's list would leave Brazilians with few options ahead of
presidential elections in 2018.
"It's likely the biggest effect of the list will come in 2018 --
it is not only potential presidential candidates who are under
investigation, but also potential regional leaders," said
Tendências's Mr. Cortez, adding that the investigations would also
increase calls for political reform in the country.
Former presidential candidate Senator Aécio Neves of the PSDB
party, who some believe could try to run again for president next
year, was on Tuesday's list. Mr. Neves vowed to prove his
innocence.
Jeffrey T. Lewis contributed to this article.
Write to Samantha Pearson at samantha.pearson@wsj.com and
Luciana Magalhaes at Luciana.Magalhaes@wsj.com
(END) Dow Jones Newswires
April 11, 2017 23:05 ET (03:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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