Published On: October 10, 2015

It’s Hard Keeping Up with the News

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Every day seems to bring another surprise. We check the news in the evening, but by the next day, everything has changed. Institutions that were once steadfast and solid are falling apart.

FIFA

The top three men at FIFA were all suspended this week by the FIFA Ethics Committee. Even more surprising, all three men were suspended for the next 90 days without a hearing before the Committee. President Joseph “Sepp” Blatter; UEFA President and FIFA vice-president Michel Platini; and Blatter’s right-hand man, Secretary General Jerome Valcke are all at home wondering about their futures. Sepp Blatter announced his resignation just four days after being re-elected earlier this year. He planned to continue his role until a new election could be held. Until this week, Michel Platini was the odds-on favorite to win the election for the next FIFA President. FIFA is a one of the world’s most unique organizations – a non-profit with U$1.5 billion in cash reserves.

Meanwhile, Lionel Messi and his father are going to trial next week in Spain for tax fraud, and Neymar’s U$75 million in assets have been frozen while the Spanish government investigates him for income tax evasion.

Sepp Blatter/Getty Images

Sepp Blatter/Getty Images

In the world of sports, rapid changes are common. With the federal government, however, the pace of the game is like watching a glacier melt. Not any more. Swiss bank accounts, oligarchs in Curitiba prison, and other revelations are daily news items.

Here is the latest update on the federal government in Brazil:

TCU Investigation

The TCU (federal audit court) has voted unanimously to support allegations of government accounting fraud. This vote, which opens the way for a full Senate investigation, hasn’t happened since 1937. Assuming the Senate decides to investigate the violations, it could take months. While the accounting violations, if proven true, are illegal, it’s basically lying rather than stealing. Accounting violations mean PT was hiding budget deficits using the state-controlled banks so the federal budget would look stronger on paper than it was. However, no money was actually stolen. It was used for social welfare programs, while the accounting records reflected there was more money in the government’s coffers than there really was. It is illegal, though, and unethical, as it enables the government to advertise better economic data figures than are accurate to the population as well as international investors.

TSE Probe

The TSE (federal elections court) is currently investigating campaign contributions from the 2014 elections, which could extend to 2010 or earlier. If the TSE investigation can prove the allegations, this would be a much bigger problem for PT than the TCU findings. TSE is investigating if PT used funds illegally in its election campaign. If PT did, it would be a strong impetus for impeachment proceedings against Dilma because the election campaign funds must have come from somewhere, and it’s unlikely the money came from unnamed PT donors. More likely, the funds used by PT for the election were stolen through kickbacks and bribes via Petrobras contracts with construction companies like Odebrecht, OAS, and Camargo Corrêa with projects such as the Abreu e Lima oil refinery in Pernambuco, or the building of the World Cup stadiums in Manaus, Brasília, Cuiabá, and Natal.

World Cup stadium in Cuiabá

World Cup stadium in Cuiabá

President Dilma Rousseff

Should the TSE investigation find proof of stolen funds being used by PT, this could provide enough fuel for the Lower House to collect two thirds of its votes to initiate an impeachment trial. Of course, an impeachment trial is no guarantee that Dilma will be removed from office. Additionally, it seems unlikely, because of pressure from Lula and PT, that Dilma would resign even under the threat of impeachment. Impeachment doesn’t mean the President loses her job. It means that she would face an impeachment trial before the Senate. During the trial, she would have to step aside for VP Temer. In 1999, President Bill Clinton was impeached and stood trial before the US Senate. However, the Republican Party was unable to gather a two-thirds vote against him, and he remained in the White House until his second term was finished.

Eduardo Cunha

House Speaker Eduardo Cunha

Impeachment

Should an impeachment trial begin, this is not a guarantee that Dilma will be removed from office. The trial can take weeks or months, and to unseat Dilma permanently requires a two-thirds vote against her by the full Senate. Another question mark is the impeachment trial cannot begin until the Lower House votes to initiate the impeachment process. This Lower House vote for impeachment would require strong leadership, which is currently lacking, because the Lower House is headed by Eduardo Cunha, who is rapidly losing his power due to the revelation by the Swiss government of secret bank accounts in Cunha’s name. Prosecutors will now attempt to connect those bank accounts to Petrobras bribes. On October 10, newspaper Folha de S. Paulo reported Swiss authorities had made a connection between Petrobras and Cunha. The money was a kickback from a U$34.5 million contract signed by Petrobras to buy an oil field in Benin, Africa, Folha says.

Along with Cunha’s diminished control of the Lower House, Dilma this week reshuffled her Cabinet Ministers, which was a political game of “musical chairs” to give Cunha’s party, PMDB, more power. She also replaced her chief of staff, her closest political partner. The new chief of staff is Jaques Wagner, who was the Defense Minister and is also a Lula confidante. While PT holds the President’s office and has for the past 13 years, PMDB has greater power throughout the country. Without PMDB’s support, PT cannot govern Brazil’s coalition government. Observers believe PMDB is weighing its options: Should PMDB encourage Dilma to resign, leaving Vice President Michel Temer to take her spot? Temer is PMDB, but PMDB has never fielded a presidential candidate. Thus, while PMDB is today aligned with PT in the coalition government, tomorrow it could become the opposition party. Right now, with the shuffling of the Cabinet Ministers, PMDB is reluctant to stab PT in the back by initiating an impeachment in the Lower House or voting for Dilma’s dismissal in the Senate.

Jaques Wagner

Jaques Wagner

New Election

Should the TSE investigation prove stolen money arrived in re-election funds through the Lava Jato scandal, it is likely that the funds would have benefited both PT and PMDB, being used for the re-election of Dilma and VP Temer. As a result, should an impeachment trial evolve out of the TSE investigation, it’s conceivable that Temer would be implicated in the scandal along with Dilma. This could force the departure of both Temer and Dilma, should the Senate decide to clean out the executive branch with a two-thirds vote. The question remains whether the Senate would see the removal of both the President and Vice President as a healthy precedent for building support for the political process among Brazilians and restoring international confidence. Should both Dilma and Temer be removed from office by the Senate, technically Cunha as House Speaker would be next in line. However, his status is clearly unclear these days, and the Supreme Court can reject him as the next in line and call for a new election before 2018.

B. Michael Rubin is an American living in Curitiba.

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