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Probing the President
Brazil Economy Dives as Corruption Case Dogs Rousseff

Federal prosecutors in Brazil have launched a preliminary investigation that is coming closer by the day to sitting President Dilma Rousseff. The prosecutors are looking into whether Rousseff’s mentor and predecessor Luiz Inácio Lula da Silva was involved in illicit influence peddling, and whether Lula’s campaign manager and political fixer, João Santana, who also worked for Rousseff, was involved in money laundering. The Financial Times:

Época, a weekly magazine, alleged on Friday that Mr Lula da Silva improperly used his influence to obtain loans from Brazil’s state development bank BNDES for Odebrecht’s dealings in Cuba and the Dominican Republic, often travelling to meet the countries’ leaders at the company’s expense. The magazine also accused Mr Lula da Silva, one of the PT’s founders, of similar influence peddling in Ghana and Angola. […]

In the Santana inquiry, Brazilian newspaper Folha de S.Paulo reported that the campaign manager of Mr Lula da Silva`s 2006 re-election bid and Ms Rousseff`s 2010 and 2014 election bids brought in $16m from Angola in 2012 in transactions police suspect were part of a money-laundering operation. Federal police confirmed the contents of the report.

That year, Mr Santana assisted in the election of Fernando Haddad, the PT candidate for São Paulo mayor, and helped Angolan president José Eduardo dos Santos win election. Police suspect the money from Angola may have been illicit payments to the PT from Brazilian companies operating in the African country. These were allegedly disguised as a legitimate payment to Mr Santana.

Rousseff, who was chairman of Brazil’s nationalized oil company Petrobas during a period in which various bribery and kickback schemes were in effect, has so far not been implicated in any wrongdoing. Hundreds of thousands of protesters have taken to the streets, however, calling for her impeachment.

The poor state of Brazil’s economy will likely add fuel to those calls. The country’s GDP is now expected to contract by 1.18 percent while the economy grows by only one percent. Even if Rouseff survives, her political weakness makes it hard for the government to take steps that could get the economy moving again.

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  • JR

    That’s always been a problem for leftist politicians. They promise pie in the sky to their low info voters and then are forced to admit that there is no silver bullet when safely in office. Brazil is a tremendous country and once they get rid of their red tape and government regulations that stifle them, it has all of the ingredients to become an economic powerhouse. Interestingly enough, there is a small but growing libertarian movement growing in Brazil.

  • ddh

    “The country’s GDP is now expected to contract by 1.18 percent while the economy grows by only one percent.” That sentence as written makes no sense, and it is obvious that something got garbled.

    Turning to the link to The Wall Street Journal, I found the following sentence, which clears up the confusion: “Economists expect Brazil’s gross domestic product to contract 1.18% this year and growth of just 1% in 2016.”

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