Brazil’s Dichotomous Treatment of Corruption – PT 2

After the end of the Brazilian military dictatorship, the Liberal Front Party (LFP), Democratic Social Party (PMDB) and Brazilian Social Democratic Party (PSDB) dominated the government of Brazil. For more than 20 years, right wing and centrists autocrats controlled the government and struggled with enormous foreign debt, rampant hyperinflation, and the difficulties of transitioning to democracy.

President José Sarney (LFP) started out his administration with great popularity but public opinion shifted because of the Brazilian debt crisis and chronic hyperinflation. Also, he faced multiple allegations of corruption. During the course of his administration, Fernando Collor de Mello(PSDB) was accused of corruption, evidence to support the allegations were found by a Congressional inquiry, and he subsequently resigned the presidency to avoid removal from office by the Senate. After Collar, Itamar Franco (originally a member of PL then later switched to the National Reconstruction Party-PRN) assumed the presidency. HIs administration faced severe hyperinflation of 1,110% in 1992 and reaching almost 2,400% by 1993. However, his administration restored integrity in government especially after the troubled Collar presidency. Then, Fernando Henrique Cardoso (PMDB), an internationally renowned university scholar who introduced the Plano Real became president. He served as president for two consecutive terms. Although considered an honest president, his administration faced criticism for selling off several government-owned enterprises as part of his privatization campaign.

After failing three consecutive times to capture the presidency, in 2002, Luiz Inácio Lula da Silva (PT) became president. His political party was left wing, socialist and progressive. However, Lula became one of the most popular presidents in the history of Brazil and his accomplishments as a Brazilian politician spread over a wide spectrum. Early in his career, he advocated for change in the electoral system. Previously, a closed session of both houses of Congress selected the president. The president was not selected by a general election of the people. These were closed-door sessions. When he became president, many feared that Lula would implement radical socialist reforms but instead he attacked very serious social and economic problems in the country.  For example, he instituted programs to address malnutrition and education. He effectively managed the Brazilian economy bringing steady growth without making any drastic reforms, and managed to pay off Brazil’s foreign debt. His social programs lifted millions of Brazilians out of poverty making it possible for them to enter the middle class. He also became a major leader in Latin American politics and international peacekeeping efforts. Moreover, under his leadership, Brazil became a leader in biofuels and clean energy.

When Lula left office in 2010, Dilma Rouseff, his previous Chief of Staff, became his handpicked successor. Rouseff is a Brazilian economist who fought against the military dictatorship during her youth. She became a member of various left wing, Marxist, urban guerilla groups and was eventually captured, tortured and jailed for two years. As a politician, she helped found the Democratic Labor Party (PDT), served as Secretary of the Treasury of the City of Porto Alegre and the Secretary of Energy for the State of Rio Grande do Sol. In 2002, Lula invited her to become the Minister of Energy. In 2010, Rouseff ran for president, beat José Serra (PSDB) and won again by a very small margin in 2014 by beating Aécio Neves (PSDB). As a result, the Worker’s Party controlled the Brazilian government for 14 years. Then things began to take a turn for the worse.  In March 2014, the country’s biggest corruption scandal ever launched, Operation Car Wash (Lavo Jato). It led to the arrest of more than 150 business tycoons and elected political officials. In December 2015, impeachment proceedings began against Dilma Rouseff for manipulating the federal budget to help her re-election campaign of 2014. In May 2016, the Senate suspended Rouseff’s powers and duties for six months until the Senate could decide whether she was guilty or acquit her. These events plunged the Brazilian political elite and the entire country into a severe political crisis. By September 2016, Rouseff was impeached. The Senate voted overwhelmingly to impeach her and her vice-president, Michel Temer became interim president.

Still, no clear evidence has been produced to indicate that Dilma Rouseff was involved in any way in the Operation Car Cash scandal. However, the Brazilian Accounting Court has found that she broke fiscal responsibility laws. There are two separate investigations against Rouseff. First, the Federal Court of Accounts investigation concerning alleged fiscal irregularities from 2012-2014. Second, the electoral court is investigating whether illegal donations made to her campaign in 2014 were by overcharging Petrobras. To make matters worse, when prosecutors from São Paulo alleged charges of money laundering and misrepresentation against Lula, Dilma offered him a cabinet position. Many believe that the offer was a clever way by Dilma to shield Lula from prosecution. However, five different federal court judges ruled that Lula could not accept the position.

We should note that in the midst of the furor for impeachment, many of the members of the Congressional houses lobbying for impeachment are the same people currently under investigation for corruption and influence peddling. These are the same politicians that have been lining their pockets for decades and most Brazilians are completely aware of who they are and their corruption. Under such circumstances, it seems obvious that several important questions need asking. For example, if the Vice-President, the past President of the Senate, Renan Calheiros, and the past Speaker of the House of Congress, Eduardo Cunha (impeached for corruption in the Petrobras scheme and now serving a 15-year jail sentence) were all being investigated for corruption, who was trustworthy enough to run the country? Also, is this actually a “soft” coup to usurp the Worker’s Party and put PSDM or PMDB politicians back in control of the country? On the other hand, could this have been a smoke screen designed to obstruct the Operation Car Wash investigations into corruption? These are all valid questions.


Over the course of the last two years, corruption scandals continue to be unearthed. Three of the most damaging have occurred with the JBS (Brazil’s largest meat-packing company) and co-owner Joseley Batista’s audio recording of the acting President, Michel Temer, agreeing to pay hush money to former Congressional leader Eduardo Cunha to remain quite about events concerning the Operation Car Cash scandal. Apparently, Cunha has enough damaging information to bring down the entire political apparatus in Brazil. Temer is heard agreeing to pay Cunha “hush money” while he is currently serving a sentence for corruption. Temer is now facing charges of corruption and is the first sitting president of Brazil to face criminal allegations.

In addition, the 2015 presidential candidate Aécio Neves, was stripped of his office as senator and indicted on charges of corruption. Apparently, there is evidence that he received millions of dollars for peddling influence. He is no longer a political figure and is desperately struggling to avoid serving prison time.*

The other involves past president Luiz Inácio Lula da Silva charged with corruption and subsequently sentenced by Judge Sergio Moro to nine and one-half years in prison. This decision struck the country like the specter of death that came over ancient Egypt in biblical times. As a result, Brazilians on both sides of the issue returned to violent demonstrations in the streets. Also, it was the nail in the coffin for many people’s hope that Lula would run again for office in 2018. The debate now seems focused on whether Lula will get an opportunity to run for office again or go to jail. Without doubt, if he were to run for the office of president again, he would win.

It is also important to consider that this time, the judicial system and the federal police have been like a “dog with a bone” going after corrupt politicians and corporate executives who laundered money and accepted bribes. People all over Brazil are talking about how this has never happened before or how in the past investigations just seem to “all of a sudden” fade away. Brazilian federal court judge, Sergio Moro (PMDB) is not only making a name for himself but is also clearly demonstrating the “new found” independence of Brazil’s highest federal court.

One could argue that when Brazil was in the hands of rich, right-wing autocrats, corruption and influence peddling resulted in economic turmoil, unemployment, high inflation, enormous debt and social decline. Yet, when it was in the hands of left wing, socialist, progressive leaders, it grew and prospered with an egalitarian model that improved the lives of many people. On the other hand, as it became necessary for the left-wing, socialist leadership to resort to corruption as well, many of the constructive policies that were so successful are now being undone and Brazil seems to be headed for another “lost period”…(to be continued)

(*)subsequent to this writing, Aécio Neves has returned to politics)

Brainard, L., Martinez-Diaz, Leonardo, (2009). Brazil as a Economic Superpower: Understanding Brazil’s Changing Role in the Global Economy. Washington DC, Brookings Institute; Diaz-Alejandro., Cooper, R.N. and Dornbusch, Rudiger. (1983). Some Aspects of the 1982-83 Brazilian Payment Crisis. Brookings Papers on Economic Activity, Vol. 1983(2), 515-552; Almeida, J.T., (2008). Brazil: economics, politics and sociology. New York, Nova Science Publishers; Schineller, Lisa, (2012). Brazil’s economic success is based on more than the demand for natural resources. America’s Quarterly;; Rapoza, K. (2016) Latest Brazil Study on Impeachment Unlikely to Save Dilma.

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