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Viewing cable 05BRASILIA1979, BRAZILIAN CONGRESS INVESTIGATES CORRUPTION
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
05BRASILIA1979 | 2005-07-22 20:13 | 2011-07-11 00:00 | UNCLASSIFIED | Embassy Brasilia |
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 04 BRASILIA 001979
SIPDIS
TREASURY FOR PARODI
STATE PASS TO USTR
USDOC WASHDC
E.O. 12958: N/A
TAGS: PGOV PREL ECON BR
SUBJECT: BRAZILIAN CONGRESS INVESTIGATES CORRUPTION
ALLEGATIONS -- A PRIMER ON THE ROLE OF CPI'S
REF: A. BRASILIA 1494
¶B. BRASILIA 1544
¶C. BRASILIA 1622
¶D. BRASILIA 1631
¶E. BRASILIA 1819
¶F. BRASILIA 1867
¶G. BRASILIA 1849
¶1. SUMMARY. A series of interlocking and expanding
corruption scandals (reftels) that have engulfed the
Brazilian government and President Lula da Silva's Workers'
Party (PT) since May has led to the establishment of three
separate, but closely related, Congressional Inquiry
Committees (CPIs): the Brazilian Postal Service CPI; the
Bingo Houses CPI; and the vote-buying scheme CPI. Although
divided due to disagreements between the government and the
opposition, the investigations conducted by the three
committees have a common purpose and are expected to work
concomitantly. Post will track the developments of the CPIs
and follow with regular updates on the corruption scandals.
END SUMMARY.
THE ROLE OF A CONGRESSIONAL INQUIRY COMMITTEE (CPI)
--------------------------------------------- ------
¶2. The Congressional Inquiry Committee (CPI) is the only body
within the Brazilian Congress that has subpoena powers when
investigating allegations against its members. A CPI has the
same investigative powers as any judicial authority.
However, it cannot establish penalties, and must route its
final report to the appropriate judicial organ. A CPI can
be unicameral or bicameral and must investigate a specific
issue over a set period of time, which can be extended until
the end of the legislature within which the CPI was created.
Each committee is composed of a president, vice-president,
rapporteur, and a varying number of members from most of the
parties, depending on the CPI's focus. Herewith is a primer
-- the CPIs involved in investigating current scandals:
THE FIRST CPI: INVESTIGATING THE POSTAL SERVICE & MORE
--------------------------------------------- ---------
¶3. Purpose: To investigate the causes and consequences of the
corruption allegations in the Brazilian Postal Service
(reftels). Even though the original purpose of this CPI was
to investigate the corruption scheme in the Postal Service,
in practice, it is investigating all corruption allegations
that have emerged during the last few months. This is
largely due to its broad mandate and because it has been
active longer than the other two CPIs.
Background: The May 15 edition of Brazil's newsmagazine VEJA
revealed a corruption scheme involving the head of the Postal
Service's Contracting Department, Mauricio Marinho. Caught
on tape negotiating bribes, Marinho pointed out that he was
politically connected to Deputy Roberto Jefferson, now former
president of the PTB party (an ally in President Lula's
governing coalition). Soon after the publication of the
article, the PTB-connected head of the Brazilian Reinsurance
Institute (IRB) revealed that he had been pressured by
Jefferson to skim money from the IRB and to funnel it to PTB
campaign coffers (ref A).
Type: Bicameral (16 Senators and 16 Deputies)
Set up: June 9, 2005
President: Senator Delcidio Amaral (PT-MS)
Rapporteur: Deputy Osmar Serraglio (PMDB-GO)
Latest developments: In a television interview, former PT
treasurer Delubio Soares acknowledged that he had received
approximately U$16 million in loans from Marcos Valerio -- an
advertising executive accused of being the party's "bagman"
-- which were used to pay the PT's campaign bills for 2002
and 2004. The money was never recorded on the party's
accounting books. On July 18, Soares confessed to the
violation of electoral regulations, but refused to admit to
criminal allegations of corruption with money taken from
state-owned companies and denied the existence of a
vote-buying scheme. However, bank records being examined by
the CPI showed that the PT and other parties members withdrew
more than U$12 million since 2003 from bank accounts
belonging to Marcos Valerio (septel discussed this
development in more detail).
SECOND CPI: THE BINGO HOUSES
----------------------------
¶4. Purpose: To investigate the use of bingo houses for money
laundering purposes, and the relationship of these houses
with organized crime and illegal campaign financing.
Background: In February 2004, a scandal involving Waldomiro
Diniz, Casa Civil's Chief of Congressional Relations and one
of former Presidential Chief of Staff Jose Dirceu's closest
aides, broke out as a numbers racketeer, Carlinhos Cachoeira
("Charlie Waterfall"), released a clandestine video tape of
his conversation with Diniz in July 2002. The tape revealed
Diniz trying to extort a "side payment" bribe to maintain
Cachoeira's bingo and lottery operations in Rio de Janeiro
and soliciting illegal campaign contributions. Last year,
the PT refused to assign members to a CPI, arguing that this
was solely a police matter. Consequently, the CPI, though
approved, was not established until recently when the Supreme
Court ruled that parties must name members for an approved
CPI.
Type: Unicameral (15 Senators)
Set up June 29, 2005
President: Senator Efraim Morais (PFL-PB)
Vice-President: Senator Mozarildo Cavalcanti (PTB-RR)
Rapporteur: Senator Garibaldi Alves Filho (PMDB-RN)
Latest developments: Cachoeira, the first witness called
before the CPI, testified that Diniz had operated alone and
had no ties with Jose Dirceu. Cachoeira also stated that
Diniz had lied about the bribe being for Geraldo Magela's
(PT-DF) 2002 governor went directly into Diniz's pockets.
Opposition members of the CPI complained that Cachoeira was
"covering up" for Dirceu.
THIRD CPI: THE VOTE-BUYING SCHEME
---------------------------------
¶5. Purpose: To investigate two alleged vote-buying schemes:
the current scandal involving the PT and other parties from
the governing coalition, and another vote-buying scheme for
the "reelection bill" during the Cardoso administration.
Background: In a testimony before the Chamber's Ethics
Committee, PTB Congressman Jefferson alleged that over the
past two years members of the PT party had been paying
monthly bribes to buy votes in Congress. Jefferson stated
that the vote-buying scheme was controlled by the PT's former
treasurer Delubio Soares, and its former Secretary General,
Silvio Pereira, with the blessing of PT's former President
Jose Genoino and former Lula's Chief of Staff Jose Dirceu
(ref B).
Type: Bicameral (18 Senators and 18 Deputies)
Set up: July 20, 2005
President: Senator Amir Lando (PMDB-RO)
Rapporteur: Deputy Ibrahim Abi-Ackel (PP-MG)
Latest developments: As noted in paragraph 3, the separate
CPI on postal corruption has already initiated and heard
testimony that relates to the vote bribe allegations. The
governing coalition maneuvered to control the key seats of
this CPI to try to protect Lula, the PT, and the
administration from collateral damage, and was successful in
getting former Social Security Minister Amir Lando elected as
president of the committee.
FOCUS ON CORRUPTION: OTHER DEVELOPMENTS
---------------------------------------
¶6. In a parallel investigation, the Federal Public
Prosecutor's Office uncovered a scheme by which Marcos
Valerio's companies borrowed approximately U$17 million from
private and state-owned banks using contracts with state
companies (such as the Postal Service) as collateral.
According to Valerio's testimony to the Prosecutor's Office,
the money was given to the PT to finance its electoral
campaigns and other allied parties, but he denied the payment
of monthly bribes. Valerio also stated that former Chief of
Staff Jose Dirceu knew about the scheme to funnel funds from
loans backed by state-owned companies to the Workers' Party
(PT), and Valerio also surrendered a list of persons who were
authorized to make withdrawals of money loaned to the PT (see
septel). The opposition is seeking sanctions against the
Workers' Party, including the blocking of public
party-building funds and the cancellation of the party's
registry with the electoral authority.
WHO'S WHO IN THE CPI'S
----------------------
- Jose Dirceu (PT): former Chief of Staff and deputy.
Accused of approving the vote-buying scheme; could be
summoned to testify before the three CPIs.
- Jose Genoino (PT): former PT president. Accused of
approving the vote-buying scheme; was replaced by Education
Minister Tarso Genro as PT president.
- Delubio Soares (PT): former PT treasurer. Accused of
controlling the vote-buying scheme; was replaced by Deputy
Jose Pimentel.
- Silvio Pereira (PT): former PT secretary-general. Accused
of controlling the vote-buying scheme; was replaced by former
Labor Minister Ricardo Berzoini.
- Luis Gushiken (PT): Communications Sectetary. Lost his
rank as cabinet minister and is accused of giving benefits to
one of Valerios' companies in a public bid.
- Roberto Jefferson (PTB): former PTB party president, and
deputy. After being accused of heading the corruption scheme
in the Postal Service and the Brazilian Reinsurance
Institute, he accused PT members of paying monthly bribes to
buy votes in Congress.
- Mauricio Marinho: former head of the Postal Service's
Contracting Department. Caught on tape negotiating bribes;
alleged that he was politically connected to Deputy Roberto
Jefferson.
- Marcos Valerio: advertising executive in Belo Horizonte.
Accused of being the "bagman"; transferred cash to PT
campaign coffers and is accused of paying monthly bribes to
members of Congress.
- Fernanda Somaggio: Valerio's former-secretary and principal
witness against him.
- Waldomiro Diniz: former Chief of Congressional Relations of
the Casa Civil. Caught on tape soliciting bribes from a
numbers racketeer.
Comment:
--------
¶7. (SBU) The Brazilian congress is now utterly absorbed by
the scandal investigations. That, coupled with the fragility
of the President's coalition in the legislature and his lack
of political clout there, make progress unlikely on many
substantive agenda items (with the exception, perhaps, of
political reform) from now until the 2006 elections. But it
is institutionally important to the Congress ) and to Brazil
as a whole ) that the CPIs manage to produce credible
results in their investigations of corruption allegations
among not only the GOB and PT officials, but implicated
congressmen as well. We will monitor the key investigation
developments and report them regularly in septels to follow.
MANGANIELLO