Temer scandal roils Brazil (May 18, 2017)

Two businessmen secretly recorded Brazilian President Michel Temer telling them to continue paying a jailed politician hush money, according to a report yesterday by O Globo that has scandalized a country already accustomed to House of Cards plot twists. 

The tape from March forms part of the plea bargain testimony submitted by brothers Joesley and Wesley Batista, who run the country’s biggest meat-packing firm JBS. Their tapes reportedly implicate other high level politicians such as former presidential candidate Aecio Neves and the former finance minister Guido Mantega.

In covert recordings made during two conversations in March, Joesley tells Temer he is paying former House speaker Eduardo Cunha to keep him quiet, to which the president allegedly replies: "You have to keep it going, OK?" The executives carried a recorder in their pocket in conversations with politicians, according to O Globo. It's not clear what Cunha was allegedly being paid to keep silent about.

Cunha, a member of Temer's PMDB party, was once considered the country's most powerful politician and was instrumental in bringing about Dilma Rousseff's impeachment last year. In March he was found guilty of taking about $1.5 million in bribes from Petrobras, laundering the money, and hiding it in secret bank accounts in Switzerland and was sentenced to more than 15 years in jail. (See March 31's briefs.) It is believed he could provide damaging testimony about dozens of politicians if he reaches a plea bargain with investigators, reports the Associated Press. When he was stripped of his congressional position last year in order to face charges of corruption, he was called a "man bomb" by media. (See post for Sept. 16, 2016.)

The report also indicates there is evidence that Temer’s aide Rocha Loures negotiated bribes worth $160,000 a week for 20 years in return for helping JBS overcome a problem with the fair trade office, reports the Guardian.

Temer denies the allegations, reports El País. "President Michel Temer never solicited payments to obtain the silence of ex-deputy Eduardo Cunha," according to an official statement released yesterday."He did not participate nor authorize any movement with the objective of avoiding a plea bargain or collaboration between the justice system" and Cunha.

And the Procuradoria-Geral da República neither denies nor confirms the reports of the recording, reports El País separately. Reuters had three sources confirm the accuracy of O Globo's report.

One member of the lower chamber of Congress has already filed a motion for impeachment, reports El País. Opposition lawmakers from five opposition parties have called for the president's resignation, reports Bloomberg. Commentators have referred to this as a "point of no return," reports the BBC.

Temer's ruling coalition has maintained a large Congressional majority, but the scandal could affect that equation, leaving him politically vulnerable, according to Reuters. 

The news significantly raises the chances of an unscheduled government change before next year's presidential elections, reports the Financial Times. If Temer is ousted, House speaker Rodrigo Maia, himself implicated in corruption investigations, would be next in line. Yet impeachment proceedings could take a long time -- in Rousseff's case they took eight months, notes Bloomberg. And Maia, a member of Temer's party, would have to sign off on their start.

An early election could only be held with a constitutional amendment.

About 2,000 people gathered in São Paulo yesterday demanding Temer's ouster, notes the AP. And Bloomberg reports that Brasilia was in crisis mode yesterday, with military police braced for demonstrations.

A third of his cabinet has already been affected by corruption allegations. And Temer himself, was already accused of negotiating a $40 million bribe in 2010 for his party, though the presidency affords him temporary immunity from investigation into issues outside of his time in office, reports the New York Times. The country's top electoral court is also assessing whether to annul the 2014 presidential ticket because of illegal campaign financing, which could potentially unseat Temer. (See yesterday's briefs.)

The news was so striking that O Globo's website was affected by the flow of traffic yesterday, notes El País. The news is likely to further paralyze a government already suffering from major accusations of corruption; single digit approval ratings; and a wildly unpopular economic reform platform, according to the Guardian. Eurasia Group analysts signaled the potential for a "profound political crisis," reports the AP.

Investors dumped Brazilian assets in foreign markets after the news broke yesterday, reports Reuters. Though Temer's agenda was unpopular with Brazilians, it was widely praised by investors, reports the Wall Street Journal. 

News Briefs

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• Immigration arrests in the U.S. increased by 38 percent in the first three months of the Trump administration compared with the same period last year. It's an indication of how hard-line policies are being rapidly carried out, according to the New York Times.

• Human rights activists increasingly denounce abusive government treatment of protesters, reports the Los Angeles Times. About 2,300 protesters have been arrested since demonstrations broke out across Venezuela over six weeks ago, and many are being subjected to military trials in violation of Venezuelan law, according to Human Rights Watch.  (See yesterday's post.)

• Security officials may seem like the bad guys in Venezuela's ongoing protests, but behind their anti-riot equipment, they face the same economic complications as their compatriots. And many feel their loyalty to the government wavering, reports the New York Times.

• Venezuela’s government has announced that it is sending 2,000 soldiers to Tachira to stop looting, reports Reuters.

• Yesterday at the U.N. Security Council the U.S. brought up the issue of the Venezuelan crisis. If left unaddressed, Venezuela’s crisis would escalate into a "world problem," as had the crises that afflicted countries like Syria and South Sudan, said U.S. Ambassador Nikki R. Haley. "Suddenly, you’re arresting protesters, we’re seeing deaths happen, we’re seeing political prisoners," she said, according to the New York Times. "That’s not the way to respect your people."

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• "...the region must take a much bolder step to stop the brutal repression of opposition protests that has already led to at least 45 deaths," argues Andrés Oppenheimer in the Miami Herald. "U.S. and Latin American pressure on the Maduro dictatorship will be essential not only to give moral support to Venezuela's opposition, but also to deepen the growing cracks within the Maduro regime and help bring about an electoral solution."

Latin America Daily Briefing