“Hear me, citizens of Brazil, senators, and deputies…”
Thus commenced the televised coverage of the saga of the “escândalo do mensalão” (big monthly allowance scandal) in Brazil, a corruption extravaganza that, despite playing to an audience virtually immune to the fall-out from the chronically bad behavior of crooked politicians, has captured the attention, imagination, sadness, and revulsion of much of the Brazilian public.
The scandal’s full dimensions are now being scrutinized in the riotous hearings being conducted by a congressional investigative committee (CPI), which are being broadcast live to audiences throughout the nation.
The CPI sessions are detailing how key figures of President Luiz Inácio Lula da Silva’s Partido dos Trabalhadores (Worker’s Party – PT) carried out the acts of bribery and political extortion for which they have been charged.
The full magnitude of the crimes has dominated the Brazilian political scene throughout much of 2005. With a simple switch of a remote control, Brazilian citizens can get their daily fill of theatrics and dramatics, of name-calling and ironic, sugar-coated insults, as well as unrestrained slams.
The scandal broke at a time when the excitement over the upcoming October 2006 presidential election had begun to mount. Though Lula has not yet officially confirmed whether or not he will run for re-election, many speculate as to whether mensalão might already have cost him the ballot.
The November 30 impeachment of José Dirceu, Lula’s former Chief of Staff and right-hand man, by the Lower House of Congress, further adds fuel to the fire and worsens the charismatic Brazilian leader’s prospects for victory.
To Lula’s immense relief, the congressional investigation is scheduled to terminate shortly, as the CPI has announced that it has found all the evidence necessary to charge fourteen people with corrupt dealings, and has placed a formal request to the public prosecutors to indict these individuals.
Under Duress, Falling Prey to Corruption
Mensalão, a neologism of the Portuguese word for “payment,” refers to the monthly bribes of approximately US$ 14,000 (30,000 reais) given individually to members of Lula’s governing coalition to vote for government-backed measures.
While PT supporters, including Lula himself, maintain that Brazilian politics have always bred a culture of bribery, the mensalão scandal is hardly the garden-variety type of pork-barreling that Brazilians have come to grudgingly accept.
The current outrage has transported the buying-off of bureaucrats to a gargantuan scale, one that was, until recently, unheard of even in a country like Brazil, whose governments are almost axiomatically mired in corruption.
The current scandal threatens to bring to an end the rule of the PT, a party which, spearheaded by Lula, built its popularity over the past 25 years on the basis of its public stance of being a doughty warrior against corruption and the success of its sophisticated party machinery – perhaps the most effectively institutionalized political party in the stormy history of Brazilian politics.
Up to this day, the PT is the only political body in Brazil that holds direct internal elections for party posts among its registered members, who currently number some 850,000, twice its number prior to Lula’s coming to power. The staggering cost of sustaining such a high-maintenance organization became a significant factor in spawning an environment within the party that rendered it susceptible to accepting bribes.
In 2005 alone, the PT held its intra-party elections in 4,600 municipalities with 120,000 candidates contesting 83,000 party posts, a highly costly undertaking. Lula’s campaign for the presidency in 2002 alone cost US$ 91 million (200 million reais), four times the amount spent by his opponent.
The 10% tax placed on the salaries of PT officeholders for kick-backs to the party hardly compensated for the exorbitant funds spent to maintain its activities. Hence, party leaders often found themselves in a bind, unable to pay off advertising firms that so creatively marketed their public personas to the electorate at excessive costs (allowing to add pay-offs to the final bill), as in the case of the 2002 presidential campaign.
Lula, who had run for President three times prior to his eventual electoral triumph, refused to run again in 2002 unless the PT hired political marketing expert Duda Mendonça to manage his media campaign. Hire Duda it did, and the firm created the catchy “Lulinha, paz e amor” campaign (“Little Lula, Peace and Love”), a scheme that succeeded in capturing the public’s eyes and hearts.
The consequence, however, was a US$ 11 million (25 million reais) bill, a vast sum of money that the PT could hardly come up with. When testifying in front of the CPI on August 11, Duda disclosed that he had been paid US$ 4.6 million (10 million reais) of his bill via an illegal money laundering plan, using funds hidden outside of Brazil, and further, was told to open a BankBoston account in the Bahamas under the name Dusseldorf.
The players
Roberto Jefferson
The ringmaster in the congressional inquiry is Roberto Jefferson, one of the longest-serving members of Congress and president of the center-right Partido Trabalhista Brasileiro (Brazilian Worker’s Part – PTB).
He first unleashed a salvo of accusations against the PT after it was disclosed that he had taken part in a bribery scheme involving the Postal Service, allegations that had been brought forth by the Brazilian weekly Veja, and which were bolstered by hidden camera footage posted on Veja’s website.
Jefferson, feeling scorned by the PT, a former ally that had suddenly turned on him when it called for the launching of a police investigation, revealed in an interview with daily newspaper Folha de S. Paulo that PT treasurer (and a central figure in the party’s evolution to paramountcy) Delúbio Soares had been administering the 30,000 reais monthly payments, to which he casually referred to as mensalão.
The payments went to congressional deputies of other parties in the de facto ruling coalition to ensure that they would consistently vote in favor of the PT’s legislative agenda. Likewise, Jefferson accused the PT of cronyism, handing out jobs in state-run companies to its political allies.
Though expelled from Congress on September 14, which means that he will not be able to run for office for another eight years, Jefferson nonetheless is a highly visible character in the country’s political life, appearing daily on the televised congressional investigations, and never failing to give viewers a show filled with theatrics and outrageous statements.
José Dirceu
Dirceu’s story has long been well-known among those familiar with the history of the PT. A student leader in the revolutionary “generation of 1968” that resisted Brazil’s harsh military dictatorship, as well as a former Cuban intelligence officer after fleeing the country, Dirceu came back to Brazil under the fictitious name of “Carlos Henrique Gouveia de Melo.”
After undergoing plastic surgery while in Cuba, Dirceu went unrecognized until years later, when he revealed his true identity as the former wild-child radical militant and political prisoner, who had come to be widely known among that era’s revolutionaries.
In recent years, however, Dirceu’s energies have been shaped less by his radical past, than on accommodating himself to the same thoroughbreds of capitalism that he and Lula so vehemently denounced in their youth – such as the IMF, Wall Street, the U.S. Treasury, big business, and the World Bank.
In this context, Dirceu’s alleged central role as the mastermind of the mensalão scandal is certainly dismaying, but less than entirely shocking; indeed, the lure of money apparently proved more enticing than the radical ideals which he so fervently plied in his youth.
After the scandal was exposed, Dirceu was forced to resign from his position as Lula’s Chief of Staff in June after being implicated in the scheme. He resumed his post as a federal deputy in the Lower House of Congress, only to be impeached by that body on November 30.
A huge blow to Lula’s re-election prospects, Dirceu’s impeachment is the first in the PT’s twenty-five year history, and signifies that he will lose the parliamentary immunity that protected him from public prosecution.
Delúbio Soares
Delúbio Soares, Lula’s constant companion and PT treasurer, bears a similar story to Brazil’s populist president. Both were born into a family of poor farmers, Delúbio on Brazil’s vast central plateau. But unlike Lula, Delúbio thrived in academia, studying mathematics at the Catholic University and becoming a teacher, and thereafter, the leader of the country’s teacher’s union.
Through the labor movement’s political apparatus, Delúbio was able to rise from poverty and become a leader within the PT and, with the party’s subsequent rise in influence, became one of its ranking political figures. Delúbio has since been expelled from the PT, largely on the basis of the revelation in Jefferson’s Folha de S. Paulo interview that he administered the monthly payments to congressmen of the Partido Progressista and Partido Liberal (PL) so that they would vote the PT line.
Once a close companion of Lula’s, as the gravity of the situation grew, the president indicated that he felt “betrayed” by Delúbio, and immediately distanced himself from his former close associate.
Consequences: The Public’s Indignation
After the mensalão scandal captured the attention of Brazilians, the public began to seethe with frustration and disappointment at a party that had marketed itself as the antithesis of the money-hungry party machines devoid of any morals that Brazilians have come to know and loathe.
Public indignation also stemmed from the wearisome reality that the whole matter will, as Brazilians say, “end in pizza” (that the guilty will ultimately face little or no adverse consequences – politically or criminally – and that everything likely remained unchanged).
The most severe political penalty a deputy could face as a consequence of the scandal is expulsion from Congress, as was the case with Dirceu. Since expulsion is decided by a secret congressional ballot, the potential for deal-brokering among parties is all too likely, and the central question remains as to whether there will be any criminal process resulting from such political extortion practices.
If indeed the Ministério Público does mandate a criminal investigation, it will be an almost unprecedented step at holding politicians accountable for their misdeeds.
Justice for Lula
Should formal procedures fail to fully punish the PT and all those involved, the public might decide to teach them a lesson by utilizing the most powerful tool it wields: the democratic electoral process.
Public frustration has soared with the ever-widening revelations of corruption, with blogs, e-mail chain letters, and websites such as www.e-indignacao.com, expressing such rage and disappointment over a lack of accountability for their leaders who engage in such blatantly illicit activities.
The question all are asking, therefore, is: will Brazil’s citizenry punish the PT – and more importantly, Lula – at the polls in next year’s presidential election?
Lula’s presidential track record, though far from perfect, is otherwise untainted. The economy under his rule has flourished, in comparison to the inflation, trade deficits and debt that characterized the country in the 1980s and ’90s.
Lula entered the presidency adored by much of the Brazilian citizenry, particularly the lower classes, which identified with his impoverished upbringing, his upright mother of whom he speaks with undying admiration and to whom he attributes his success, his disdain for intellectual elitism (admitting freely that, with his fifth-grade education, he has never read a book in his entire life), and then there’s his simple manner of speaking.
With Lula radiating a refreshing sincerity that, despite his Zero Hunger program’s lack of success and his inability to adequately appease those of the Movimento Sem Terra (Landless Rural Worker’s Movement – MST), Brazilians have always been willing to forgive the delinquencies of their golden boy of the day.
Likewise, Lula enjoyed an admiration and exaltation on the international stage that any leader would envy. The New York Times characterized him as “the genuine article, a walking fable, democracy’s classic story, the poor boy who grew up to be president.”
At the London School of Economics’ Progressive Conference on Governance in 2003 – in which he spoke, along with other notable world leaders such as Bill Clinton, Tony Blair, and Ricardo Lagos – Lula was extolled by sociologist Anthony Giddens, who declared that “Lula wants to change Brazil, but I seriously think he can change the world.”
Two years and scores of accusations later, Giddens might hesitate to make such a paean of unrestrained praise. Though not personally tainted by any of the latest round of corruption charges (indeed, even the PT’s harshest critics admit that Lula likely didn’t have a direct hand in his party’s schemes), few would hesitate to insist that the president wasn’t aware of the wrongdoings of his comrades.
In an interview with Época magazine, Valdemar Costa, head of the small PL party, who resigned upon Jefferson’s accusation that he had received bribes from the PT in order to lead the PL into Lula’s coalition, admitted that Lula was present at a meeting to discuss money matters. He said, “I began asking for US$ 9 million (20 million reais) in order to settle for US$ 7 million (15 million reais). Lula was in the next room. He knew we were negotiating numbers…. Then Lula came in to authorize the operation.”
Veja again pointed its finger at the PT in late October, printing an article in which it asserted that Lula himself had received approximately US$ 3 million in illegal funds from Cuban president Fidel Castro for his victorious 2002 presidential campaign.
The accusations are significant insofar as it is unlawful in Brazil for politicians to receive foreign contributions, and furthermore, they must disclose the source of all such funds. The claims are nonetheless dubious and lacking in credibility, as the idea that a country as impoverished as Cuba would funnel money into the campaign of a political party in far wealthier Brazil, is clearly preposterous.
An official statement from the Cuban embassy in Brasília called the accusation “slander,” maintaining that “it has never interfered in the internal affairs of a sister nation and attributes full responsibility for this propaganda scheme on the aggressive plans of imperialism against Cuba and Lula.”
Likewise, an outraged Sergio Cervantes, a Cuban diplomat accused of being the operation’s middleman and a close friend of both Lula and Castro’s, told Veja, “Cuba is short of hard currency. How can it afford to send it elsewhere?”
The prospects for Lula’s re-election nonetheless are now surprisingly somewhat dim. Lula is today seen as an isolated president: he has lost many of the other historic “founding fathers” of the PT, such as Dirceu and Delúbio, who have spent decades building the party and shaping it as the vehicle for Brazil’s masses.
Many of his senior PT comrades have gone down in flames, either forced to resign, expelled, or charged with corruption. Furthermore, the public is fully aware, and somewhat ashamed, of the messy and undignified nature of the hearings, which are producing daily headlines.
The procedures of the CPI involve name-calling and explosive revelations that, while making any Brazilian citizen blush at the sight of their elected representatives behaving like wayward youths, would make for fitting fodder for cinematographers. It is politics in its rawest form, and the Brazilian public is far from being amused.
The Economy
The saving grace of Lula’s now mired reign as president has been the economy’s robustness – hardly an insignificant achievement. Both he and his PT colleagues had hoped that the good health of the economy might go a long way to wipe from the minds of voters the PT’s travails come next year.
Unfortunately for Lula, however, his Finance Minister has recently come under attack and the latest statistics show the economy to be underperforming.
Allegations have been made concerning Finance Minister Palocci, linking him to a notable scandal during his term as mayor of Ribeirão Preto – an important city in the interior of São Paulo state – which could have deadly repercussions for Lula’s presidency.
A fiscal conservative who has been lauded by Washington and the IMF, as well as a founding member of the PT, he has recently been criticized by elements in his own party, who would prefer a much more open economic policy.
His entwinement in the mensalão scandal lies in an accusation by Rogério Buratti, a former secretary during Palocci’s mayoral term in Ribeirão Preto. Buratti claimed that between 2001 and 2004, the then-mayor received US$ 23,000 (50,000 reais( in monthly payments from the garbage collection company Leão & Leão.
The daily O Estado de S. Paulo revealed on November 13 that Palocci had requested to be allowed to resign three times in one week following the Veja accusations naming him as being involved in the PT’s alleged monetary links with Havana.
Lula, reluctant to lose the architect of Brazil’s economic recovery, apparently rejected his appeal each time, and likened losing him to being tantamount to inviting “suicide” for his government.
The Rio de Janeiro daily O Globo revealed on November 14 that the President had indeed begun to compile a list of possible replacements should Palocci be forced to leave his position. Palocci’s links with the already questionable Cuba scandal are dubious at best, and as of November 17 he had been cleared of the allegations.
Yet the accusations regarding his brokering of shady deals while serving as mayor remain, and as Lula’s re-election hopes very much depend on a healthy economy, losing Palocci would be a major blow to his aspirations for 2006.
While Palocci’s economic strategy has proven to be highly effective, it is nonetheless increasingly unpopular: Minister of the Presidency Dilma Rousseff described it as “the wrong policy for Brazil” and “rudimentary and detrimental to economic growth.”
Palocci is scheduled to appear on December 10 before a congressional commission investigating possible links between the PT and illegal gambling bankers. Some believe that he is likely to have resigned by that point, and therefore could be questioned as “citizen Palocci” and not as the finance minister, hence going some way to protect the economy from the possible consequences that could arise from having an individual so central to the economy’s health being placed in an embarrassing position before the nation.
Furthermore, on November 30, the country’s official statistics agency announced that Brazil’s GDP contracted 1.2% in the third quarter of 2005. The figure has led analysts, surprised by the announcement, to lower expectations of GDP growth to 2.5%, as opposed to at least 3%, which had been previously predicted. The result is added pressure on Palocci’s economic team, and on the central bank’s policy of maintaining a high interest rate, which has come under fire from the production sector.
As the scandal broadens and the accusations reach higher into the country’s sources of power, Lula finds himself struggling to maintain the high approval ratings that had been commonplace throughout his presidency.
A November 22 poll published by the Confederação Nacional dos Transports (CNT) and Instituto Sensus showed that 29% of respondents describe the government as “bad”, compared with 24% two months ago in September.
It is evident that Lula is not immune to the outrage that is being directed at his party either, as his popularity has also witnessed a noticeable decline. Whereas in September only 39.3% of respondents said they would not vote for Lula in 2006, the November figure was a whopping 46.7%.
Once the “golden boy” of the Latin American Left, Lula now has little to back himself with this important constituency in 2006. His economic policies have hardly reflected his socialist credentials and would best be described as conventional and orthodox.
His ambitious Zero Hunger plan, arguably the primary reason why two-thirds of Brazilians voted for Lula in the previous presidential election, has since died amid the hullabaloo surrounding the scandal.
Lula has essentially failed to provide the types of successful social and economic redistributive plans that he championed on the campaign trail, and which his counterpart Hugo Chávez has had so much success with in Venezuela.
A Scandal in More than Just Name
The mensalão scandal has undeniably marred Lula’s image as an apostle of liberal and left-wing thought in Brazil and Latin America. Though at this point he personally has escaped the accusations that have been flung mercilessly by the press and by Roberto Jefferson, there is no question that Lula no longer holds the unquestioned trust of the Brazilian people that he once could take for granted.
This certainly will haunt him come 2006, when the opposition will undoubtedly utilize the scandal as ammunition to possibly pummel the once-beloved incumbent. Should Lula survive the political mudslinging in the campaign that now looms near, it could very well provide a signal to the country’s future party leaders that a little deal-brokering and monetary sleight-of-hand will be quickly forgotten by an ever-forgiving, if bovine, electorate.
This analysis was prepared by COHA Research Associate Leila Seradj
The Council on Hemispheric Affairs (COHA) – www.coha.org – is a think tank established in 1975 to discuss and promote inter-American relationship. Email: coha@coha.org.
