Brazil: Temer teeters as plea bargain revelations unleash chaos

São Paulo, May 22. Few Brazilians were familiar with the name of Joesley Batista, who with his brother, Wesley, owns Brazil’s biggest meat packing industry, JBS, now part of the multinational holding J&F. But the revelations of his secretly taped tête a tête with President Michel Temer, alone in the Jaburu Palace late at night on March 7, off the official agenda, have placed a ticking time bomb under the government. In the barely audible conversation, Temer apparently agrees with the payment of a monthly bribe to the disgraced and imprisoned politician Eduardo Cunha to keep his mouth shut, and makes no protest when Batista says he has a couple of judges and a prosecutor in his pocket. He offers to help sort out JBS’ problems with CADE, the business merger overseer and the official development bank, BNDES. Joesley Batista (centre, in picture) with his lawyer, giving evidence in the office of the Procurador-Geral da República on April 7 The Attorney General´s office filmed and taped interviews with JBS executives and uncovered a longstanding and vast scheme of bribes even more shocking than that of  construction company Odebrecht’s. Over 1800 politicians of all parties, at all levels, including deputies, senators and governors, were on the payroll, receiving money for campaign financing and to influence legislation. Senador Aecio Neves, leader of the PSDB, harsh critic of Lula and Dilma, and staunch ally of Temer’s, asked for two million reais to pay the lawyer defending him against – wait for it – corruption charges under the Lava Jato inquiry. Aecio is also revealed as an inveterate user of four letter words, something which seemed to shock Joao Doria, the apparently squeaky-clean mayor of São Paulo, more than his actual crimes. But the direct involvement of Temer himself, and his futile attempts to discredit Joesley by calling him a liar and a loudmouth when he was obviously on close terms with him, have sent shock waves through the country. The president has rebuffed calls to resign. Instead, in speeches and interviews he has  attacked the credibility of the tape recorded in the Jaburu palace, calling up sound experts to pick holes in the recording. But as the OAB, the Brazilian Bar AssociatIon, which has called for his impeachment, pointed out, he has not denied the actual conversation. Ten impeachment requests have been filed in the lower house, including the OAB’s, whose similar request in 1992 was the fuse that led to the impeachment of president Fernando Collor de Mello. In fact Temer’s vehement denials of wrongdoing and attempts to present himself as the victim, bear unnerving resemblances to the Collor debacle. But Temer has an important ally in the speaker of the Chamber of Deputies, Rodrigo Maia, who has declared his priority to be passing the government’s reform programme, not hearing impeachment requests which could “cause political instability”. With Temer refusing to go quietly, and impeachment proceedings uncertain, those who want him out are now looking to June 6, when the Electoral Court, the TSE, is due to judge the case for suspending (cassacao) the Dilma-Temer ticket in the 2014 elections, a case ironically brought by Aecio Neves, the losing candidate. However, the present chair of the TSE is Judge Gilmar Mendes, a close friend of Temer’s, so the outcome is uncertain. That leaves the Supreme Court, which has to decide whether to accept the Attorney General’s accusations against the President on three counts: obstruction of justice, passive corruption and criminal organisation. More than the various legal attempts to remove the president, what will count most is his political support, which is still relatively intact, in spite of the damaging revelations. If this crumbles, he cannot cling on to power. Two of the smaller parties have already left the governing coalition. One minister has resigned. The environment minister, José Sarney Filho, of the PV (Green party) says he is only staying on to defend the Amazon against the onslaught of the farmers’ lobby, the bancada ruralista. As usual the PSDB party, the major coalition partner, with 6 ministers in the government, is sitting on the fence while competing experts debate the technical quality of the tape, and whether it was adulterated. Some of the major media have taken sides. Media giant Globo, a traditional kingmaker in Brazil, has come out against Temer, with editorials saying he must go, and extensive coverage of every turn and twist of the scandal. Influential news weekly Veja’s last number carried the headline “Basta” on the cover -“Enough”.

Sunday’s “Fora Temer” and “Diretas Já” (‘Temer Out’ and ‘Direct Elections Now’) protests were not as big as expected, but what has become clear is that what the streets say does not count in this power game. There is no room for direct elections in the negotiations now taking place behind closed doors in Brasilia, São Paulo and Rio. What is at stake, more than Temer’s personal fate, are the economic reforms his government was trying to push through, at the cost of R$55 billion in bribes, sorry,  ‘funding’, for parliamentarians’ projects.  Political scientist Paulo Sergio Pinheiro is one of many calling for direct elections as the only remedy for the sea of corruption enveloping Brazil, saying, “Direct elections must be held. It is unacceptable that in the name of avoiding economic shocks we accept a government compromised by corruption”. But that, it seems, is what is going to happen. If, by whatever means, Temer goes, in the absence of a vice president, speaker Rodrigo Maia, who is also being investigated by the Lava Jato prosecutors, would become interim president, with 30 days in which to arrange an indirect, congressional election. This new president would carry out the remaining 18 months of Temer’s, or rather, Dilma’s, mandate.

The names being touted for this indirect election are Finance Minister Henrique Meirelles, although the fact that from 2011 on he was chair the board of directors at J&F, the holding company that controls the Batistas’ company JBS, could, ought, to count against him. But from the point of view of the market, he is a safe pair of hands who would carry on the austerity programme which has prolonged the recession and increased the number of unemployed to 15 million, and would push through the unpopular reforms of the pension system and labour rights. Another name in the ring is Nelson Jobim, a man for all seasons, ex-High court judge, ex-minister of justice and defence, a member of both the Cardoso and Lula governments. The crisis has shone the spotlight on the activities of the Batista brothers, Joesley and Wesley and their billion dollar meat and food business. The spectacular rise from their father’s small butcher’s business in Goias to the position of the world’s biggest producer of animal protein, is largely due to Lula’s policy of creating Brazilian champions[1], by choosing a few select firms, like Odebrecht, Eike Batista’s company, and JBS to receive millions in subsidies and cheap loans from the BNDES. The Batista brothers also make their money in other ways. They made a killing in the crisis they themselves had provoked, by buying dollars and selling shares the day before the revelations broke. The next day, when the dollar rose and the share price dropped, they are reputed to have pocketed a billion dollars. They also got a much better deal with the public prosecutors than Odebrecht’s top management who have spent months or years in jail. No charges have been brought, and Joesley was allowed to leave for a golden exile in New York. JBS has relocated most of its factories to the United States. They are also refusing to pay the huge fine of 11 billion reais set by the prosecutors. President Michel Temer is being compared to a patient on life-support in intensive care. The next few days will see whether he recovers, or his political allies decide to turn off the machine.

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[1] See Brazil Under the Workers Party: from Euphoria to Despair, by Sue Branford & Jan Rocha, LAB, 2015