Brazil: courts get tough on corrupt politicians

How endemic is the problem though..?

President Dilma Roussseff, only in office since January 2011, has just lost her Deputy Tourism Minister and thirty seven other Tourism Ministry officials after they were arrested for corruption.  Deputy Minister Frederico Silva da Costa is not the first high ranking government official to go as, according to a BBC report:

• Transport Minister Alfredo Nascimento and more than 20 officials resigned early this month over allegations of kickbacks at the Ministry of Transport

• Presidential Chief of Staff Antonio Palocci resigned after Folha de Sao Paulo said Mr Palocci's net worth had increased 20-fold in four years

• Prosecutors seized a number of computers at the agriculture ministry on Monday, and Agriculture Minister Wagner Rossi has been asked to appear before an ethics commission to answer the allegations.

And although all refuse to accept they are culpable, Brazilians must be asking how widespread this is and and how high it reaches.

Latin America's biggest country with 191 million people and an economy with an annual GDP of around US$2.42 trn, Brazil is the major regional motor.  Any political scandal could dent its growth of 4.1% as market confidence is shaken in its government's ability to steer the economy.

The World Factbook reports, "Brazil was one of the first emerging markets to begin a recovery. Consumer and investor confidence revived and GDP growth returned to positive in 2010, boosted by an export recovery.  Brazil's strong growth and high interest rates make it an attractive destination for foreign investors."

At a time of global uncertainty and market volatility stemming from Arab revolutions, British riots, Eurozone contagion and American debt profligacy, the last thing the global economy needs is Brazil, a significant BRIC, from assisting a further weakening in the wall of stability.

No doubt the strength of the Brazilian rule of law and freedom of the domestic press will offset the efforts of speculators or competitors who might wish an ill-wind chills the Latin giant.  Allegations of corruption in Brazil at the highest levels of government and business have been around a very long time.  When former President Lula left office at the end of last year, MercoPress noted that WikiLeaks had exposed cables sent from the US embassy in Brasilia which claimed "Brazilian president Lula da Silva concludes his eight years in office with a performance marked by open corruption “among his closest political allies”, with a “plague” of vote-buying in Congress and the ruling party, and without having given a reply to the issue of crime."

This is at odds wth a 2007 report from Bloomberg: "Lula Strengthens Brazil's Federal Police to Combat Corruption."   However, by February 2011, the BBC reported that "Federal prosecutors in Brazil say they are opening a case against former President Luiz Inacio Lula da Silva for alleged misuse of public funds.  They say the ex-president sent out 10 million letters to older Brazilians promoting low-interest loans in 2004."

The latest allegations against the Transport Ministry officials relate to "irregularities in the granting of contracts for public works and services" reports International Business Times.  IBT refers to an O Globo report claiming also "federal prosecutors in Brazil are investigating Nascimento’s 27-year-old son, Gustavo Morais Pereira, in connection with a company he owned that saw its value jump to 50 million reals ($32 million) just two years after being ... with (an) initial capital outlay of only 60,000 reals."  Profits had been generated by contracts allegedly awarded from the Transport Ministry, O Globo continues, says IBT.

As Brazil becomes richer corruption will likely reduce, it's foreseen.  The persevence and diligence of police and prosecutors to hound down those responsible will be vital in that process.

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