Brazil scandal wave now threatens trade minister

Reuters News
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Posted: Dec 08, 2011 11:19 AM
Brazil scandal wave now threatens trade minister

By Alonso Soto

BRASILIA (Reuters) - Brazil's trade and industry minister faced pressure on Thursday to explain his personal wealth, becoming the latest and one of the most high-profile members of President Dilma Rousseff's cabinet to be targeted by the media over alleged ethics breaches.

Six members of Rousseff's cabinet have quit over corruption allegations since she took office in January - the latest was her labor minister who stepped down on Sunday.

Her approval ratings have so far remained buoyant, however, as she benefits from a perception that she is being tough on graft and has dealt firmly with errant ministers, who have mostly been members of other parties in her unruly coalition. Others have been holdovers from the administration of Rousseff's predecessor, Luiz Inacio Lula da Silva.

A serious scandal involving Trade and Industry Minister Fernando Pimentel, a member of the president's own Workers' Party, could be far more damaging for Rousseff.

A close confidant and long-time personal friend of Rousseff, Pimentel is the most influential minister to face an ethics storm since her chief of staff Antonio Palocci was forced out of his post in June.

Unlike some of the recent casualties in less important ministries, Pimentel is a crucial player in Rousseff's economic team, which is scrambling to revive growth that stalled in the third quarter as Brazil felt the effects of Europe's debt crisis.

"This is the ultimate test of Rousseff's house cleaning," said David Fleischer, a political science professor at the University of Brasilia.

"The others have been from other parties and holdovers from Lula, but Pimentel is her own pick. This is a different game and it could be a big blow for her if Pimentel leaves."

Leading newspapers have reported that Pimentel earned more than $1.1 million in consultancy fees over two years after he stepped down as mayor of the city of Belo Horizonte and before joining Rousseff's government in January. Pimentel has denied any wrongdoing but acknowledged that Rousseff has asked him for explanations.

Newspaper O Globo reported that his consulting firm, P-21 Consultoria, was linked to a current aide to the Belo Horizonte mayor. Other newspapers have reported that his firm worked with a construction company that later was awarded a contract with the Belo Horizonte municipality.

ECHOES OF PALOCCI

The accusations echo those against Palocci, whose net worth jumped 20-fold when he consulted for companies while simultaneously serving in Congress from 2006 to 2010.

Unlike Palocci, however, Pimentel did not hold public office while running his consultancy - a difference that government sources said had given Rousseff confidence that her trade minister would not have to quit.

One source close to Rousseff told Reuters that Pimentel had shown documents that proved he was not guilty of trafficking political influence through his former business.

Many of the scandals this year have started with a similar pattern - initial denials by ministers followed by a steady drip of fresh allegations in the media that prompted Rousseff to withdraw her support.

While her approval ratings have not been hurt, the scandals since June have been a near constant distraction for the government and an irritant in Rousseff's relations with Congress as she tries to win approval for economic reforms.

The opposition PSDB party called on Wednesday for the public prosecutors' office to open an investigation into Pimentel's business dealings. Rousseff's ruling coalition used its clout on Wednesday to vote down a call to summon Pimentel to explain his consultancy's activities at a congressional commission.

Pimentel is a respected political operator who oversees Brazil's trade policy at a time when the South American country is trying to shield itself from the global downturn and a flood of cheap imports from China. He has deep personal ties with Rousseff, forged as teenagers when they were both involved in the armed resistance to Brazil's dictatorship.

(Editing by Stuart Grudgings and Mohammad Zargham)