Brazil's Rousseff scrambles to contain latest scandal

Reuters News
Posted: Nov 27, 2012 9:25 AM

By Anthony Boadle

BRASILIA (Reuters) - Brazilian President Dilma Rousseff is scrambling to contain fallout from a corruption scandal involving government officials linked to her mentor and predecessor Luiz Inacio Lula da Silva that has given her political opponents fresh ammunition.

The new scandal, which comes two weeks after the conviction of top Lula aides in Brazil's biggest-ever political corruption trial, could delay government decisions over airport upgrades and other infrastructure projects that are badly needed to make the world's sixth-largest economy more efficient.

It is not, however, expected to significantly dent Rousseff's popularity or her chances for re-election in 2014, since the details of the scandal are complex and the individuals directly implicated so far are outside her inner circle.

Police raided government offices in Brasilia and Sao Paulo on Friday and seized computers and data. Six people, including directors of two regulatory agencies, were arrested for using their government positions and contacts to sell approvals and favorable reports to businessmen.

Opposition senators have since called on government officials to testify before Senate committees. One congressman said Lula himself should appear to explain the role of his former personal assistant, Rose de Noronha, who police say was at the center of the influence-peddling ring.

Lula, who was president from 2003 to 2010 and still retains enormous influence in Rousseff's Workers' Party, said he felt betrayed when he heard Noronha had been implicated in the scandal. "I feel like I've been stabbed in the back."

Rousseff promptly fired Noronha and other officials under investigation. She also ordered a review of all decisions taken by the alleged corrupt officials.

Among those arrested was Rubens Carlos Vieira, director of airport infrastructure at the National Civil Aviation Agency. That has raised fears that investigations could delay the auctioning of private concessions for airports in Belo Horizonte and Rio de Janeiro, among 12 Brazilian cities hosting the 2014 soccer World Cup.

World soccer body FIFA expects stadiums will be ready for the tournament but is worried that Brazil will not have enough hotels for the estimated 500,000 foreign visitors and that airport improvements will not be ready on time.

A government source said Vieira's actions would not compromise private concessions granted earlier this year to operate airports in Brasilia, Campinas and Sao Paulo.

An overdue plan for private companies to upgrade Brazil's congested seaports and build new ones will still be announced on December 6 as planned, the source told Reuters.


The government is hoping the influence-trafficking scandal will blow over if no new damaging revelations emerge to distract political energy away from Rousseff's top priority of restoring solid growth to a once booming economy.

Her agenda is packed with issues crucial to Brazil's development, including a plan to lower Brazil's high electricity costs that has yet to be ironed out, plus a decision she must take by Friday on a bill to share royalties from oil-producing states with the rest of the nation.

Government business could get sidetracked if opposition leaders get their way and open a congressional investigation.

Senator Alvaro Dias, of the opposition PSDB party, called on Monday for Rousseff's justice minister to appear before a Senate commission hearing, along with Attorney General Luis Inacio Adams, her top legal adviser whose deputy was implicated.

Adams is one of the four or five people Rousseff most relies on for advice, a top government source said, and he was in line to become her chief of staff in a cabinet shuffle expected in February. That is probably not in the cards anymore as Adams is expected to lose clout inside the president's inner circle.

Adams and other officials implicated in the new corruption case were Lula appointees inherited by Rousseff, which will help the president shield herself from the fallout. Although Lula's support was critical to Rousseff winning election in 2010, she has after two years as president established her own image as an effective administrator who is tough on corruption.

"Dilma is Dilma, and not Lula's ventriloquist doll. She has her own style, her own way of operating, her own agenda," political consultant Andre Cesar said.

Time is also on Rousseff's side. Congress will enter recess on December 20 and stay out until February. With the year coming to an end, many Brazilians are more concerned with Christmas shopping, planning for the summer holidays and who will coach their soccer team for the World Cup than another scandal.

"The calendar is the government's best ally at this point," Cesar said.

(Additional reporting by Jeferson Ribeiro, Editing by Brian Winter and Eric Beech)