RIO DE JANEIRO — Just a few days ago, Brazil
seemed to be turning a corner. The stock market was soaring. Bankers
were cheering. The nation’s cutthroat lawmakers were lining up to curb
spending. Inflation had been tamed.
Brazil, it appeared, was finally on the mend.
Then,
in a matter of hours, it all started falling apart. President Michel
Temer, long embroiled in graft scandals, suddenly became tangled in a
new one, accused of taking millions of dollars in illicit payments and
caught on tape discussing how to obstruct an anticorruption drive.
The
allegations — including testimony released Friday in which executives
at one of the world’s largest food companies accused him of taking about
$4.6 million in illegal campaign contributions — have ignited broad
calls for Mr. Temer’s resignation, sent markets whipsawing and set off
fears that Brazil will slide back into the political and economic
turmoil that has rattled it for the last two years.
The
testimony, released by the Supreme Court, also described tens of
millions of dollars in illicit payments into offshore accounts intended
to benefit his impeached predecessor, Dilma Rousseff, and her mentor,
former President Luiz Inácio Lula da Silva, both of whom have denied any
wrongdoing in the matter.
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The
bombshell made it clear that the political and economic upheaval in
Latin America’s largest country is far from over. Mr. Temer, who took
over after Ms. Rousseff’s ouster only a year ago, is facing the biggest
crisis of his already rocky presidency. Mr. da Silva, who has been
angling for a comeback, was facing multiple corruption investigations
even before the allegations were revealed on Friday.
On
top of that, the politicians in line to take over if Mr. Temer falls —
including the speaker of the house and the leader of the Senate — are
also embroiled in corruption investigations, raising deep concerns over
the nation’s leadership and future.
“The
damage done to our institutions and to rule of law needs to be
stanched,” Paulo Sérgio Pinheiro, a former secretary of human rights,
wrote in the newspaper Folha de S.Paulo, describing the latest crisis as
a “unique and tragic moment in our history.”
“We’ve arrived at the end of the line,” he said.
Beyond
the torrent and staggering scale of the accusations, many Brazilians
have been shocked that the latest scandal became public because Mr.
Temer, a veteran of Brazil’s Machiavellian politics, stepped into a trap
that has ensnared him before: He was caught on tape by someone he
trusted.
“It’s
stunning that this isn’t even the first time Temer has been recorded
and betrayed in recent months,” said Mauricio Santoro, a political
scientist at the State University of Rio de Janeiro. “You’d think a
Brazilian president would be less careless.”
Mr. Temer called it “appalling”
the last time a secret recording of him came out, late last year. One
of his own ministers had captured their conversation, accusing the
president of pressuring him to help an ally in a property deal.
Even
then, the double crossing should not have come as a surprise. At each
turn in Brazil’s long-simmering political crisis, secret recordings have
produced one revelation after another, tripping up some powerful
politicians.
Now, Mr. Temer is on tape again, this time caught by one of Brazil’s richest men.
The
latest scandal involves Joesley Batista, 44, an heir to JBS, a food
empire with operations across Brazil and the United States. The secret
recording is not only raising anxiety over what Mr. Temer did, but also
his susceptibility to subterfuge in a political system where leaders
often rush to inform on one another.
Mr. Temer, 76, “wound up getting ambushed by a billionaire one March night in Brasília,” the capital, said José Casado, a columnist for the newspaper O Globo.
In
a move worthy of a plot twist in a thriller, Mr. Batista handed over
the recording to investigators as part of a plea deal. The tape caused
jaws to drop over Mr. Batista’s description of moves that seem to
crudely refer to buying off a prosecutor and judges, as well as bribing
Eduardo Cunha, the jailed politician who helped to orchestrate the
impeachment of Ms. Rousseff.
“I’m
good with Eduardo, O.K.?” Mr. Batista is heard telling Mr. Temer on the
recording, emphasizing that he had “paid up” his obligations to Mr.
Cunha.
“You need to keep that up, got it?” Mr. Temer replied.
At
other points in their conversation, which occurred at Mr. Temer’s
official residence, Mr. Batista described “taking care” of two unnamed
judges and counting on a prosecutor who had informed him about a fraud
investigation at Brazil’s largest pension funds.
Mr.
Temer insists that he did nothing wrong and is rejecting calls to
resign. But the recording offers a glimpse into how one of Brazil’s
richest men bragged about obstructing justice to the nation’s president.
Critics
of Mr. Temer argue that he should never have met in the first place
with Mr. Batista, who is the target of a graft investigation. Mr.
Temer’s growing chorus of opponents is also asking why the president
took no legal action upon being told by Mr. Batista about an array of
illicit activities.
Mr.
Temer was already struggling with dismal approval ratings as he sought
approval for cutting pension benefits and curbing the influence of
unions. Now a new phase in Brazil’s instability seems to have started —
just when it appeared Brazil was turning the page on political upheaval.
“The government’s popularity was already low, but now it’s even lower,” said Carlos Melo,
a political scientist at Insper, a business school in São Paulo. “It
will be difficult for the government to approve unpopular reforms.”
Mr.
Temer has governed under a cloud of scandal since taking office a year
ago. Ministers in his cabinet have resigned amid claims of trying to
stymie corruption inquiries. Mr. Temer also faces accusations that he
negotiated a $40 million bribe for his party in 2010, a claim he denies.
Marcos Troyjo,
who teaches international relations at Columbia University, said the
latest scandal could severely damage the view that Mr. Temer was
“getting the economic agenda going.”
After
being gripped by panic selling on Thursday, Brazilian markets
stabilized somewhat on Friday as investors tried to gauge how Mr.
Temer’s refusal to step down would affect Brazil’s economy. Unions were
already marshaling resistance to the austerity measures he has proposed.
“I
don’t even have a job yet and they want us to work until we die,” said
Julia Canedo, 21, a university student who expressed disgust with Mr.
Temer’s proposed overhaul of the pension system, which allows many
Brazilians to retire in their 50s. “Everyone is lost and can barely
follow what’s going on because it’s so crazy and unstable. I want him to
leave.”
In
addition to the secret recording, executives at JBS, Mr. Batista’s
company, said that they paid about $4.6 million in illegal campaign
contributions to Mr. Temer in 2014, some of which he pocketed himself,
according to the court testimony released Friday.
It
also described deposits of tens of millions of dollars into offshore
accounts to benefit Ms. Rousseff and Mr. da Silva, both of the leftist
Workers’ Party.
The
JBS executives recounted a remarkably ambitious effort to get public
loans for the company’s global expansion into markets like the United
States. They described efforts to influence officials across Brazil’s
public bureaucracy, regardless of their party affiliation.
The calls for Mr. Temer to resign have come from many sides, including an editorial Friday in O Globo, part of Brazil’s most powerful media group.
“If he doesn’t go,” the newspaper warned, “he’ll drag Brazil through an even more profound political crisis.”
Stepping
down, however, could also expose Mr. Temer to an array of legal
battles: He would lose the privileged legal standing that senior
officials enjoy in Brazil, often allowing them to avoid prison.
If
Mr. Temer resigns, “he can be tried and convicted,” said Daniel Vargas,
a law professor at Fundação Getúlio Vargas, a university in Rio.
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