Brazilian Presidential Hopefuls Clash Over Corruption, Petrobras in Debate

Brazilian presidential candidates Dilma Rousseff and Jose Serra accused each other of tolerating corruption in their second-to-last television debate before this weekend’s runoff election.

Serra, in the debate yesterday hosted by Record TV network, attacked President Luiz Inacio Lula da Silva’s former cabinet chief for surrounding herself with allies in her Workers’ Party tainted by charges of corruption.

These include Erenice Guerra, who succeeded Rousseff in Lula’s cabinet. Guerra gave testimony yesterday to police investigating a kickbacks scandal involving her sons’ alleged work negotiating contracts for companies doing business with the government. Guerra resigned her post Sept. 16.

“She had as her right hand as cabinet chief and in the mining and energy ministry someone who is facing charges for mounting a far-reaching corruption scheme,” said Serra, who finished 14 percentage points behind Rousseff in the first round of voting Oct. 3.

Rousseff, 62, said she supports a police investigation into Guerra’s actions and accused a former executive of Sao Paulo state´s highway authority, known as Dersa, of stealing campaign donations. Serra is the former governor of Sao Paulo.

Rousseff’s lead over Serra ahead of the Oct. 31 vote widened to 10 percentage points from 6 percentage points in a Datafolha survey published Oct 22. Rousseff’s total votes rose to 50 percent from 47 percent in an Oct. 14-15 poll, according to Datafolha. Serra’s total votes fell to 40 percent from 41 percent in the previous survey. The poll of 4,037 people has a margin of error of two points.

Petrobras

Rousseff said that Serra, if elected, would privatize Petroleo Brasileiro SA and abandon its plan to develop the biggest oil discovery in the Americas in three decades.

”Before we used to eat beef jerky and now he wants to hand over the country´s filet mignon,´´ said Rousseff, who served as chairwoman of the state-controlled oil company.

Serra said that Lula´s government favored foreign companies over Brazilian ones in the awarding of oil contracts. If elected, he said he would strengthen the company and eliminate political influence in its management which he said grew out of control under Lula.

”She´s foaming at the mouth, inventing myths, with the only aim of deceiving voters,´´ said the 68-year-old Serra.

Rousseff, a former member of the Marxist underground that battled Brazil´s 1964-1985 military dictatorship, has pledged continuity with her mentor’s policies that helped lift 21 million out of poverty since 2003 and created more than 14 million jobs. Latin America’s biggest economy will grow 7.3 percent this year, according to central bank estimates.

To sustain the fast pace of economic growth, Rousseff said last night she would cut taxes for companies that increase investment and expand payrolls.

Interest Rates

Serra has vowed to maintain Lula’s social programs while moving faster to reduce the world’s second-highest real interest rate and the highest tax burden in the developing world.

In last night´s debate, he said the ”planet´s highest interest rates´´ and overvalued currency are among the ”critical´´ problems facing Brazil and the reason why its manufacturers are losing ground to foreign competitors.

Rousseff said that her policies ”aren´t focused on the GDP number or interest rates but on people.´´

Both candidates have vowed to reduce Brazil’s debt levels as a percent of gross domestic product though have said little about how they intend to rein in public spending that rose 18.2 percent in July from the same month a year ago, more than twice the 8.8 percent rate of economic growth in the second quarter.

To contact the reporters on this story: Maria Luiza Rabello in Brasilia Newsroom at mrabello@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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