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Brazil’s Rousseff Said to Be Considering Belchior as Palocci Replacement

Brazilian President Dilma Rousseff may tap Planning Minister Miriam Belchior to replace Cabinet Chief Antonio Palocci, who is under scrutiny for a surge in his personal wealth while managing Rousseff’s election campaign last year, a government official said.

Belchior, 53, is supported by former president Luiz Inacio Lula da Silva, who arrives today in Brasilia for meetings, said the official, who declined to be identified because he isn’t authorized to speak publicly. Communications Minister Paulo Bernardo may replace Belchior as Planning Minister if Palocci leaves the government, according to the official.

Rousseff, who was Lula’s cabinet chief, will wait for an assessment of Palocci’s consulting business by Brazil’s General Prosecutor Roberto Gurgel by Wednesday before taking a decision, the official said.

Palocci, in a June 3 interview on TV Globo, said "not a single cent" of his earnings last year was related to work on Rousseff’s campaign. All of his income, which may have totaled 20 million reais ($12.7 million), was reported to tax authorities, he said.

On May 15, newspaper Folha de S.Paulo reported that Palocci paid 6.6 million reais for a Sao Paulo apartment last year. On May 20, Folha reported he earned 20 million reais in congress and managing Rousseff’s election campaign.

Palocci, 50, rose to national prominence when he served as President Luiz Inacio Lula da Silva’s finance minister from 2003 to 2006.

Consulting Firm

Palocci’s consulting firm, Projeto Consultoria Financeira e Economica Ltda, stopped advising companies when he was named cabinet chief. The company earned 160,000 reais in 2006, its first year of business, Folha de S.Paulo reported. In his interview with TV Globo, Palocci said he cannot name the 20 to 25 banks, investment funds and other companies he provided consulting services to because the contracts are confidential.

As finance minister, Palocci paid $15.5 billion in loans to the International Monetary Fund ahead of schedule and sponsored a bankruptcy law favoring creditors over workers.

Palocci also helped craft regulations allowing loan payments to be deducted from paychecks, which helped fuel a record expansion of credit among low-income families. During his time as minister, inflation slowed to 5.3 percent from 17.2 percent. The benchmark Bovespa stock index more than doubled.

Palocci resigned in March 2006 after lawmakers accused him of illegally obtaining and leaking the private banking records of a witness in a bribery investigation that targeted senior officials of Lula’s Workers’ Party.

The witness, a caretaker, placed Palocci at a Brasilia residence where politicians and lobbyists allegedly negotiated bribes and partied with prostitutes.

Palocci denied any wrongdoing. The Supreme Court cleared him of breaking bank secrecy laws in 2009.

To contact the reporter on this story: Carla Simoes in Brasilia Newsroom at csimoes1@bloomberg.net

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

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