Commentary: Brazil: Will Corruption Probes Cripple Cardoso?

By Jonathan Wheatley

It was a riveting display of pluck. In a televised hearing of the Brazilian Senate's ethics committee on May 3, Regina Borges, a diminutive but resolute civil servant, stuck to her guns. The two high-ranking senators sitting beside her at the hearing, said Borges, had ordered her to turn over the tally of a secret vote that led to the expulsion last June of a legislator accused of influence peddling. Senator Antônio Carlos Magalhães, of the right-wing Liberal Front Party, and Senator José Roberto Arruda, of the ruling Social Democratic Party, admit that they got a hold of the forbidden list--a clear violation of Senate rules. But both deny asking Borges for it. Yet if the committee takes Borges at her word, the senators' heads will roll.

PIQUE. That could be bad news for President Fernando Henrique Cardoso. Magalhães, a canny political operator, is at the center of a mounting corruption scandal that threatens to overwhelm the government. While battling to clear his name in the affair of the secret vote, the septuagenarian senator has also been waging war against his personal rival, Jader Barbalho, whom he has cast as a serial embezzler. Piqued by Cardoso's decision to back Barbalho in February elections to succeed him as Senate speaker, Magalhães has fired off a slew of accusations of misconduct against government officials.

Nobody suggests that the President himself has done any wrong. Yet there's a real danger that in his remaining 20 months in office, the scandal will take precedence over legislative reforms in key areas like tax and social security. Of course, if a pending congressional inquiry could root out corruption, then delayed reforms might be a price worth paying. According to a study by the

Fundação Getúlio Vargas, a business school in São Paulo, corruption takes $2,800 from the pocket of every Brazilian each year--a figure equal to more than half of gross domestic product per capita. Yet if the past is any guide, the current scandals will probably produce the worst of both worlds: a rudderless government--and a prolonged investigation that does little to wipe out sleaze.

True, there has already been some progress. One minister has been forced to resign. Two government-run development agencies have been disbanded after the discovery that $1.8 billion in funds were missing. And on May 9, opposition lawmakers gathered enough signatures to launch a wide-ranging congressional inquiry into corruption in the government.

Yet it's hard not to be skeptical. Brazilians have seen it all before: Nine years ago, President Fernando Collor resigned in the face of evidence that he had misappropriated millions of dollars in government funds. Yet he never faced criminal charges, nor did any of his flagrantly corrupt ministers.

IRONY. Many doubt the congressional probe will get to the bottom of anything either. And if it goes ahead--Cardoso's allies are doing all in their power to block it--it will keep legislators busy for the rest of the year. The politically charged environment could drive away foreign investment and depress economic growth.

The irony is that the Cardoso government may be cleaner than many of its predecessors. "In lots of areas, corruption has diminished," says Cláudio Abramo, head of the Brazilian chapter of Transparency International, which tracks corruption worldwide. "The problem is that while the government is taking a lot of the right measures, it also gives the impression it will tolerate corruption."

Instead of trying to derail the congressional inquiry, Cardoso could instead try to embrace it as a way to elevate debate about corruption to a national level and make an effort to punish the offenders. He doesn't seem prepared to take that step. The likely result: Brazil will get neither reform nor justice.

Wheatley is São Paulo bureau chief.

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