In Brazil, Ministers Fall and the Press Smells Blood: Dom Phillips

A reshuffled Cabinet in the first few months of a new administration isn't usually cause for alarm. But President Dilma Rousseff has lost her chief of staff, four other Cabinet ministers, and dozens of government staffers since taking office in January -- and the press is smelling blood.

Newspapers like the Folha de Sao Paulo and its rival the Estado de Sao Paulo won't leave the subject alone.

The trouble started when Rousseff's chief of staff, Antonio Palocci, quit in June after Folha revealed he had increased his personal worth 20 times in four years and had recently bought a luxurious new apartment, despite his modest government salary. A consultancy he owned also made hefty profits in 2010, an election year. In a television interview, Palocci denied wrongdoing, but would not reveal who his clients were or how his firm made its money:

The numbers of the company are numbers I would like to leave alone because they are not in the public interest … I say to you, I did not do traffic of influence, I did not act with public companies representing private companies.

Soon after, more Cabinet ministers started falling.

In July, the news magazine Veja reported that officials in the transportation ministry had conducted an "over-invoicing" scheme and alleged they had accepted bribes. Transportation Minister Alfredo Nascimento suspended several officials and denied knowledge of wrongdoing. Then the O Globo newspaper revealed that prosecutors were investigating links between a company owned by Nascimento’s son and one that benefited from contracts awarded by the ministry. Nascimento resigned, and called for an investigation, but again admitted no guilt.

Defense Minister Nelson Jobim went down next after he admitted in August to voting for Jose Serra, Rousseff's rival presidential candidate, and allegedly making disparaging remarks about his colleagues.

About a week later, Agriculture Minister Wagner Rossi fell under a storm of allegations. Veja alleged that a lobbyist had a "clandestine office" in the ministry and acted as an intermediary with outside companies. Rossi promised a clean-up. Then Veja carried another story by a whistleblower saying that Rossi could have received a bribe in an auction. In his resignation letter, Rossi said the allegations were "lies" and said his parents and friends had been attacked. "My family is my limit," he said.

Folha ran a special section dedicated to corruption on Sept. 4. "A value equivalent to at least the Bolivian economy was diverted from government safes from 2002-2008," estimated columnist Mariana Carneiro. The paper ran a photo gallery of the fallen ministers looking sheepish on Sept. 14, with the latest victim, 80-year-old Minister of Tourism Pedro Novais, looking as he frequently did: bewildered.

Novais clung to his job while 36 of his staff were indicted in a Federal Police investigation into bribery and corruption. Then Folha revealed that he was using government money to pay his maid and a government driver to take his wife to upscale Brasilia stores. And the paper alleged that he had previously been involved in questionable deals as an official in his home state of Maranhao. He denied wrongdoing. In his reign at the ministry, Novais signed just one act.

His successor, Gastao Vieira, is also from Maranhao. And that says a lot about who enjoys real power in Brazil: Maranhao is the North East state dominated by 81-year-old Senate president (and former Brazilian president) Jose Sarney and his family. Sarney's Democratic Movement Party of Brazil, or PMDB, forms a key part of Rousseff's ruling coalition, and his hand is seen behind both appointments.

"Connected to Sarney, Gastao Vieira will be the new Minister of Tourism," announced the headline on news site Terra Sept. 14. The choice of Vieira had followed a "fierce dispute" among the PMDB, said Terra, because although the party wanted to maintain control of the ministry, too many of its potential candidates had scandals or corruption allegations hanging over them.

The nomination "made analysts and the general public ask: why, so many years after leaving the presidency, does Jose Sarney conserve so much power in the republic?" wrote Vera Magalhaes in a column in Folha on Sept. 17.

Some Brazilians see Sarney as the last survivor of "colonelism" -- a throwback to the days when rich, powerful landowners, or colonels, ran entire Brazilian states, buying votes with food and intimidation in a policy known as "bread and circus." In Maranhao, Sarney's daughter is in her fourth term as governor, and his son runs the local television station.

The family is so powerful that Vieira felt it important to tell TV Globo Sept. 15 that his new job had nothing to do with their influence: "Absolutely not. I have had a connection with the Sarney family for many years and he has never imposed on me to do anything," Vieira said.

In 2009, Sarney himself survived a blizzard of corruption allegations -- including accusations that money destined for an educational foundation was diverted to front companies, that his son was involved in money laundering and that 663 "secret acts" were passed in the senate under his leadership, some of which benefited Sarney's family members.

Sarney denied all of this. And days after Vieira's appointment a high court announced that it had annulled a federal police investigation into the activities of the Sarney family.

In August, Sarney was seen using one of Maranhao's new emergency helicopters, allegedly for personal business, while a patient lay on the runway -- by Folha again, which also ran an amateur video of the incident.

"He's not just any person," said State Deputy Magno Bacelar. "Do you want the Senate president riding on a donkey?"

To accompany its coverage of the incident, Veja ran a widely used photograph of Sarney. He's sitting on an ornate leather seat in the corridors of power, smiling knowingly, unlikely to be riding a donkey out of government any time soon.

(Dom Phillips is the Sao Paulo correspondent for World View. The opinions expressed are his own.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.