BRASÍ LIA—Eduardo Cunha, leader of the lower house of Brazil's
congress, had a hectic day on Dec. 15. Federal police raided his
home around 6 a.m. seeking evidence he had received kickbacks in a
wide-ranging embezzlement scandal relating to the state oil company
Petrobras.
Hours later he was in Congress, impeccably dressed in a blue
suit, vowing to move forward with his top legislative issue, a
motion to impeach Brazilian President Dilma Rousseff for allegedly
using accounting tricks to mask deficits.
"I wake up at 6 a.m. My door is always open. I have no problem
with this," Mr. Cunha, a talkative former radio host, told
reporters that day.
Mr. Cunha is poised to make history by bringing the impeachment
vote against Brazil's president to a floor vote as soon as Sunday.
If it passes by two-thirds, she faces a trial in the Senate. Ms.
Rousseff would be the second president impeached since Brazil's
1985 return to democracy, deepening political uncertainty in a
country that also faces a severe economic contraction.
All the while, Mr. Cunha's own legal battles continue. Brazil's
attorney general brought charges of corruption and money-laundering
against him last summer, adding new allegations a month ago. Swiss
authorities have closed four bank accounts they say were his. The
attorney general says bribe money was used to pay Cunha family
credit-card bills, including $156,000 in the six months through
January 2015.
Mr. Cunha has denied any wrongdoing. He has said the Swiss
accounts weren't his, and any money he spent was earned legally. He
declined to be interviewed.
The sweeping Petrobras scandal, in which businessmen and
politicians stand accused of diverting oil-company money to
themselves and political parties, with 84 convictions so far, has
spurred hopes that a country long beset by corruption may be
turning an ethical corner. That the legislator overseeing
impeachment is also facing charges suggests how difficult that will
be, in a country where the roots of corruption are deep.
Ms. Rousseff has said she did nothing wrong. Her aides contend
Mr. Cunha supported impeachment to divert attention from himself.
They note that after months of bottling up impeachment motions, Mr.
Cunha decided to move one forward just hours after Ms. Rousseff's
party said it would no longer vote to protect him from
prosecution.
A poll a week ago showed 61% of Brazilians think Ms. Rousseff
should be removed from office; 77% think Mr. Cunha should be.
According to a nonprofit called Transparê ncia Brasil, 60% of
Brazil's federal legislators have been convicted or are under
investigation, for crimes ranging from corruption to electoral
fraud to assault. The president of the Senate, Renan Calheiros, is
a focus of numerous lines of investigation in connection with the
Petrobras scandal; he denies any involvement. Ex-President Luiz Iná
cio Lula da Silva is also under investigation, suspected of being
the real owner of a ranch and a beach-front apartment registered to
third parties, which he denies.
Many Brazilians are caught between satisfaction at seeing
leaders held accountable and despair that so much of the political
class is implicated.
"I want Dilma gone, but that won't change everything. Do you
know why? The person next in line after her is terrible, and the
person after him is worse, and so on," said Thiago Vieira, a young
financial analyst who stood in a sea of protesters chanting "Dilma
Out!" in Sã o Paulo on March 13.
The impeachment charge against Ms. Rousseff doesn't involve
Petrobras. The motion alleges she violated federal budget laws by
using loans from state-owned banks to mask the size of the
government's budget deficit.
An electoral court, however, is investigating whether Ms.
Rousseff's 2014 re-election campaign was funded partly with
kickbacks from the Petrobras scandal. She says it wasn't. Public
support for Ms. Rousseff's ouster has surged as the corruption
allegations have widened and the economy tanked. Many blame Ms.
Rousseff for allowing corruption to flourish, noting she was the
Petrobras chairwoman while much of the scandal unfolded. She says
she was unaware of any illegal activities.
Ms. Rousseff's replacement if she were removed would be Vice
President Michel Temer from Mr. Cunha's PMDB party, which shared
power with the president's Workers' Party before splitting off in
March. Mr. Temer is included in the electoral court investigation
of whether bribe money funded Ms. Rousseff's 2014 campaign; he
denies that it was. Mr. Temer stepped down as leader of the PMDB
this month after a Supreme Court justice made a preliminary ruling
that any impeachment of Ms. Rousseff must consider him, too.
Mr. Temer's successor as party chief, Sen. Romero Jucá , is
under investigation in connection with the Petrobras scandal. He
denies having anything to do with it.
"My God in Heaven, this is our alternative leadership?" said
Supreme Court Justice Luis Roberto Barroso on March 31 in a meeting
with law students that he didn't know was being recorded. "The
problem with our politics at this moment is the lack of
alternatives. There is nowhere to run."
Third in line to the presidency is Mr. Cunha, 57 years old. An
economist by training, he broke into politics campaigning for
Fernando Collor, who won the presidency in 1989 and named Mr. Cunha
to run Rio de Janeiro's phone company. Mr. Collor was impeached for
corruption in 1992.
A religious conservative, Mr. Cunha began hosting a radio show
decrying abortion and same-sex marriage. He often exclaimed, "The
people deserve respect!" In 2003, he won a seat in the lower house
of Congress with Evangelical support.
His backers there describe Mr. Cunha as a dusk-to-dawn
negotiator, often using an iPad or cellphone to send What's App
messages to a network of allies. His knack for raising funds and
delivering votes won him support among dozens of lawmakers in
several parties, analysts say.
In February 2015, he became president of the lower house, called
the Chamber of Deputies. By then, the Petrobras scandal was
claiming prominent businesspeople, and voters were calling for Ms.
Rousseff's removal.
Mr. Cunha appeared invincible. Brazilian news magazines compared
him to Frank Underwood, the scheming politician played by Kevin
Spacey in the drama "House of Cards."
In March 2015, however, the Supreme Court gave the attorney
general the go-ahead to investigate Mr. Cunha and dozens of other
politicians. Mr. Cunha made an hourlong speech in Congress calling
the investigation a joke. Legislators applauded loudly.
By August, the attorney general had brought charges against Mr.
Cunha, alleging that from his position in Congress, he pressured
executives for bribes in exchange for amendments favorable to their
businesses. He has denied that.
The main charges related to the Petrobras matter, which many
call Brazil's biggest ever corruption scandal. The oil company has
acknowledged losses of $17 billion from it, including from
embezzlement and money-losing projects.
The indictment alleged that in 2006, Mr. Cunha helped
orchestrate a $40 million bribe in exchange for two contracts to
build floating oil platforms for Petrobras. The charges said a
broker who represented South Korean shipbuilder Samsung Heavy
Industries and its partners paid the bribe out of a huge fee he
charged his clients. The broker opened a running tab for Mr. Cunha
at a business-jet charter firm, the charges said.
Mr. Cunha began opening Swiss bank accounts under various names,
such as "Triumph," the Brazilian charging documents said. They said
investigators have traced oil money to these accounts, including a
kickback from an executive appointed to Petrobras by the PMDB.
The broker who represented Samsung Heavy Industries became a
cooperating witness last July 2015, according to Brazilian
prosecutors. He told investigators Mr. Cunha had received a $5
million cut of bribes paid in the oil-platform contracts, which was
paid mostly to a Petrobras executive and a money launderer,
according to the indictment. It said the broker, Julio Camargo,
described a meeting he said he had with Mr. Cunha to discuss the
scheme at an office in the Leblon district of Rio de Janeiro.
Mr. Cunha summoned Mr. Camargo's defense attorney before a
congressional commission. The attorney, Beatriz Catta Preta, never
appeared. She told a television journalist she had received "veiled
threats." She dropped Mr. Camargo as a client and closed her law
practice.
"After everything that's happening, and to ensure the safety of
my family, of my children, I decided to end my career in the law,"
she said in a TV interview. Ms. Catta Preta couldn't be reached for
comment. Mr. Camargo's new lawyer didn't return a message left with
his assistant.
The following month, August 2015, Brazil's attorney general's
office brought its charges against Mr. Cunha. According to the
charges, the bribe arrangement hit a snag in 2011, stopping the
payments, which were meant to come in installments. Mr. Cunha
responded by starting a congressional corruption investigation of
Samsung Heavy Industries' contracts, the charging document said,
and as a result of this pressure tactic, the remaining bribe
installments were paid.
The document said that at a time when Mr. Cunha's annual income
was around $120,000, he took his wife and daughters for a New
Year's 2013 trip to Miami—staying at the five-star Perry Hotel,
spending around $1,000-a-pop dining at places like Joe's Stone
Crab, and running up a credit-card bill of $42,000 in nine
days.
In February 2015, he flew to France and spent $8,000 at a
menswear boutique and $16,000 bill at the Plaza Athé né e hotel,
another charging document said.
Mr. Cunha has denied receiving any kickbacks or bribes. Samsung
Heavy Industries, which hasn't been charged, didn't respond to
requests for comment.
(MORE TO FOLLOW) Dow Jones Newswires
April 15, 2016 15:45 ET (19:45 GMT)
Though Brazilians facing such charges normally would be
arrested, Mr. Cunha hasn't been. An immunity provision in Brazil's
constitution says lawmakers can be arrested only if Congress or the
Supreme Court sanctions the move.
Another provision says they can be tried only by the country's
Supreme Court. Together, the rules shield legislators from most
prosecutions. The bulk of the seven-dozen Petrobras convictions
have been against businesspeople, not politicians.
Last fall, critics of Mr. Cunha in Congress attacked his
immunity through an inquiry by an ethics commission. The legislator
in charge was Fausto Pinato. On the night of Nov. 12, according to
a police report filed by Mr. Pinato and his chauffeur, two
motorcyclists approached the driver and said, "Ask your boss
whether he wants to go to heaven or whether it is better to
collaborate with the situation. He has a beautiful daughter, a
beautiful wife, a nice brother…"
A spokesman for Mr. Pinato said he doesn't know who threatened
him and isn't accusing Mr. Cunha, who says he had no involvement.
Mr. Pinato is no longer on the ethics commission because he changed
parties.
On Dec. 2, the leader of Ms. Rousseff's party in the lower house
of Congress announced the party would vote to strip Mr. Cunha of
his immunity from prosecution.
Later the same day, Mr. Cunha said he was moving forward with
impeachment proceedings against Ms. Rousseff.
In the previous months, Mr. Cunha had blocked 27 motions for
impeachment. Asked by reporters whether the Rousseff party's
position against him had prompted his switch, he said no, his
switch on impeachment was a technical decision based on the large
number of motions reaching his desk.
Brazil's attorney general this year asked the Supreme Court to
lift Mr. Cunha's immunity. The court hasn't ruled.
What the court did do, in March, was to accept charges the
attorney general filed last summer. That made Mr. Cunha officially
a defendant. He still has immunity from arrest.
The lead prosecutor in the Petrobras case, Deltan Dallagnol,
calls for an overhaul of rules such as legislators' immunity. He
says corruption runs so deep that even the dozens of convictions in
the Petrobras investigation won't root it out.
"If we want a country without corruption and impunity, we have
to alter the institutions," he said at a conference.
Mr. Cunha's first political patron, ex-President Collor,
returned to government 15 years after his impeachment. He was
elected to the Senate and put in charge of an ethics committee.
Last year, federal police began investigating Mr. Collor in
connection with the Petrobras scandal. Raiding his home, they found
a Lamborghini, a Porsche and a Ferrari. His spokesman says he is
innocent.
The attorney general brought charges, which the Supreme Court,
so far, hasn't accepted. In the Senate, Mr. Collor will be among
those voting on Ms. Rousseff's impeachment, if it passes the lower
house.
(END) Dow Jones Newswires
April 15, 2016 15:45 ET (19:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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