EDINBURGH — As in South Africa, the pressure is on Brazil to excise corruption that is deep-rooted and has spread its tentacles across society. Operation “Car Wash” kicked off in March 2014 and has seen many arrested and charged in Brazil and elsewhere in connection with bribery and related crimes. Brazil’s popular former president Luiz Inácio Lula da Silva is serving a sentence for corruption. Brazil’s current president, Jair Bolsonaro, appears to be taking no prisoners, firing a top advisor amid accusations of fraud connected to campaign finance. As The Wall Street Journal underscores, graft does not impress investors: anti-corruption efforts appear to be linked to an uptick in the key Brazilian stock market index. – Jackie Cameron
Brazil’s Bolsonaro Fires Key Adviser Amid Accusations of Campaign-Finance Fraud
By Paulo Trevisani and Jeffrey T. Lewis
BRASÍLIA—Brazil’s President Jair Bolsonaro fired a top adviser on Monday amid allegations of campaign-finance fraud, a scandal that could delay his administration’s effort to revamp the country’s sluggish economy.
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Mr. Bolsonaro was elected last year on a law-and-order platform that included strong anticorruption initiatives. The new president’s first political scandal blew up over the weekend after local press accused his party of diverting public campaign funds to candidates who supposedly didn’t run for office.
Gustavo Bebianno, the general secretary of the presidency in the Bolsonaro administration, also served as the national chairman of the Social Liberal Party, or PSL, during last year’s general elections, raising the possibility he might have known about the alleged scheme.
Mr. Bebianno has denied any wrongdoing or knowledge of wrongdoing.
Bolsonaro’s spokesman said Monday that Mr. Bebianno had been ousted and that the president wished him luck. The spokesman declined to elaborate on the reasons for Mr. Bebianno’s dismissal, saying only it was the president’s personal decision.
Mr. Bolsonaro won a lopsided victory in October of last year while running on the PSL ticket, but hasn’t been linked to the alleged fraud.
The scandal nevertheless raised questions about the administration’s ability to implement pension reforms, which economists see as key to taming ballooning public debt and reviving a feeble economy.
The effort to approve the changes to the pension system was already going to be complicated and controversial, said Erich Decat, a political analyst at the XP Investimentos brokerage.
“Now you have all the political twists and turns of the government losing a minister in less than 50 days of governing,” he said, adding that though he still believed the reform will eventually pass, “it’s not a good start.”
Investors have cheered as Mr. Bolsonaro’s government prepared to make changes to the country’s notoriously generous pension system, which allows some Brazilians to retire before age 50 and is projected to have a deficit of 218bn reais ($58bn) in 2019.
The benchmark Ibovesa stocks index is up more than 10% since Jan. 1, the day Mr. Bolsonaro was sworn in, and the Brazilian real has strengthened about 4% in the same period.
Local news media reported over the weekend that the PSL gave campaign money to several female candidates to comply with a rule requiring 30% of public electoral funds to be used for financing women running for office.
With corporate donations banned, public funds are politicians’ main source of financing, and the allegedly shell candidates, in turn, illegally spent the funds on the campaigns of other candidates approved by the party’s leaders, or on businesses owned by people connected to the party’s leadership, according to local news reports.
As Mr. Bolsonaro was recovering last week from surgery related to a nearly-fatal stabbing he suffered during the campaign, Mr. Bebianno denied that the allegations of misused campaign funds had caused a rift between him and the president.
He also said that the two men were in touch, a claim that was swiftly denied by Carlos Bolsonaro, the president’s son and a city councilman in Rio de Janeiro, who called the dismissed minister a liar in a Twitter post.
Write to Paulo Trevisani at [email protected] and Jeffrey T. Lewis at [email protected]
