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Brazil's top court releases testimony linking president to bribes

EconomyMay 19, 2017 03:50PM ET
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© Reuters. The motorcade of Brazilian President Michel Temer drives past graffiti which reads 'Out with Temer' in Brasilia

By Brad Brooks and Lisandra Paraguassu

SAO PAULO/BRASILIA (Reuters) - Brazil's Supreme Court released explosive plea-bargain testimony on Friday accusing President Michel Temer, along with former presidents Luiz Inacio Lula da Silva and Dilma Rousseff, of receiving millions in bribes.

The testimony raises serious doubts about whether Temer, who replaced the impeached Rousseff last year, can maintain his grip on the presidency amid the string of corruption scandals that has engulfed vast swaths of Brazil's political class and business elites.

Austerity reforms pushed by Temer, who has denied any wrongdoing, are considered crucial to revive the economy of Latin America's biggest country, mired in its worst recession on record.

The bombshell revelations came from testimony given by executives at JBS SA (SA:JBSS3), a meatpacking company that grew quickly through acquisitions funded by low-cost loans from Brazil's development bank during 13 years of government by Lula and Rousseff's leftist Workers Party.

The testimony implicates both ruling and opposition parties and indicates that Temer, a conservative, took 15 million reais ($4.6 million) in bribes from JBS, which ranks as the world's largest meat processor.

It also alleges that Lula, who is already facing five corruption trials, received $50 million in bribes in offshore accounts from JBS, while Rousseff took $30 million in bribes, also in offshore accounts.

Lawyers for Lula said he was innocent. A lawyer for Rousseff could not immediately be located, though the former leader has repeatedly said she has committed no corrupt acts.

The corruption scandals that have polarized Brazil center on political kickbacks in exchange for firms winning contracts at state-run enterprises, especially at oil company Petrobras (SA:PETR4).

They have led to over 90 convictions of businessmen and politicians and prompted the investigation of dozens of sitting congressmen and a third of Temer's cabinet.

Supreme Court Justice Edson Fachin wrote this week that an immediate investigation into Temer was required because the alleged criminal practices "are underway or about to occur."

Temer on Thursday, in a terse address to the nation, said he would not resign from the presidency.

His defiance came as the Supreme Court released an audio tape of him speaking with JBS Chairman Joesley Batista.

In the recording, secretly made by Batista in a March visit to Temer, the president appeared to condone the payment of hush money to former lower house speaker Eduardo Cunha, who last year orchestrated Rousseff's impeachment and was later convicted for corruption.

Many politicians fear that if Cunha should turn state's witness, his testimony could implicate scores of congressmen and members of the executive branch.

The constant march of indictments and new scandals has led to near paralysis in Brasilia, the capital, and led to widespread calls among Brazilians for new elections.

Brazil's top court releases testimony linking president to bribes

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