BRAZIL CORRUPTION SCANDAL UPDATE, WEEK OF

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 002384

SIPDIS

TREASURY FOR PARODI; STATE PASS TO USTR AND USAID/LAC

E.O. 12958: DECL: 09/09/2015
TAGS: PGOV PREL ECON BR
SUBJECT: BRAZIL CORRUPTION SCANDAL UPDATE, WEEK OF
SEPTEMBER 5-9, 2005: CHAMBER PRESIDENT HEADED FOR A FALL

REF: A. BRASILIA 2219

B. BRASILIA 2150

C. BRASILIA 2082

D. BRASILIA 2025

E. BRASILIA 1979

F. BRASILIA 1874

G. BRASILIA 1973

H. BRASILIA 1631

I. BRASILIA 2242

J. BRASILIA 2237

K. BRASILIA 2305

L. BRASILIA 2348

M. BRASILIA 0767

Classified By: POLITICAL COUNSELOR DENNIS HEARNE. REASONS:
1.4(B)(D).


1. (SBU) President of the Brazilian Chamber of Deputies (U.S.
House Speaker equivalent) Severino Cavalcanti is in danger
of removal from his position, as bribery allegations against
him appearing in weekend newspapers became seemingly
irrefutable this week in the face of testimony by witnesses
and documentary evidence. Sebastiao Buani, concession holder
for a restaurant in a congressional annex in Brasilia,
testified that he had been pressured over a course of years
by Cavalcanti to pay him bribes in order to maintain a
restaurant services contract with the congress. Moving past
earlier inconsistencies in his account, Buani stated publicly
on 8 September that he had paid Cavalcanti up to reals
120,000 (USD 50,000) between 2002-2005 in order to maintain
his contract. An employee of Buani's firm also confirmed the
bribery account, and provided to the press an April 2002
document signed by Cavalcanti on Chamber letterhead -- while
Cavalcanti was a member of the Chamber's directorship table
-- that awarded a three year contract to Buani. The document
was authenticated by experts commissioned by newsmagazine
Veja. The document not only provides circumstantial evidence
for the bribe allegation, but points up other illegal
behavior on Cavalcanti's part, since he would not have had
authority to award a multi-year contract absent public
bidding procedures. Buani also claims there is a signed
check to Cavalcanti for one payment.


2. (SBU) A broad and potent front of senior representatives
from an array of parties -- the opposition PFL, PSDB, PV
(Green) parties, but also elements of Lula's own PT and
leftist parties -- are clamoring for Cavalcanti to step down
from his post pending investigations, or for a plenary vote
for his expulsion from congress. Cavalcanti, in New York for
an international parliamentarians' event at the UN, has
denied the allegations, but his refutals have been
inconsistent and unconvincing.


3. (SBU) The Lula government's reaction is a wire walking
act, reflecting the ambiguities of its relationship with
Cavalcanti. The GOB faced its largest congressional defeat
ever in February when the obscure Cavalcanti was able to
capitalize on GOB and PT ineptitude to win a surprise victory
over the PT's candidate in the internal election for the
Chamber presidency. Cavalcanti alternately bated and
supported the President early in the year, before becoming
something of an unlikely ally over the past three-plus months
of corruption scandals (refs) -- e.g., Cavalcanti has refused
to acknowledge the existence of monthly bribes by the PT to
congressmen implicated in the corruption scandals, and tried
to slow-roll congressional investigations. This odd, tacit
alliance may have reached its bizarre zenith in recent days,
when President Lula decorated Cavalcanti with the prestigeous
Rio Branco Order before a stunned and silent audience of
officials and media. The GOB is neither defending nor
attacking Cavalcanti, with spokesmen expressing to the press
only Lula's concerns that investigations should proceed
quickly to a resolution.


4. (C) Comment. Severino Cavalcanti, an elderly career
politico from Pernambuco variously seen as a "populist
bumpkin,""clever tactician" (Brasilia 767) and/or corrupt
operator, ascended to the Chamber presidency by an
unprecedented political accident. Since then he has been
viewed by many as a retrograde symbol of the worst aspects of
Brazil's traditional politics, suddenly and improbably back
to haunt Brazilians' aspirations for a modernizing democracy.
His questionable suitability for President of the Chamber at
precisely the moment that Brazil's worst political corruption
scandals in recent memory are roiling the congress and his
equivocal attitude toward punishing his implicated colleagues
have exacerbated concerns about damage to the congress'
institutional credibility. Some in the media and political
class have speculated about the possibility of Cavalcanti's
name appearing in the lists of congressmen implicated in
monthly pay-off schemes by the PT because he fits snugly into
the profile of a suspect -- i.e., affiliation with a small,
mercenary party (the PP),a relaxed approach to propriety,
and a life history of political opportunism in the service of
no coherent ideology other than re-election. Further, his
place in a succession scenario (Cavalcanti would be third in
line) in the unlikely event of impeachment proceedings
against Lula has been a prospect viewed by most Brazilians as
both ludicrous and terrifying. For these reasons, momentum
was already developing in the legislature to seek
Cavalcanti's removal, and the credible bribery allegations
emerging this week provided an expeditious line of attack.
But Cavalcanti may well go down fighting, lashing out and
seeking to accuse others of wrongdoing, and thus sparking a
free for all that risks a generalized denigration of the
congress' authority at a time when Brazilians need to see
their institutions functioning. The congress will need to
move both with dispatch and prudence to avoid such a melee,
and have ready a replacement candidate who can command broad
respect and provide a bridge between the legislative and
executive branches that is sufficiently strong to provide
modest potential for progress on key bills even amidst the
continuing crisis.

CHICOLA