Petrobras Scandal Shakes Brazil to its Foundations

Sunday, 8th March 2015
Petrobras Scandal Shakes Brazil to its Foundations

The heads of Brazil’s two houses of Congress, former ministers and an ex-president are among a list of 54 names who will be investigated in relation to corruption at Petrobras, Brazil’s supreme court said on Friday night.

The court said it had authorised an investigation into the head of the Senate, Renan Calheiros, and the head of the lower house of Congress, Eduardo Cunha, over the case, said Globo, the Brazilian broadcaster. Both are among Brazil’s most powerful politicians.

It also authorised investigations into senator Fernando Collor, a former president, and former cabinet members from President Dilma Rousseff’s first administration, Gleisi Hoffmann and Edison Lobao. A former governor of Maranhao state, Roseana Sarney, is among scores of others on the list, most of whom are politicians.

The scandal at Petrobras, Brazil`s state-owned oil company, follows revelations from former executives that they collaborated with politicians to receive bribes from private-sector contractors in exchange for awarding them business.

The release of the names accused of involvement in the scandal comes amid a delicate moment for Latin America`s largest economy.

Inflation reached a 10-year high and the real hit its weakest point against the dollar in more than a decade as emerging market currencies tumbled on Friday.

The investigations will also ratchet up tensions in Brasilia between Rousseff’s ruling Workers’ Party and its allies in Congress.

In Brazil, only the highest court has the authority to authorise investigations and prosecutions of politicians.

The heads of Congress, Calheiros and Cunha, belong to the PMDB, the government’s main coalition partner and one of the most powerful parties in Congress.

They have become increasingly confrontational with Rousseff after she was weakened by a bruising election last October, which she won by one of the narrowest margins for a sitting president in recent memory.

Economists are concerned that the increasingly fragmented situation in Brasilia could make efforts by Rousseff to stabilise the economy through a budgetary austerity programme more difficult.

Brazil’s new finance minister, Joaquim Levy, is seeking to quell inflation and restore the budget to a primary surplus — the surplus before interest rate payments — and revive investor confidence in Latin America`s biggest economy.

He is also seeking to avoid a downgrade of Brazil’s sovereign rating by Standard & Poor’s to junk status.

A team from the rating agency was in Brazil this week to evaluate the country’s progress in stabilising its finances.

Source: Gulf News

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