‘Big Monthly’ exposes failings in Brazilian political system
By Brian Nicholson
The Brazilian Supreme Court (STF) is about to judge one of the country’s most important political corruption cases of recent years: the so-called Mensalão or ‘Big Monthly’ scandal that brought down several senior members of the last government. Beyond tabloid-style headlines about wads of cash in brown paper bags, the case highlights some serious structural weaknesses in Brazil's political system that hamper economic and social development.
First, the caveats. ‘About to judge’ doesn’t necessarily mean ‘about to rule on’. Judges on the Supreme Court said 105 hours of hearings were likely to run from June through August, but the Brazilian judicial system is replete with opportunities for defendants to lodge appeals and create procedural delays.
The Supreme Federal Court of Brazil
The case started in 2005 with reports that people inside, or close to, the government, headed by President Luiz Inácio Lula da Silva, were operating a systematic slush-fund to secure congressional support for the Workers’ Party (PT). Antonio Fernando de Souza, then Attorney General, sent the STF indictments against 40 people, 38 of whom now face trial. Why the STF, Brazil’s senior forum for constitutional questions? Because a dozen of the alleged participants were federal congressmen, and as such enjoyed a constitutional privilege to be tried there.
‘The coalition supporting President Dilma Rousseff comprises ten parties that bicker over no less than 34 ministries and ministry-status secretariats, avid for the patronage that running a ministry permits. More than 23,500 federal jobs are ‘positions of trust’ held by political appointees chosen by ministers. Agencies that control large budgets are hotly disputed.'
Leading the charge sheet, at least in terms of public prominence, was José Dirceu, Lula’s Chief of Staff at the time, who ran the government from an office adjacent to the president’s. Other high-profile defendants included João Paulo Cunha, President of the Chamber of Deputies at the time; José Genoino, then a federal congressman and PT President; and Delúbio Soares, then PT Treasurer.
Charges included being a member of a criminal organisation, lying on a public or private document, offering bribes, accepting bribes, embezzlement of public funds, money laundering, fraudulent management of a financial institution and foreign exchange fraud, with penalties of up to 12 years in prison. Many of the accused faced multiple indictments; all denied any wrongdoing.
More than R$75m was involved according to current Attorney General Roberto Gurgel. Adjusted for Brazilian inflation and using current exchange rates, that would be roughly US$55m. Cash was allegedly doled out to various members of the PT and other pro-government parties to finance election campaigns, pay off past campaign debts, and generally buy support for congressional votes. There is no suggestion that personal financial gain was a key driver, although at least one politician said she was offered money to change party. The affair became popularly known as the ‘Big Monthly’ because of initial suggestions that it involved regular monthly payments.
‘The criminal scheme was conceived and carried out to serve the aims of the political nucleus, headed by the then Presidential Chief of Staff José Dirceu,’ Gurgel said in his final written argument delivered to the STF last year. ‘The evidence supporting the charges proves that the accused… associated in a regular and organized way, with division of tasks, to commit crimes against the public administration (and) the financial system.’
Money allegedly came from two main sources: a couple of minor banks that simulated loans to the PT via an advertising agency in exchange for government permission to make profitable payday loans to public employees and pensioners; and rake-offs from advertising contracts with private companies that received government contracts.
Brazil has seen various high-profile political corruption cases since the end of military rule in 1984, involving parties of various hues. Fernando Collor de Mello suffered impeachment and resigned the presidency in 1992 after allegations of kickbacks on government contracts, and Federal Police are currently investigating what appears to be a wide-ranging scheme said to involve public construction contracts, numbers racketeering and payoffs to both government and opposition politicians.
One thing making the ‘Big Monthly’ such a landmark case was the involvement of so many senior members of the PT. Founded three decades ago by Lula and other prominent leftists, the PT boasted that it offered a clean new alternative based on grass-roots activism rather than traditional power structures. Thus, when the ‘Big Monthly’ was exposed, Lula’s suggestion that the PT had done no more than ‘is done systematically in Brazil’ came to be seen as a milestone in the party’s induction into the political mainstream. Similarly, his claim of total ignorance about the manner whereby his government was apparently securing its congressional majority led several commentators to debate if this indicated presidential dishonesty or incompetence.
There were other consequences. The first presidency of a party created to fundamentally transform Brazil ended up producing some moderate social improvement, but precious little basic structural reform; while the forced clean-out of PT leaders paved the way for Rousseff to rise from obscurity.
More even than individual venality, the bottom line is that Brazil has a largely unworkable political system. The 1964–85 military dictatorship imposed a pro-forma democratic façade with two tightly controlled parties. Today there are 29 parties; 23 of them represented in Congress, where the largest has just 17 per cent of seats. Most parties lack a consistent or even discernible ideological position, and some are sub-divided into warring factions. Maintaining a majority could be likened to herding adolescent cats, with constant tidbits the main inducement to good behaviour.
This case highlights the structural weakness of the Brazilian political system
The coalition supporting President Dilma Rousseff comprises ten parties that bicker over no less than 34 ministries and ministry-status secretariats, avid for the patronage that running a ministry permits. More than 23,500 federal jobs are ‘positions of trust’ held by political appointees chosen by ministers. Agencies that control large budgets are hotly disputed.
Federal highway investments ground to a halt last year and are still running way behind schedule because of a kickbacks scandal that toppled the Transportation Minister. He was just one of six ministers to quit in Rousseff’s first year of government following media reports of corruption, normally related to patronage and contract skimming to finance political parties.
Rousseff sports an ‘iron lady’ halo and has pledged not to continue ‘politics as usual.’ But it remains to be seen if she can win a congressional majority of the strength of argument alone.
Shortly before taking office at the start of the Rousseff administration in January 2011, the current Justice Minister, José Eduardo Cardozo, described political reform and public financing of campaigns as ‘an imperative,’ because elections were decided by financial muscle with no debate of party programmes, leaving the system susceptible to organised crime.
‘The first year of government is the moment when you can move ahead with structural reforms,’ he said. But, as things turned out, Rousseff’s first year was largely dedicated to managing scandals.