Brazil’s president-elect appoints Car Wash judge in anti-corruption push

Ruth Green, IBA Multimedia JournalistTuesday 4 December 2018

The result was an emphatic end to a divisive election, which saw the Social Liberal Party candidate survive a near-fatal stabbing to beat Workers’ Party candidate Fernando Haddad in the second round. It’s also the culmination of a 2018 election cycle that played out in a similar fashion across the region with the election of right-wing, anti-corruption crusaders Mario Abdo Benítez in Paraguay in April; Iván Duque Márquez in Colombia in May and Andrés Manuel López Obrador in Mexico in July.

Bolsonaro will assume office on 1 January, succeeding Michel Temer, who took on the top job in 2016 after incumbent president Dilma Rousseff was impeached for her role in the Car Wash corruption scandal, Lava Jato. The task ahead of him is challenging. Brazil is only beginning to emerge from a two-year-long recession. There are strong calls for fiscal reform and greater privatisation to boost the economy and encourage more foreign investment.

Alexandre Aroeira Salles, founding partner of Aroeira Salles Avogadoes in São Paulo, views Bolsonaro’s appointment of former investment banker, Paulo Guedes, as finance minister as significant. ‘Guedes hopes to simplify existing regulations to improve the business environment for both Brazilian and international businesses,’ says Aroeira Salles. ‘He has also stated his intent to tackle the labyrinthine Brazilian tax system and the country´s costly pension programme.’ Aroeira Salles says the proposed privatisation drive is also expected to lead to ‘significant opportunities for international investment.’

Horacio Bernardes Neto, IBA Vice-President and a senior partner at Motta Fernandes Advogados, says the early indications are that Bolsonaro is moving the economy in the right direction. ‘The Brazilian economy will only start to recover when the necessary reforms are made, especially the one concerning the public pension fund (reforma previdenciária),’ he says. ‘Apparently Bolsonaro and his team have realised that as they have declared their willingness to pass such reform before the end of the Temer term. This seems to be a positive sign.’

Other appointments have proved controversial. Sérgio Moro – the judge who famously presided over the Car Wash investigation that put former president Luiz Inácio Lula da Silva in prison – has accepted the position of justice minister.

Octavio Ferraz of King’s College London says the decision calls into question both Moro’s and the investigation’s reputation. ‘I know that judges’ decisions are not completely insulated from the political world, but they have to protect as much as they can the impartiality of the judiciary as an institution,’ he says. ‘I think by accepting now to be the minister of the president who won against the Workers’ Party candidate that was affected by some of his acts, he tarnishes his appearance of impartiality and therefore all his acts as a judge.’

Protests against the corruption scandal, Lava Jato

Leopoldo Pagotto is head of antitrust and anti-corruption at Freitas Leite Advogados and Vice-Chair of the IBA Anti-Corruption Committee. ‘When Judge Moro said he would accept the position as justice minister, he clearly stated that he was willing to carry on the fight against corruption,’ says Pagotto. ‘It speaks volumes about what Judge Moro will do the fact that, during the flight from Curitiba to Rio de Janeiro, he was reading a book On the new measures to fight corruption edited by Transparency International.’

The appointments of André Luiz de Almeida Mendonça as Attorney General of the Union and Wagner Rosário as the Ministry of Transparency and the Comptroller General of the Union are also significant. ‘I am optimistic that these appointments, if they are carried out with professionalism and supported by public opinion, will enhance, rather than inhibit, the Brazilian business environment,’ says Aroeira Salles. ‘The involvement of well-qualified professionals will hopefully serve to increase the consistency and predictability of legal processes in Brazil whilst also continuing the fight against corruption.’

The Prosecutor’s office for the Lava Jato Task Force in Curitiba declined to comment on how Moro’s appointment or the election result might affect its investigations. Pagotto is confident though that the momentum will still be there to keep the investigation going: ‘On the day after Judge Moro takes office, Car Wash will probably come back at full force – prosecutors say that approximately half of the case has not yet been investigated.’

Bolsonaro’s critics continue to voice concerns about his inflammatory rhetoric on a range of issues including trade, migration, and LGBT and women’s rights. ‘I’m convinced that the Brazilian legal structure and stable institutions will not allow any members of the Executive to alter laws that are in force,’ says Bernardes Neto. ‘There is no other way than giving Bolsonaro the benefit of the doubt and I hope he does very well.’

In 1988 Brazil promulgated its Constitution, marking the country’s triumphant return to democracy after more than two decades of dictatorship. Thirty years on, Ferraz believes Brazilians must maintain their faith in democracy and keep pushing for progress. ‘There is a bigger critical mass in Brazil now that rejects homophobia and racism,’ he says. ‘You must remember that at the same time that we saw Bolsonaro’s party grow, we also saw for the first time homosexual women and black people being elected to parliament. Some of the more progressive parties grew a bit as well, so I think there is some hope.’