October 25, 2014
Graft scandals take over Brazilian campaign
Petrobras inquiry complicates Rousseff as PSDB struggles with probe into Sao Paulo corruption
BRASILIA — The two main Brazilian parties — the Workers’ Party (PT) and the Brazilian Social Democratic Party (PSDB) — traded accusations yesterday as graft scandals seemed to take over the campaign toward a presidential election in October, in which President Dilma Rousseff will seek her re-election.
Rousseff will likely face a runoff against PSDB candidate Aécio Neves, who has been steadily growing in polls and could benefit from rising inflation and slow growth during the last year of the PT president’s first term.
The ruling PT was able to gather enough votes yesterday to create a parliamentary commission (CPI) to investigate price-fixing by a group of companies during the construction of the subway in Sao Paulo and other Brazilian cities (the Sao Paulo government has traditionally been in the hands of the PSDB). The commission, however, won’t be able to start working until its president and vice-president are designated, something that lawmakers failed to agree on yesterday.
Several international companies — including Siemens, Bombardier, Alstom and CAF — have faced accusations of participating in a price-fixing scheme that acted complicitly with the Sao Paulo state government. According to Brazil’s antitrust agency CADE, “the members of the cartel apparently divided up the tenders between themselves and pretended there was competition, but had agreed previously on the prices of their bids.”
Sao Paulo’s PSDB Governor Ge-rardo Alckim has admitted that some irregularities took place during tenders but the Brazilian justice system has yet to rule on the case.
The PT argues that Congress should investigate the so-called train cartel because courts don’t seem to be making progress.
Meanwhile, the PSDB pressed on with its demand that the PT clarify allegations that a CPI on the Petrobras purchase of a refinery in the US handed the oil company’s executives the questions they would be asked in advance. According to a story published by Veja magazine during the weekend, the executives were even given the “correct” answers.
In 2006, the Brazilian oil company paid US$360 million to Astra Oil for a 50 percent stake in the refinery, which the Belgian company had bought a year earlier for US$42 million. Astra Oil eventually exercised a “put option” and forced Petrobras to buy the remaining 50 percent, which ended up costing an extra US$820.5 million.
The purchase of the Pasadena refinery touches Rousseff personally because she was president of the Petrobras board when the plant was bought in 2006. She said she authorized the purchase based on an “incomplete” and “fraudulent” report by former adviser Néstor Cerveró.
The CPI on the Petrobras case is dominated by PT lawmakers, who have denied wrongdoing.
Petrobras has admitted to “prepping” their executives for the inquiry but have denied being handed the questions.
Meanwhile, the three main presidential candidates — Rousseff, Neves and Socialist Eduardo Campos — participated in a debate at the National Agriculture Confederation (CNI) yesterday and discussed the sector’s future, which is demanding deregulation.
The agricultural sector, which is responsible for 44 percent of Brazil’s exports, has been pressing for Mercosur to sign a trade agreement with the European Union, which has been under negotiation for the last 15 years.
Neves and Campos supported the ruralists demands at the debate yesterday and attributed the lack of progress to the “obstacles” imposed by Mercosur, whcih, they said, stop its members from moving forward independently.
Rousseff, meanwhile, defended Mercosur and said the EU is to blame for the slow progress. She said that France, Hungary and Ireland have faced hurdles in getting the agreement approved and said that some sectors in European politics blame the bloc’s open trade policies for its economic crisis.