Brazil – Will President Michel Temer Survive?

By now most people have probably forgotten how many criminal investigations have taken place in Brazil arising out of the “Operation Car Wash” scandals. The numbered rounds or “phases” of the investigation, as they are known in Brazil, reached 41 on May 25, 2017. Considering that these investigations started in March, 2014 and many business executives, politicians, and government employees are already in jail, the assumption might be that there is not much left to investigate.

Unfortunately for President Temer, who became President in August, 2016, after then President Dilma Rousseff was impeached, he has also become a target for impeachment or loss of office. This turn of events started with the plea bargain testimony (“delação premiada”) in March of a Brazilian billionaire, Joesley Batista, made public by the Brazilian Supreme Court this past May. Batista is one of controlling shareholders of JBS S.A., the largest producer of animal protein in the world. His testimony included a recorded conversation between Batista and President Temer, who allegedly suggested that Batista make a payment to Eduardo Cunha, the jailed former President of the Brazilian Chamber of Deputies, to buy the silence of Cunha.

While all of these Operation Car Wash investigations have been going on, the Superior Electoral Court (“TSE”), which is the highest judicial tribunal with jurisdiction over electoral proceedings in Brazil, has been investigating the 2014 election of President Rousseff and Vice President Temer. This electoral proceeding was based on their alleged use of illegal campaign funds in that election. Even though the 2014 election is long over and Dilma Rousseff is no longer President and Michel Temer is no longer Vice President, the TSE could have declared that election invalid and canceled those results. If that were to have happened, President Temer would be out of a job and there would be an indirect election by members of congress for the period remaining until the next presidential election at the end of 2018. Given the large number of members of the Brazilian Congress, who are being investigated by the Federal Police, it seems ironic that a previous Presidential election involving illegal campaign contributions would be resolved by a new election, whose electors are allegedly corrupt. In fact, the TSE ruled last week by a vote of 4 to 3 in favor of the validity of the 2014 election, in spite of the evidence about very substantial illegal campaign contributions for that election.

If all of this sounds confusing, the political maneuvering that is now going on is even more complicated. The President replaced the Minister of Justice a few weeks ago, possibly to influence the continuing corruption investigations by the Federal Police. In addition, there are published rumors that the President asked the Brazilian Intelligence Service “ABIN” to investigate the Supreme Court Justice, Edson Fachin, who is coordinating the possible presentation of criminal charges against the President. Nevertheless, there are two individuals in the custody of the Federal Police, one of whom is a recent advisor to the President and the other a black market currency operator involved in the movement of money, in and outside of Brazil. The speculation is that either or both could give plea bargain testimony that would connect President Temer to many of the illegal campaign contributions made by major Brazilian companies to the President’s political party, the PMDB. Even if that were to happen, it appears that the President has enough votes to avoid impeachment in the Chamber of Deputies. That leaves public protests in the streets as the ultimate power that might force the President to resign.

Authored by: Eugene A. Rostov