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Death of Brazil judge to delay political corruption probe

By Anthony Boadle

By Anthony Boadle

BRASILIA (Reuters) - The death of a Supreme Court justice handling corruption accusations against dozens of Brazilian politicians will not derail the country's biggest ever graft probe but will delay it, handing valuable breathing space to President Michel Temer.

Justice Teori Zavascki was killed in a plane crash on Thursday, just weeks before he was due to unveil explosive testimony from executives at engineering group Odebrecht SA that is expected to implicate as many as 200 politicians in a vast kickback scandal.

Postponing the fallout from evidence that could incriminate powerful political figures in his coalition gives the president more time to push through reforms to generous pension and labor rules and restore business confidence in a country stuck in a two-year recession.

"This can give Temer more room to move ahead with his reform agenda in Congress but Zavascki's death won't stall or change the course of the investigations," said Thiago de Aragao, partner at ARKO consultancy that advises corporations and banks on investment in Brazil. "It will just pause it for a while." Temer, who has himself been named by one defendant as a recipient of illegal campaign funds, has said he will rapidly appoint a new justice who, under Supreme Court rules, would take over Zavascki's cases.

The nominee would have to be confirmed by the Senate, which could take weeks if not months after Congress returns from its Christmas recess in February.

The new judge would then need to get up to speed on the sprawling corruption investigation, dubbed Operation Car Wash, which is centered on bribes and political kickbacks from state-run companies, principally oil company Petróleo Brasileiro S.A., commonly known as Petrobras.

"Zavascki was ready to resolve Car Wash promptly and take decisions that would clear up who could stay in government or Congress and who had to go," said Ives Gandra Martins, a constitutional lawyer in Sao Paulo.

Those decisions will be delayed until at least March or April, Martins said, preventing Brazil from turning the page on a corruption probe so massive and complex it paralyzed public sector construction projects and deepened the recession.

'GOT TO BE QUICK'

That is too long for some Brazilians who want to know which of their leaders were embroiled in the scandal that involved at least 6.4 billion reais ($2 billion) in bribes for contracts with state-run enterprises.

In Brazil, federal politicians and other senior officials can only be tried by the Supreme Court.

Given the public's suspicion of politicians, the Supreme Court should opt for a rule that in urgent cases lets it name a replacement from its ranks, rather than wait for Temer's nominee, said left-leaning Senator Cristovam Buarque.

"Any presidential choice would be questionable," Buarque said in a telephone interview. "It has got to be quick. Brazil cannot wait another six months. We want to know what happened and who should be punished."

At least one justice on the 11-seat court, Marco Aurelio Mello, has come out publicly in favor of one of his peers immediately taking charge of Car Wash.

Though he was appointed by impeached former President Dilma Rousseff, the 68-year-old Zavascki had gained a reputation as independent and willing to target corrupt politicians of any stripe, including Rousseff's Workers Party.

Police are investigating the crash in which a small, twin-prop plane that was carrying him plunged into the sea south of Rio de Janeiro during heavy rain.

'BAD FOR BRAZIL'

Zavascki's replacement will have to approve hundreds of plea deal statements by defendants that are expected to shake Brazil's political establishment to the core.

Temer has already lost four cabinet members to corruption allegations. Several other ministers and leaders of his PMDB party in Congress have been named in Odebrecht plea deals, raising concern about the survival of his government.

Odebrecht S.A. is the holding company for the group's interests, which include 14 subsidiaries.

"In the short-run, any delay works in Temer's favor because it will put off the instability that the new accusations will bring," said Roberto Dias, a constitutional law professor at the FGV think tank in Sao Paulo. "But it's bad for Brazil."

For Brazilians dismayed by the scandals that Car Wash has uncovered, Zavascki's death - whether an accident or not - was just the latest reason to lose faith in their institutions.

"His death will delay the Odebrecht testimony and, depending on who takes over, the Car Wash investigation could take a different course," said Rio de Janeiro systems analyst Bruno Bokel. "I do not believe in our justice system."

(Additional reporting by Thais Freitas in Sao Paulo and Rodrigo Viga Gaier in Rio de Janeiro; Editing by Daniel Wallis)

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