President Michel Temer faced new pressure to resign Friday, after Brazil’s supreme court said prosecutors are investigating him for obstruction of justice and corruption, and a government witness claimed his company paid US$1.5 million to Temer in bribes. A day after the release of surreptitious audio recordings in which Temer seemed to condone a criminal cover up in the “Car Wash” investigation, the court released testimony accusing him of soliciting illegal payments from meatpacking firm JBS.
The court also put out new videotape accusations by the company’s chairman claiming former presidents Dilma Rousseff and Luiz Ignacio “Lula” da Silva each received tens of millions of dollars in dirty money from the company. He claimed the illegal payments were destined for campaign slush funds.
Temer has told Brazilians he’s done nothing wrong, rejecting calls for his resignation Thursday in a defiant statement on national television. But the new charges have left his survival more imperiled than ever, and the country’s influential newspaper O Globo called on him to step down in an editorial Friday.
The two-day cascade of scandalous news has deepened Brazil’s misery, crashing financial markets and wiping out incipient signs of recovery from the country’s worst economic slump.
It is not the first time Temer, Lula and Rousseff have been accused of wrongdoing by witnesses cooperating with the Car Wash probe, which has jailed and disgraced dozens of business executives and politicians and uncovered billions in kickbacks. Many of the accused have turned to snitching on one another or wearing recording devices in hopes of ducking prison.
For three years Brazil has been gripped by the sprawling investigation, named for the humble carwash that first alerted authorities to extensive networks of graft. Crusading federal prosecutors say they must drain the swamp of kickbacks, bribery and cronyism that are swallowing the country’s political system.
The latest plea-bargain testimony to become public was provided by meat industry tycoon Joesley Batista and another company executive. They claim that their firm funneled around US$150 million to Lula and Rousseff. Both former presidents have long maintained their innocence.
Rousseff was impeached last year on a separate allegation of budget irregularities and was replaced with Temer. At the time, it seemed that Brazil had hit rock-bottom. But this week’s revelations have put the country right back in a hole.
The Temer allegations risk a new drawn-out legal fight and the undermining of his economic program— a combination of spending cuts and pension reforms that were Brazil’s best hope for luring back foreign investors.
By defying calls to step down, Temer appears to be betting he can muddle through the latest scandal and serve out the remaining 16 months of his term, analysts said. But with rumors circulating of additional recordings yet to be released and calls for his removal growing louder than ever, he may be too crippled to effectively govern, analysts said.
The latest scandal began on Wednesday, when O Globo newspaper said it had obtained an explosive recording in which Temer supported corruption. The conversation was secretly taped by Batista, who unbeknown to the president had been swept up in the corruption probe and agreed to cooperate with investigators.
On the recording, Batista informs Temer that he’s been making payments to buy the silence of jailed former congressional leader Eduardo Cunha, who is serving a 15-year term for corruption. The Brazilian president is heard telling the business executive to “keep that up.”
On Friday, after the recording was released, analysts said it did not appear to be as damning to the president as initially thought. Temer’s defenders will probably assert that his words merely indicated a desire to provide moral support for Cunha. But while that may be enough for Temer to avoid a conviction, the episode has left him so damaged that he may be unable to regain the backing of the allies in congress he needs to pass his austerity measures.
Even top officials from Temer’s inner circle appear to be hedging against his survival. Economic minister Henrique Meirelles told investors Friday he believed Temer would be able to hold on to power, but that he was also willing to stay on under a different administration to limit the impact of the political turbulence on the market.
There are several ways Temer could fall. One immediate risk to his presidency may be Brazil’s electoral courts which are considering whether to annul the country’s 2014 election result over allegations of illegal campaign donations. Temer ran as vice president on Rousseff’s ticket that year, though the two are not from the same party