MercoPress. South Atlantic News Agency

Pressure mounting for the ousting of Lula da Silva’s crucial Senate ally

Dilma Rousseff chances, handpicked by Lula da Silva to succeed him, could be impaired with the downfall of Senator Sarney.

Fresh reports of alleged fraud and embezzlement by Brazil Senate president Jose Sarney proliferated in Brazil's weekend press fuelling an ongoing Senate ethics scandal plus renewing pressure for Sarney to resign.

The political survival of Sarney, a former president (1985/1990) and key ally of President Lula da Silva has been in doubt for weeks following media allegations of unethical behaviour and personal enrichment, which are under police investigation.

The scandal has also exposed tensions in the ruling coalition that threaten to hold up the government's legislative agenda and hamper President Lula da Silva's plans for his hand picked chosen successor in October 2010 elections.

If Sarney is forced to resign the post most probably will fall in the hands of Lula da Silva’s coalition main opposition and their best positioned candidate for the presidential elections of 2010.

News magazine Veja reported at the weekend that Sarney had failed to report to tax authorities a foreign account he held with Banco Santos, a Brazilian bank that went bankrupt in 2004. Sarney withdrew 2.2 million reais (1.1 million USD) from Banco Santos one day before authorities intervened in the bank Veja claims, citing central bank documents used in police investigations.

Sarney and the former owner of the bank denied knowledge of the alleged account abroad Veja said. The senator said public prosecutors could investigate the charges freely.

In a separate report on Sunday, O Estado de Sao Paulo gave details of allegations that Sarney and his family pocketed sponsorship money given by the state-run oil company Petrobras to a cultural foundation carrying his name. The report said 500,000 Reais (250,000 USD) ended up in companies owned by Sarney or friends and family.

The head of the Jose Sarney Foundation said it could account for all its expenses and that the allegations by O Estado de Sao Paulo were slanderous.

Lula da Silva relies on Sarney's conservative PMDB party, which is the largest in both houses of Congress, to approve legislative proposals and to back his preferred candidate, chief of staff Dilma Rousseff, in 2010 presidential elections.

Opposition legislators now want to charge Sarney before the Senate ethics committee with nepotism and wrongdoing related to a secret spending and hiring scheme in the Senate that benefited legislators, staff and their families with perks and pay. His grandson was also involved in a banking loans scheme to the 10.000 staff of the Brazilian Senate.

To avoid a high-profile hearing and scrutiny by the media Sarney could step down, analysts said. He previously admitted receiving housing benefits he did not need and failing to declare ownership of a mansion to electoral officials.

In previous investigations the Brazilian press revealed that Sarney and his top aides had a special “bunker” built at the Senate which had all the facilities and furniture for intimate encounters and private dealings.