MercoPress. South Atlantic News Agency

Rousseff administration first scandal takes off in Congress and with prosecutors

Antonio Palocci was Lula da Silva’s first ultra orthodox Finance minister but had to step down following a corruption scandal

Brazil's young government faces its first scandal involving presidential chief of staff Antonio Palocci who is under fire for revelations that, while in Congress between 2006 and 2010, his net worth multiplied 20 times.

The huge growth in wealth came from a consulting firm Palocci, a medical doctor by training, ran at the same time he was managing President Dilma Rousseff's campaign, and enabled him to purchase an apartment in Sao Paulo valued at 6.6 million Real (4.1 million USD).

Documents show most payments went to the firm at the end of 2010, after Palocci announced his retirement from consulting to enter Rousseff's government. Palocci changed the firm's mission from consulting to real estate management two days before he took office as Rousseff's chief of staff.

Members of Congress owning businesses are not a crime in Brazil, but influence peddling is.

Palocci has been a Wall Street market favorite ever since he served as President Lula da Silva's first Finance minister, and was credited with bringing down inflation and restoring fiscal stability. But he was forced out of that post over accusations of corruption and witness intimidation.

The charges were unproven and subsequently dropped, though public memory of that scandal has kept him mostly out of the spotlight in the current government.

However he is still a very influential minister and a voice of macroeconomic orthodoxy within the government, especially as a counterweight to Finance Minister Guido Mantega.

President Rousseff has expressed her full confidence in the former Trotskyite Palocci, but the main opposition party, the PSDB, expects to have enough signatures to form a parliamentary inquiry commission (CPI) to investigate Palocci.

Prosecutors have also opened an investigation and are demanding information on his tax statements.