Corruption scandal of Bolsonaro's son damages reforms in Brazil

A cloud of corruption hangs over Brazilian politics, threatening to derail the ambitious program of government reforms and destroy the hopes of citizens and investors eager for change.

This sentence could have been written many times in the last quarter of a century. But few Brazilians or foreign investors expected to read a text like this in January 2019, during the first weeks of an elected government based on a platform dedicated to eradicating corruption and promoting corruption. essential reforms that previous administrations did not want or could not implement.

The latest scandal is also in its infancy and investors will want to know more before making decisions. The recent history of Brazil shows that corruption scandals, such as clouds, often dissipate as quickly as they appear.

At the end of 2005, the scandal of "mensalÒo" (high monthly payment) was about to end the government of Luiz Inácio Lula da Silva, Left Workers Party (PT), after the discovery that some senior officials Instead of distributing the ministries to allies of the other parties in exchange for support, they were distributing money.

But then there was the global commodity boom and the beginning of a decade of prosperity. The PT's social badistance programs have helped tens of millions of people out of poverty. Luiz Inacio Lula da Silva has become a national hero and the scandal of "mensalÒo" has disappeared from the public eye.

The successor chosen by Lula da Silva, Dilma Rousseff, was not so lucky. When global conditions changed in 2014, Brazil was plunged into a terrible recession that lasted two years and is still struggling to recover. The investigation "Lava Jato" revealed the degree of PT's persistent dependence on corruption as a pathway to power, in the same way that the recession revealed the extent of its management inadequate economy. This time, the Brazilians were relentless and Rousseff was removed from his position as president in August 2016 to be replaced by an interim government that became the most unpopular in Brazil's history.

Currently, instead of "mensalÒo", we have the "mensalinho" (small monthly payment). Contrary to the huge corruption related to PT's construction projects, it is a small-scale corruption, which enriches those who receive payments, typical of the "clerro baixo" (low clergy) , from the layer of federal and federal lawmakers including the new right-wing president of Brazil, Jair Bolsonaro, and many of his congressional supporters have emerged. In a typical "mensalinho" system, legislators fill their offices with phantom staff, funded by public funds and pay their salaries.

In mid-December, prosecutors in Rio de Janeiro opened a criminal investigation into suspicious movements of bank accounts of at least 20 law enforcement personnel at the state badembly.

Among them is Fabrício Queiroz, who worked until October in the offices of Flávio Bolsonaro, son of the president then MP, currently a federal senator. Queiroz has a daughter, Nathalia, who until October was a full-time employee in the Brasilia office of Jair Bolsonaro, then a federal deputy. At the same time, she was also working as a personal trainer in Rio, posting photos with local celebrities on social media.

The details of the case have been broadcast by the Brazilian media at a rate that has become in recent days a deluge of information. As stated, Queiroz transferred R $ 7 million ($ 3.5 million) into his bank account in the three years ending in January 2017. Flávio Bolsonaro received R $ 96,000 in his bank account, deposits in one amount of R $ 2,000 each, in the middle of 2017. Prosecutors said that Flávio Bolsonaro had been the subject of a civil investigation about suspicious financial transactions, alongside 26 other deputies and former deputies of the State of Rio.

Queiroz points out that his money came from the buying and selling of automobiles; Flávio Bolsonaro said that this came from the purchase and sale of real estate. Both firmly deny any crime. The President forwarded the questions regarding Nathalia Queiroz to her office manager at the time, who did not respond to a request for comment.

Brazilian journalists who followed Jair Bolsonaro to Davos this week reported having had informal talks with foreign investors who "were concerned" that the episode could undermine the president's political capital, while "it's not easy". he needs all the support he can get from Congress. approve the controversial but vital reforms of the Brazilian pension system in deficit.

Foreign investors are right to worry. In May 2017, the interim government of President Michel Temer was about to push his pension reform to Congress after being accused of allowing bribes to other politicians. He fought the charges and survived, but his pension reform did not continue.

The question facing Brazil is what will happen first: a dangerous scandal or the rapid approval of pension reform after the resumption of Congress next month, thereby generating renewed confidence and blackout Corruption. level

Brazilian stocks have reached new heights since the election of Bolsonaro. Until now, this has been the job of local investors. In a terrible year for emerging markets, foreign investors made a net withdrawal of capital from the São Paulo Stock Exchange in 2018 and continue to represent net withdrawals so far this month. .

Local investors are apparently convinced that the Bolsonaro government will turn Brazil into a better country. Countless foreigners are waiting to see what happens.