Apr 18, 2016

Brazil's Lower House Votes in favor of Starting Impeachment

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

After a contentious weekend in Brasilia, the Brazilian Lower House of Congress voted on Sunday to start impeachment proceeding against President Dilma Rousseff. The vote was 367 in favor and 137 against, with 342 votes needed to move the impeachment forward. The next step is to send the recommendation to the Brazilian Senate. If a majority of the senators vote in favor of conducting a trial, they will have 180 days to complete the trial. During the trial, Dilma will be temporarily suspended from the Presidency. Two thirds of the senators must then vote in favor of impeachment in order for her to be removed from office and the Vice President assume the presidency for the remaining two and half years of her term.

What she is being accused of is a technical violation of financial rules laid out in the Brazilian Constitution. Prior to her reelection in October of 2014, she is accused of burrowing money from state owned banks in order to cover shortfalls in various departments. The problem is that these loans were made in secret and not revealed to the public. These various departments should have been reducing their spending, but would not look good prior to an election. Instead, she covered up the extent of the budget deficits which were sparling out of control in an effort to paint a better picture of the economy in an effort to bolster her reelection.

What she did may have technically been against the rules, but her supporters are crying foul. They contend that there was no crime committed and certainly what she did was not enough to justify impeachment.

Here critics openly admit that her budgetary slight-of-hand is being pushed because they do not have proof of her involvement in the Petrobras corruption scandal sweeping the country. She was Chairman of the Board of Petrobras, which is a giant state-owned oil company and Brazil's largest company, when tens of billions of dollars disappeared from the company's books with most of the money being paid in bribes and kickbacks to dozens of Brazil's ruling elite, company ceo's, and high ranking Worker Party officials including the former Brazilian President Lula. The illicit funds are also suspected of being funneled to the Workers Party for their reelection efforts while Dilma was head of the party.

The Petrobras scandal comes after vote-buying schemes of the Workers Party while Lula was president in which the party paid secret monthly stipends of US$ 12,000 to opposition leaders to vote for legislation supported by Lula. Those payment are also suspected to have come illegally from Petrobras.

Part of the problem in Brazil is that there are about 700 high ranking public officials, including all the members of Congress that can only be prosecuted for corruption or money laundering by the Brazilian Supreme Court. That is why Dilma recently appointed ex-president Lula as her Chief-of-Staff in order to protect him from prosecution by a lower court. The Brazilian Supreme Court is notorious for being extremely slow in conducting its proceedings. It takes years and years to get anything through the Supreme Court and as a result, it is very rare for any politician to be convicted and sent to jail on corruption charges.

Even though the Brazilian Senate has 180 days to conduct the impeachment trial, most observers feel that it will precede quickly in an effort to get the entire affair behind them so the focus can be put on getting the Brazilian economy out of its worst economic slump in recent memory. Even though the impeachment proceedings appear to be straight forward, this is uncharted territory for Brazilian politicians, and so a vote in the Senate in favor of impeachment is far from certain.