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Temer resists calls to resign as hush-money scandal explodes

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Supreme Court approves inquiry into PMDB leader, who denies wrongdoing

Brazil’s President Michel Temer defiantly refused to step down yesterday after being formally placed under investigation for allegedly authorising payment of hush money to former Lower House speaker Eduardo Cunha, a disgraced politician imprisoned for corruption.

“I will not resign. I repeat: I will not resign,” he announced angrily, wagging his finger repeatedly in a brief, televised statement to the nation.

Temer’s combative reaction contrasted sharply with the mood on the markets — and in the country’s streets. His address was followed shortly after by street demonstrations in Rio de Janeiro, São Paulo, Brasilia and other cities demanding his resignation.

“Fora Temer!” (Temer out!) chanted several thousand protesters in Rio, as protesters demanded snap elections be held.

Around 24 hours after an explosive report in the O Globo newspaper that said Temer had been caught on tape agreeing to bribe the jailed politician, he faced eight formal requests for his impeachment.

There were also signs that his coalition was crumbling, with some allies calling for his resignation. Piling on the pressure, the Supreme Court greenlighted a formal investigation into Temer’s alleged wrongdoing.

Later, as the audio recording was leaked online, Temer was brazenly telling his presidential aides that the investigation to be shelved, saying nothing on the tape incriminated him.

There had been speculation that Temer would use his televised address to resign. Instead, the veteran centre-right politician — who took over last year with a promise to restore Brazil’s stability after the impeachment of leftist president Dilma Rousseff — came out swinging.

He highlighted signs this week that Brazil’s two-year recession is coming to an end and claimed that “optimism was returning” thanks to a programme of austerity reforms that he is trying to pass in Congress.

Now “those efforts may come to nothing,” he warned.

It remained unclear whether Temer’s defiance will be enough, with cracks growing in the ruling coalition, which is centred on Temer’s PMDB Brazilian Democratic Movement Party and the PSDB Social Democrats, along with a coalition of smaller parties.

The culture minister, Roberto Freire, resigned and there were indications that the urban affairs minister would follow.

Earlier, a PSDB leader, Ricardo Tripoli, told AFP that “if the evidence is confirmed, then we will ask our (ministers) to leave the government.”

Investors have been counting on Temer pushing through the austerity reforms, which include a raising of the minimum retirement age, so that Brazil’s bloated public finances can be brought under control.

Temer believes an investigation into whether he condoned hush money should be shelved after he listened to the recording that triggered a political crisis in Brasilia, a presidential aide told Reuters.

Temer found nothing that incriminates him in a recorded conversation with Joesley Batista, chairman of the world’s largest meatpacker, JBS SA, the official said, asking not be named in order to speak freely.

Many lawmakers, including some Temer allies, have called for his resignation. Brazil’s Popular Socialist Party announced it was leaving President Michel Temer’s coalition yesterday, the start of an expected exodus of allies following allegations Temer obstructed justice in the country’s biggest corruption scandal.

The party said in a statement that Culture Minister Freire had already resigned, but its other cabinet member, Defence Minister Raul Jungmann, would stay on for the sake of the country’s security at a time of crisis and uncertainty.

Temer was reported late Wednesday by O Globo to have been secretly recorded agreeing to payments of hush money to Eduardo Cunha, the disgraced former speaker of the lower house of Congress.

According to the report, the president discussed the matter with Joesley Batista, an executive from the meatpacking giant JBS, on March 7.

Batista told Temer that he was paying money to make sure that Cunha — thought to have encyclopaedic knowledge of Brazil’s notoriously dirty political world — would keep quiet while serving his jail sentence for taking bribes.

In the recording, offered as evidence in a plea bargain between Batista and his brother Wesley with prosecutors, Temer allegedly can be heard telling Batista: “You need to keep doing that, OK?”

In his statement yesterday, Temer angrily responded to the claim, saying: “I never bought anyone’s silence.”

A separate secret recording made by Batista allegedly caught Senator Aécio Neves, head of the PSDB party and a close Temer ally, asking him for a bribe of two million reais, or around US$600,000.

The Supreme Court suspended Neves. Officers could be seen entering Neves’ property in Rio de Janeiro and his sister Andrea was arrested in Belo Horizonte.

Globo published what seemed to be pictures showing men delivering a suitcase of cash for Neves.

The scandal is the latest shockwave from the wider ‘Car Wash‘ graft probe ripping through Brazilian politics.

Investigators have uncovered a massive scheme in which politicians took bribes in exchange for getting big businesses overinflated contracts with state oil company Petrobras. The bribery and embezzlement then rippled far beyond, pulling in many of the country’s most famous executives and leaders.

Until now Temer has managed to stay above the fray. Although previously alleged to have participated in large-scale bribery deals, Temer had limited immunity. He could not be prosecuted for crimes prior to his mandate. However, the hush money claims date from well within his time in office.

If he resigns, he would no longer have his case handled by the Supreme Court, but be moved to what are seen as far more aggressive, quicker-acting lower courts. If he stays, Congress could launch impeachment proceedings but that would depend on him losing his base.

“That’s why today the main question is to know whether the parties that form the government’s base will leave,” said Thomaz Pereira, constitutional law professor at the Getulio Vargas Foundation in Rio.

Herald with AFP, Reuters

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