IMF in Brazil's scandals

[Robert Weissman <rob@essential.org>]

>From WEEKLY NEWS UPDATE ON THE AMERICAS. Full citation at the bottom:

SECRET TAPES SHAKE BRAZIL'S PRESIDENT AND MARKETS

A coalition of Brazil's leftist parties tried unsuccessfully on May 25 to
open the way to an impeachment of President Fernando Henrique Cardoso just
five months into his second term in office. Federal deputy Vivaldo Barbosa
of the Democratic Labor Party (PDT) presented a request for the opening of
impeachment proceedings around Cardoso's alleged participation in
irregularities in the sale of the state-owned telephone company,
Telecomunicacoes Brasileiras SA (Telebras), on July 29, 1998. Meanwhile, the
Workers Party (PT) requested a Parliamentary Investigation Commission (CPI)
to look into the entire Telebras privatization. [El Diario-La Prensa 5/26/99
from AFP]

The impeachment effort was set off by the publication in the daily Folha de
Sao Paulo on May 25 of transcripts of telephone conversations between
President Cardoso and other officials. The 13 pages of transcripts were made
from 46 illegal tapes of conversations about influencing the direction of
the privatization. Communications Minister Luiz Carlos Mendonca de Barros
and National Bank of Economic and Social Development (BNDES) president Andre
Lara Resende resigned last November after secret tapes revealed their role
in an attempt to influence the Telebras selloff [see Update #461]. In one of
the new tapes, Cardoso is heard authorizing the use of his name to pressure
the state-owned Banco de Brasil and the pension fund for its employees,
Previ, to join a consortium with Opportunity Bank and Stet to bid in the
privatization. "No doubt about it," the president tells Lara Resende on the
tape when Lara Resende proposes using his name. [Clarin (Buenos Aires)
5/26/99]

Cardoso immediately denounced Folha de Sao Paulo's reports as
"sensationalist" and "obscur[ing] the fundamental facts." The news of
Cardoso's involvement in the scandal drove stock prices down by 4.95% on May
25; the currency, the real, fell from 1.72 to 1.75 to the US dollar. Stock
prices had already fallen almost 5% the day before on fears that Argentina
might free its peso from strict convertibility with the US dollar.
[Financial Times (UK) 5/26/99; New York Times 5/25/99, 5/26/99] The problems
with the Argentine peso and the Brazilian president followed glowing reports
in the US media that Cardoso's government had overcome the economic problems
that accompanied the devaluation in January. [NYT 5/23/99]

A new scandal broke out on May 28 when Folha de Sao Paulo published a
transcript of a phone conversation between Lara Resende and Finance Minister
Pedro Malan in mid-September about a speech on the economy that Cardoso,
then campaigning for reelection, was to give on Sept. 23. "Are you going to
speak to Stanley Fischer?" Malan asks Lara Resende, referring to the second
in command of the International Monetary Fund (IMF). "I am," Lara Resende
answers. "Both the Fund and the [US] Treasury are asking us to let them read
[the speech] in advance," Malan says. "Hum," Lara Resende answers. "The
idea," Malan says, "is that they come up with an expression of support. Can
you speak [with Fischer] on this question?" "I'm going to talk to him now,"
Lara Resende answers. Interviewed by Folha de Sao Paulo, Stanley
Fischer denied having asked to read the speech and said there must have been
a "translation error" by Malan. Malan is said to speak perfect English.
[Clarin 5/29/99]

With the ruling coalition blocking impeachment efforts, leftist parties met
on May 29 to declare themselves "on a war footing" against Cardoso and his
economic policies. PT president Jose Dirceu said he was sure the left was
able "to bring 100,000 people to the Palace of Planalto [government palace]
to demonstrate to Cardoso that the people don't like him or support  him."
[La Republica (Lima) 5/30/99 from EFE] According to a poll taken by the
Brazilian Institute of Public Opinion and Statistics (IBOPE) among 2,000
people May 13-17, Cardoso's approval rating is now 18%, down from 51% in
March 1997, and 44% rate his performance in office as "very bad." [LR
5/28/99 from EFE]

Source:
WEEKLY NEWS UPDATE ON THE AMERICAS - ISSUE #487, MAY 30, 1999
  NICARAGUA SOLIDARITY NETWORK OF GREATER NEW YORK
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