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Cablegate: Brazil: Little Hope Offered On International

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DE RUEHBR #0041/01 0071756
ZNR UUUUU ZZH
R 071756Z JAN 08 ZDK CITE RUEHSG 3643 0071856
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0801
INFO RUEHAC/AMEMBASSY ASUNCION 6498
RUEHBU/AMEMBASSY BUENOS AIRES 5221
RUEHLP/AMEMBASSY LA PAZ 5859
RUEHMN/AMEMBASSY MONTEVIDEO 7164
RUEHSG/AMEMBASSY SANTIAGO 0085
RUEHRG/AMCONSUL RECIFE 7577
RUEHRI/AMCONSUL RIO DE JANEIRO 5659
RUEHSO/AMCONSUL SAO PAULO 1433

UNCLAS SECTION 01 OF 03 BRASILIA 000041

SIPDIS

SIPDIS

FOR WHA, WHA/BSC, AND INL

E.O. 12958: N/A
TAGS: PGOV KCRM KCOR KDEM BR
SUBJECT: BRAZIL: LITTLE HOPE OFFERED ON INTERNATIONAL
ANTI-CORRUPTION DAY

BRASILIA 00000041 001.2 OF 003


1. (U) Summary: In commemoration of International
Anti-Corruption Day, the regional office of the United
Nations' Office on Drugs and Crime together with the
University of Brasilia sponsored a roundtable with senior
Brazilian government officials from the judicial and
legislative branches, media members, academics, and civil
society leaders to discuss the status of corruption in Brazil
and the fight against it. The panelists offered a mixed
picture of Brazil's struggle, with some offering praise for
the steps Brazil has taken in the last few years while others
focused on the persistent challenges Brazil faces. A few
positive signs emerged from the roundtable, but overall the
picture remains bleak. In addition to pointing a finger at
the usual suspects--self-interested politicians, systemic
inefficiencies, an unhelpful private sector--perhaps
surprisingly, panelists cast blame on an apathetic Brazilian
public for tolerating the current level of corruption. End
Summary.

--------------------------------------------- -----
The Government's View: More Aggressive than Ever
--------------------------------------------- -----

2. (U) On December 10, poloff attended a roundtable on
corruption sponsored jointly by the regional office of the
United Nations' Office on Drugs and Crime (UNODC) and the
University of Brasilia (UnB). Panel participants included a
broad range of government officials and representatives from
the media, academic, and civil society spheres:
Comptroller-General of Brazil (CGU) Jorge Hage; Superior
Court (STJ) Justice Gilson Dipp; Federal Deputy and leader of
the Congressional Anti-Corruption Caucus Paulo Rubem Santiago
(PDT, Democratic Labor Party, government coalition; of
Pernambuco); highly influential O Globo commentator Miriam
Leitao; UNODC's Giovanni Quaglia; UnB Professor Ricardo
Caldas; "Instituto Ethos de Responsabilidade Social" (a
private sector institute created to fight corruption)
President Ricardo Young; Gil Castelo Branco of "Contas
Abertas" (an anti-corruption NGO); Juliette Gaasenbeek of the
Christian Movement against Corruption (CRISCOR), and Joao
Geraldo Piquet Carneiro, president of the Helio Beltrao
Institute (a good governance NGO), who moderated the
roundtable.

3. (U) Making the government's case, Comptroller-General
Hage asserted that corruption is fought vigorously in Brazil.
According to Hage, "there is no scientific evidence that
corruption is increasing." Rather, perception of it is on
the rise because there are more investigations than ever.
One aspect of the government's fight against corruption that
is not well publicized because it does not lead to court
cases, according to Hage, is the 1500 public officials who
have suffered some form of administrative punishment. (Note:
A December 9, 2007 article in "Correio Braziliense" reported
the figure as 1,382. End note.)

4. (U) According to Hage, the government made a decision in
2003 to strengthen the government's instruments to fight
corruption. These measures included beefing up the CGU and
the Tribunal de Contas da Uniao (TCU - the government's
accounting and auditing office), placing a comptroller in
each government entity, establishing an anti-money laundering
lab within the Ministry of Justice and formulating a national
Strategy to Combat Money Laundering (ENCLA), and opening the
government's books to the independent Public Ministry (the
constitutionally established autonomous body of prosecutors).
Under this government, according to Hage, the Federal Police
was given a free hand to investigate corruption and has
undertaken over 400 anti-corruption operations over the last
few years. It also established a transparency portal on the
internet (www.portaltransparencia.gov.br) that purports to
track all government expenditures by the federal government.
For Hage, this government has been more open and transparent
than any previous government.

---------------------------
Others Beg to Differ
---------------------------

5. (U) Most of the other participants at the roundtable took
a less sanguine view of the challenges Brazil faces.
According to Federal Deputy Santiago, Brazil continues to

BRASILIA 00000041 002.3 OF 003


tolerate corruption at all levels. The problem is
particularly acute in the states. There is little
transparency at the state level, and since more than 70% of
state funds come from federal transfers, it does not matter
how much the federal government keeps its accounts clean,
corruption will persist.

6. (U) The federal budget process also needs to be reformed,
particularly earmarks, which often go to finance enrichment
schemes for Members of Congress. According to Santiago, many
NGOs are a faade for corruption, and there is little
oversight of them. It is common practice among federal
deputies to set up NGOs and staff them with family members
and associates and then include earmarks in the federal
budget for them. Santiago stated that any effort at reducing
corruption has to include more transparency in the budget and
greater oversight of NGOs. (Comment: a CPI, or special
congressional investigative committee, was convened last year
to investigate NGOs, but has not finished its work. Post
will report on the CPI's work septel. This high-profile
problem adds an additional hurdle to efforts to encourage the
GOB to work more with NGOs. End Comment.)

7. (U) Santiago called for curtailing or altogether ending
the "foro privilegiado," a privilege granted to all Senators
and Federal Deputies, state governors, and most high-level
executive and judiciary branch officials, which entitles them
to have any accusations against them heard by either the
Federal Supreme Court (STF) or the Superior Court of Justice
(the highest appellate court on non-constitutional matters).
As both courts are severely backlogged, the cases take years
to be decided. Unless the "foro privilegiado" is drastically
curtailed, Brazil will not be able to do much about
corruption, Santiago said. (Comment: according to the
Associacao dos Magistrados Brasileiros, in 2006 the STF
rendered judgments on 110,284 cases in 2006, and STJ 262,343.
End comment.) In one recent case, as an eight-year process
against a member of congress in the "foro privilegiado" drew
to a close with the finding almost certainly against the
member, the deputy in question resigned, which automatically
moved the case back into the regular court system, where it
was to begin from scratch.

--------------------------------------------- -----------------
Private Sector Also a Factor, But is it Taking Responsibility?
--------------------------------------------- -----------------

8. (U) For O Globo's Leitao, a missing element in the fight
against corruption is the private sector. She decried what
she called the complicit role of corporations that complain
to her about solicitations for bribes, while doing little to
stop it--such as recording phone calls. The private sector
representative, Young from Instituto Ethos, partly agreed
with Leitao, but added that the private sector is taking
action. In 2005, the entrepreneurial sector banded together
and launched the "Corporate Pact for Integrity and Against
Corruption," which currently has 1,289 companies and other
entities as signatories, as well as a website
(www.empresalimpa.org.br). Signatories participate in
seminars on private practices to discourage corruption and
agree to abide by the pact's guidelines which, according to
Young, were praised by World Economic Forum as one of the
best such documents produced by the private sector anywhere
in the world.

---------------------------
Civil Society Missing
---------------------------

9. (U) Despite public opinion polls that consistently show
that combating corruption is one of the issues that registers
atop the list of concerns for Brazilians, Castelo Branco
claimed that in the corruption debate, "society is the
missing element", as it is simply not mobilized against
corruption. His organization, "Contas Abertas", was started
two years ago to help change this, but it remains an uphill
struggle. UnB's Caldas cited polls reinforcing Castelo
Branco's points. He cited a poll of Federal District
residents showing that 25% claimed to have directly
participated in corrupt acts. Furthermore, according to
Caldas the general public's lack of civic involvement is a
widespread phenomenon not limited to the issue of corruption.

BRASILIA 00000041 003.2 OF 003


According to the same poll only 7% of those polled claimed
they participated in some community or civil society
organization.

---------------------------
Much Work to be Done
---------------------------

10. (U) There was wide consensus among the group on the
persistence of corruption in Brazil, even if there was
divergence on whether the trend was improving or worsening.
Participants cited a number of reasons to be pessimistic.
Castelo Branco cited a "Correio Braziliense" headline from
that day's paper discussing the long delays in resolving
cases of corruption and misappropriation of funds handled by
the TCU. These often take between 5-10 years to resolve, and
in almost 200 cases took between 10-18 years. Another
participant cited a recent TCU finding that 33% of the
audited projects funded by the government's key
infrastructure initiative, the Accelerated Growth Program
(PAC), contained enough irregularities to merit halting the
projects.

11. (U) Federal Deputy Santiago called attention to
proposals the anti-corruption caucus he heads has made before
the Chamber leadership. Some of these include limiting the
scope of the "foro privilegiado"--which currently goes into
effect even on accusations related to events prior to the
accused official's public service-- imposing harsher
penalties for acts of corruption, calling for greater
transparency and greater access for the public of government
data on spending, forcing government agencies to divulge its
expenditures over the internet in real time, prohibiting
private parties from gaining public contracts for 15 years,
and establishing specialized courts to deal with corruption
cases. Unfortunately, noted Santiago, despite a commitment
from the Chamber leadership, no action has been taken on the
proposals.

------------
Comment:
------------

12. (SBU) Despite consensus on the consequences of rampant
corruption--loss of confidence in government institutions,
erosion of faith in democracy, costs to the economy,
etc.--and the measures needed to reduce corruption, the
roundtable did not leave much ground for optimism. Clearly,
perception of corruption among the public has not changed
much over the last several years, or has worsened (Brazil's
ranking in Transparency International's perceptions index has
fallen from 62 to 70 to 72 over the last three years).
Whether that is despite of or because of what the government
claims is their more aggressive approach remains in dispute.
What is not in dispute is that any credit the Lula government
deserves for its anti-corruption actions--the transparency
portal, administrative actions against government employees,
giving free hand to the Federal Police--is undermined by
scandals that have stained the PT's image as the
anti-corruption party. Unrelenting coverage of political
scandals and lack of action on anti-corruption proposals will
continue to reinforce the public's cynicism and belief that
the corruption problem is intractable, which will impede the
already difficult task of mobilizing society to demand
actions from the government. Such mobilization seems to be
the essential, but as yet missing, component of an effective
effort to reduce corruption and impunity in Brazil.

SOBEL

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