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Cablegate: Scandal Indictments Against Ex-Officials Seen As A

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UNCLAS SECTION 01 OF 02 BRASILIA 001670

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV BR
SUBJECT: SCANDAL INDICTMENTS AGAINST EX-OFFICIALS SEEN AS A
STEP AGAINST IMPUNITY

REF: A. 06 BRASILIA 1996

B. 06 BRASILIA 2027
C. 06 BRASILIA 2064
D. 06 BRASILIA 2246

1. (U) Summary. In rulings seen by Brazilians as an
important step forward in countering impunity, the Brazilian
Supreme Court has allowed prosecution to proceed against all
40 individuals accused in the "mensalao" ("monthly payola")
political scandal that rocked the Lula presidency in 2005.
In hearings and multiple rulings over several days,
concluding on August 28, the Court ruled against former
presidential palace minister Jose Dirceu, along with former
senior Workers Party (PT) officials and current and former
federal deputies from five parties in the government
coalition. A blow to the PT and President Luiz Inacio Lula
da Silva (Lula), the decisions ensure that a series of
long-lasting high profile court cases will keep the mensalao
and its defendants in the news for a long time - probably
into the 2010 national elections cycle. Although President
Lula has always escaped incrimination in the scandal and his
personal popularity remains high, many Brazilians believe he
approved the illegal congressional vote-buying scheme. With
convictions widely expected, the Supreme Court's image and
reputation are now also at stake before the public. End
summary.

2. (U) The mensalao, which broke two years ago with
revelations of PT payoffs to congressmen in exchange for
their votes on key legislation, reached a turning point in a
week of hearings in which the Supreme Court (Supremo Tribunal
Federal), issued multiple rulings that put all 40 of the
accused in the defendant's dock. Jose Dirceu, chief of the
Civil Household during Lula's first term; Delubio Soares,
former PT treasurer; Jose Genoino, former PT president and a
sitting federal deputy; Silvio Pereira, former PT executive
secretary; Marcos Valerio, a publicist who handled financial

SIPDIS
transactions; Roberto Jefferson, the former federal deputy
who revealed the vote-buying scheme; Anderson Adauto, former
Transportation Minister; Luiz Gushiken, former Government
Communications Secretary; and a number of current and former
federal deputies now face multiple charges that include
embezzlement, active and passive corruption, undeclared
international financial transactions, money laundering, and
fraudulent public administration. The most dramatic aspect
) and potentially the most politically damaging ) was the
Court's unanimous acceptance of rapporteur Judge Joaquim
Barbosa's recommendation that Dirceu, Soares, Genoino, and
Pereira be charged with forming a criminal gang.

3. (SBU) The trials could take three years, according to
Marco Aurelio Mello, one of the STF judges. In conversations
with poloffs, political analysts and a judge agreed that a
"short" three-year process was likely. Moreover, the PT may
push for early verdicts, as a three-year process would have
verdicts being handed down during the final stretch of the
presidential campaign.

4. (U) The Court has tried political corruption cases
before, but it has never convicted anyone. This time,
however, even though Lula appointed seven of the eleven
judges, many informed observers expect convictions. During
the hearings last week, a photo scoop by a photographer from
O Globo, a leading national daily, revealed an embarrassing
instant message thread between two judges. The revelation
was a wake-up call for the Court. The judges apparently were
in violation of rules prohibiting prior discussion and
agreement on decisions. As a result of the slip and the high
profile of the case there is a sense here that the Court
itself is on trial before the public.

5. (SBU) Comment: The Court's decision to go ahead with
prosecution guarantees years of mensalao trial reporting, a
constant reminder to the public that the leaders of the PT --
which once touted itself as untainted by corruption --
conceived and carried out a massive, multi-million dollar
congressional vote-buying scheme. While the scandal did not
affect Lula's re-election last year (refs A, B, C, and D) and
he remains personally popular, the trials will be a thorn in
the government's and the PT's side, and could hurt the PT in
October 2008 municipal and state elections and October 2010
national elections, heralding a change in public expectations

BRASILIA 00001670 002 OF 002


of politicians and the courts. In a country where impunity
is considered one of the top social evils, contributing to
the high crime rate and tolerance for political corruption,
convictions in the mensalao trials could also increase public
confidence in the courts, and would be widely seen as a legal
and political watershed.

Chicola

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