From: mariof@sco.COM (Mario Faria)
Subject: news from Brazil
Organization: The Santa Cruz Operation, Inc.
Date: Wed, 29 Jul 1992 22:58:04 GMT



COLLOR DEFENCE CALMS BRAZIL MARKETS, ACCUSERS ...
    By Katherine King
    SAO PAULO, Brazil, July 28, Reuter - Testimony by a former
close aide that President Fernando Collor was not involved in a
payoff scheme soothed Brazilian stock markets but failed to sway
investigators, who on Tuesday took their inquiry abroad.
    The scandal over corruption charges had shaken Collor's
government to its core and troubled financial markets in Latin
America's biggest nation, leading to calls for Collor's
resignation or impeachment.
    The scandal took a new turn on Monday when the former aide
to Collor, Claudio Vieira, told a congressional panel
investigating the charges that money deposited in the account of
Collor's secretary came from a legitimate loan, not a payoff
from an influence-peddling scheme as investigators suspected.
    Vieira who had worked under Collor as his executive
secretary said funds in the secretary's account came from a $5
million loan from a Uruguayan financial institution in 1989 to
help Collor pay for his presidential campaign.
    The former aides' nervous, sometimes earnest testimony
provoked open laughter from the audience at the hearing.
    Sceptical panel members called a halt to the session
demanding more proof and giving Vieira three days to produce
documentation. He was scheduled to testify again on Thursday.
    The scandal broke in May when Collor's younger brother Pedro
charged the president's former campaign treasurer was operating
a "parallel power scheme" by selling favours and fixing bids
in a shadowy operation using the president's name.
    A daily flood of charges in the press had tightened the
circle of accusations around Collor, shaking stock markets and
bringing legislative activity to a virtual halt.
    Congressional investigators led by panel president Benito
Gama left on Tuesday for Uruguay, Brazil's southern neighbour,
to interview personally those responsible for the loan. The
investigators were due to return on Wednesday.
    Collor did not comment on the latest events. In the past he
had steadfastly denied all charges.
    Vieira's testimony drew a sigh of relief from battered
Brazilian stock markets, which closed up three per cent on
Monday and rose in early trading on Tuesday.
    "The evidence is convincing and excludes the president from
any responsibility," Collor's Social Action Minister Ricardo
Fiuza said.
    But investigators and the Brazilian press which has been
pummeling the president with daily revelations of new corruption
charges declared themselves unconvinced.
    "The testimony...offered the nation just one more obscure,
tentative, apparently fantastic explanation, that by all
appearances was very badly documented," newspaper Folha de Sao
Paulo wrote in an editorial.

---------------------------

PRISONERS' UPRISING KILLS 13 IN RIO DE JANEIRO
Monday that a bloody prisoners' uprising over the weekend had
left 13 dead and four wounded in Rio de Janeiro.
    Authorities were investigating whether excess force may have
been used in controlling the uprising, which occurred Sunday in
a police station in Sao Joao de Meriti, a crime-ridden suburb of
Rio. Eighty-five prisoners trying to escape took two policemen
serving lunch hostage.
    Prisoners later murdered one of the police officers, Jose
Roberto Brito.
    After several hours of negotiations police burst into the
station to rescue the remaining officer and a shootout erupted,
the spokesman said.
    Police used revolvers, machine guns and tear gas bombs to
control the prisoners, the Jornal do Brasil newspaper reported.
    The prisoners used the guns they took off their hostages.
    "A legal use of public force was used to control the
rebellion," Rio state Civil Police Chief Nilo Batista was
quoted in the Jornal do Brasil as saying.
    Police have opened an investigation into the matter.
    Police station cells are supposed to be used for prisoners
in transit. But severe overcrowding in Brazil's jails means
criminals often spend long periods of time in police stations.

-------------------------------------

BRAZIL SCANDAL RAISES SPECTRE OF IMPEACHMENT
    BRASILIA, Brazil, July 25, Reuter - Brazil's seven-year-old
democracy is facing its hardest test yet as an investigation
into a scandal surrounding President Fernando Collor de Mello
opens the possibility of an impeachment.
    Just a few months ago the idea of putting Collor on trial
for his alleged links to what investigators say is an influence
peddling network was unthinkable.
    Barely 40 years old in 1990 when he became Brazil's first
directly elected president to take office after nearly three
decades of military dictatorship, Collor seemed to many the
embodiment of the country's promising future.
    But congressional investigators say the volume of evidence
that has emerged in the last week has convinced them they must
consider preparing for a possible impeachment proceeding.
    The central bank turned over some 30,000 documents including
bank statements, checks and receipts to a panel investigating
the corruption allegations on Monday.
    Details of the documents which have been leaked to the press
reportedly show the president may have profited from his links
to Paulo Cesar Farias, his former campaign treasurer and top
aide and the alleged mastermind of the scheme.
    Although the press has only shown second hand accounts of
this evidence, top legislators said they now believe that the
president reaped financial benefits from the scheme.
    "The president said he was paying for his home expenses
himself. The documents I have seen show that is not true,"
senator Eduardo Suplicy said.
    The investigative committee is scheduled to reveal all the
contents of its inquiry on August 11.
    Collor, who was in Barcelona on Saturday for the
inauguration of the Olympic Games, dismissed the latest charges.
    "There is no crisis in Brazil which concerns us at this
point in time," he told reporters in Madrid when asked about
the scandal.
    But politicians in the Brazilian capital said they feel that
if Collor expects to remain in office he will have a lot of
explaining to do when he returns to on Monday morning.
    "Either President Fernando Collor returns from his trip to
Spain and clears up definitively the accusations that envelop
him...or the political leadership will have to take control of
the crisis," Tasso Jereissati, president of the Brasilian
Social Democratic Party, said in a column in the daily O Globo.
    Jereissati said what was at stake was not political power
but the democratic system's capacity to resolve its own crises
and the credibility of the country's political leaders.
    Already some of congress' most influential legislators are
working on a political pact that would prevent the country from
coming to a stop should it come to an impeachment.
    "It is a contingency plan in case he falls," Ana Tavaes an
aide to Senator Fernando Henrique Cardoso said.
    Business leaders have sent a clear message to politicians
that whether Collor stays or is forced out, they will continue
to support democracy. But they said they wanted no changes in
his open market economic policies.
    The military, which ran the country after a 1964 coup and
until 1985, has been unwilling to go on the record about the
scandal.
    But public appearences by senior officers alongside Vice
President Itamar Franco in the three days that Collor has been
away have been interpreted as a sign that the armed forces will
not interfere with the institutional system.
    The members of Collor's largely apolitical and well
respected cabinet have remained dead silent on the scandal. But
observers wonder how long they will be willing to serve under a
president whose reputation has been so tarnished.
    Analysts say Collor's survival depends on whether his
explanations upon his return are strong enough to convince the
the Liberal Front Party (PFL), his main support in Congress,
that they have more to lose if they drop him than if they
continue behind him.
    "Nobody is willing to risk his career for the president,"
a Latin American diplomat said. "Let's wait and see what he has
to say on Monday."

--------------------------------------

COLLOR CREDIBILITY CRUMBLES UNDER SCRUTINY
    By Adrian Dickson
    BRASILIA, July 29, Reuter - President Fernando Collor's
credibility appeared to be crumbling on Wednesday as
congressional investigators scrutinised a government account
that tried to distance him from a corruption scandal threatening
his future in office.
    Members of a congressional committee investigating charges
of influence peddling among some of the president's top former
aides travelled as far as neighbouring Uruguay to check up on
the Collor camp's version of the events.
    In a hearing scheduled for Thursday the investigators are
expected to pound Claudio Vieira, the president's former
personal secretary, with new questions about his statement on
Monday that in 1989 he took a $5 million loan from a Uruguayan
financial institution in Collor's name to help finance the 1990
presidential campaign.
    The committee is investigating charges that the $5 million
was not a legitimate loan from a bank but the payoff from an
influence-peddling scheme. Investigators travelled to Uruguay on
Tuesday to interview personally those responsible for the
Uruguay loan and were expected to return on Wednesday.
    The allegations of corruption broke in May when the
president's younger brother said publicly that Paulo Cesar
Farias, Collor's former campaign manager, was sharing the
proceeds of the alleged influence peddling scheme with the
president.
    The investigation gathered steam last week when congressmen
received over 30,000 documents from the Central Bank which they
say traced the money trail from Farias to very close to the
presidency.
    Collor has consistently denied all the charges against him,
but he has made no reference to the accusations nor met with the
press since he returned over the weekend from a trip to Spain.
    On Wednesday Collor travelled to the interior of Brazil to
attend a military ceremony.
    The corruption scandal has shaken financial markets and led
to calls for Collor's resignation. The Sao Paulo stock exchange
was down more than four per cent at midday on Wednesday due to
general pessimism resulting from the crisis.
    In testimony on Monday Vieira claimed that a flood of
contributions from private sources made the $5 million loan
unnecessary for the campaign.
    He said that once elected, Collor used the money for his
personal expenses including extensive modifications to the
presidential residence.
    Although Vieira provided a file of documents to back up his
account, to many his story does not ring true.
    "It doesn't seem very logical," Senator Mario Covas said.
If events happened as Vieira said, why then had Collor not made
a clean breast of it two months ago and saved the country so
much anxiety, he asked.
    "The financial market as a whole chuckled when they heard
the explanation," a Sao Paulo-based foreign debt trader who
asked not to be identified said.
    Vieira will be under intense pressure on Thursday to make
his account sound believable in order to contain a growing
movement in Congress favouring an impeachment.
    The congressional committee interrupted Vieira's hearing on
Monday and ordered him to return with documents showing step by
step how the money from the loan entered Brazil and was
eventually used to pay for Collor's expenses.

---------------------------------

Brazilian president embroiled in corruption scandal
By RICARDO SOCA
   RIO DE JANEIRO (UPI) -- President Fernando Collor de Mello slipped
towards a congressional impeachment trial Wednesday when a senator
announced he had a "key witness" to prove the president accepted
bribes from his former campaign chairman.
   Collor faces a congressional inquiry that has been hearing testimony
on the charges for two months from secretaries, assistants and
legislators.
   Sen. Eduardo Matarazzo Suplicy said Wednesday that Sandra Fernandes
de Oliveira, a secretary for a prominent supermarket baron, would
completely discredit testimony made Tuesday by a former Collor secretary
that the president took out a $5 million loan in Uruguay. The loan
allegedly financed payments critics say were in fact bribes provided by
the private businessman Paulo Cesar Farias.
   Matarazzo said the alleged Uruguayan loan was a "comedy" invented
by the former secretary, Claudio Vieira, presidential secretary Marcos
Coimbra and Banco do Brasil president Lafaiete Coutinho.
   The witness was scheduled to appear before the congressional
investigating committee late Wednesday.
   A lawmaker who asked not to be identified told United Press
International that the testimony of Fernandes de Oliveira would be a 
"bomb" to end the work of the investigating committee.
   Meanwhile, the presidents of the major political opposition parties,
which hold a congressional majority, Tuesday agreed to call for an
impeachment trail against Collor if the investigating committee proves
he was involved in corruption.
   Collor has been walking a political tightrope since late May when his
brother Pedro accused him of taking bribes from Farias, a millionaire
businessman and the manager of Collor's successful presidential campaign
three years ago.
   Farias allegedly extorted bribes from investors for government
contracts, evaded taxes and served as a front man in conducting shady
business deals for President Collor.
   Investigating lawmakers allegedly discovered that Farias was
transferring thousands of dollars to the bank account of the Brazilian
first lady, Rosane.
   But Collor's former secretary Claudio Vieira on Tuesday told the
investigating committee he took out a $5 million loan from a Uruguayan
company in 1989 and bought 320 tons of gold, which he said he cashing in
whenever President Collor needed cash.
   Vieira claims money that allegedy came from Farias was in fact cashed
in gold from the Uruguayan loan. Brazilian lawmakers flew to Uruguay
Tuesday to investigate the claim.
   Meanwhile in Brasilia, the committee was also hearing testimony
Wednesday of former incumbent lawmaker Sebastiao Curio, who claims
Farias gave him a $120,000 campaign contribution in 1990 on Collor's
orders.

-------------------------------

BRAZIL SENATOR SAYS COLLOR AIDES FAKED DEFENSE
    By Adrian Dickson
    BRASILIA, July 29, Reuter - A top Brazilian senator said on
Wednesday he had evidence that President Fernando Collor's
former aides fabricated the defence of the president they
presented on Monday to congressmen investigating government
corruption.
    The speech by Eduardo Suplicy, a prominent senator of the
opposition Labour Party, sparked a sharp drop in Brazilian stock
exchanges, which shortly before the close were down 7.2 per cent
over the previous close.
    The corruption scandal has shaken Collor's government to its
core and led to speculation the president might resign or be
impeached.
    Suplicy, in a speech on the floor of the Senate, identified
a secretary he said was present at meetings in July in Sao Paulo
during which the alleged fabrication took place.
    He said the secretary, Sandra Fernandes de Oliviera, was
prepared to testify before the congressional panel investigating
the corruption charges.
    According to Suplicy, the secretary said she saw Collor's
former aide Claudio Vieira take part in the meeting, along with
Paulo Cesar Farias, the focus of the corruption investigation,
in mid-July.
    Collor's spokesmen were not available for comment.
    After his speech, Suplicy was asked why the secretary had
not come forward until now.
    "Because the facts have been developed in such a way that
her conscience could not allow her to keep this to herself," he
said.
    At his testimony to congressional investigators on Monday,
Collor's former aide Vieira offered documents to back up his
contention that the source of large sums of money in the account
of Collor's personal secretary was a $5 million loan from an
Uruguayan financial institution.
    Investigators had suspected the money came through official
graft. Suplicy said Oliviera "tells how over the last 20
days...this document (presented by Vieira) was put together."
    Congressmen are investigating charges that the funds, used
to pay Collor's personal expenses including a million dollar
renovation of the garden at his residence, were from an
influence-peddling scheme.
    Suplicy said that Oliviera was prepared to testify that
Vieira invented the Uruguay story with Farias and Sao Paulo
businessman Alcides dos Santos Diniz in Diniz's Sao Paulo
offices.
    Oliviera is Diniz's secretary, Suplicy said. He said
Oliviera had been scheduled to testify Thursday morning.
    Suplicy's charges were the most serious to date in Brazil's
three-month-old political crisis, sparked in May when Collor's
younger brother Pedro accused the president of turning a blind
eye to influence-peddling and racketeering.
    The graft schemes were allegedly run by Farias, Collor's
former campaign treasurer.
    Both Collor and Farias have steadfastly denied the charges,
which have deeply shaken Brazil's financial markets and brought
government activity to a near-halt.
-- 

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Mario Faria    -    mariof@sco.com
X-Integration Engineer 
The Santa Cruz Operation (SCO), Inc.
 
It works better if you plug it in.
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