The issue of corruption has captured the attention of citi- zens around the globe.' In Italy and Brazil, the battle against this ancient scourge seems to have assumed a newly effective form. In Italy, many politicians and business leaders have seen their careers and reputations shattered. In Brazil, a president was impeached and faces criminal prosecution on corruption charges, and a warrant has been issued to arrest his closest aide. Nevertheless, the difference between the two cases is obvious. In Italy, the entire political and busi- ness oligarchy is in crisis. In Brazil, the oligarchy managed to fix the blame on two people: Fernando Col- lor de Mello, a small-time politician catapulted onto the national scene by the country's major economic powers, and the businessman Paulo Cesar Farias, the president's chief legal advisor and campaign treasur- er. The oligarchy has emerged unscathed. The congressional inves- tigation into President Collor and P.C. Farias implicated some of Brazil's most important business people, but no formal charges have been laid against them. Although The oligarchy has emerged unscathed. The investigation into President Collor and P.C. Farias implicated some of Brazil's most important business people, but no for- mal charges have been laid against them. Theotonio dos Santos is a visiting professor at Universidade Federal Fluminense-Niter6i, Rio de Janeiro. He is the author of The Political Economy of Brazil, forthcoming from Westview Press. Translated from the Portuguese by Phillip Berryman. popular mobilization was a crucial factor in the president's impeach- ment, the fact that Collor is still free and P.C. Farias is a fugitive at large makes a mockery of that display of public outrage. The only person behind bars is the U.S. mechanic William Black, who is serving a sen- tence in the United States for falsify- ing documents for Farias' Miami- based air leasing company. Corruption is nothing new in Brazil or Latin America. In the 1950s, Car- los Lacerda led a broad morality cam- paign against President Getulio Var- gas, who had been elected by a wide margin in 1950. Lacerda charged that the Vargas government was mired in a "sea of slime." The campaign cul- minated in calls to impeach the presi- dent. Backed by the U.S. government and U.S. business interests as well as a portion of the Brazilian armed forces, Lacerda was preparing a coup to overthrow Vargas. The plan was foiled, however, when Vargas sud- denly committed suicide in August, 1954. In the political testament that he left behind, Vargas blamed inter- national capital and its local represen- tatives for his fall. The political upheaval sparked by Vargas' death and his final testament partially deflated Lacerda's morality cam- paign. It took on new life, however, in the figure of Junio Quadros. Quadros was elected president in 1961 by pledging to bring morality to the government and struggle against VOL XXVII, No 3 Nov/DEC 1993 17REPORT ON CORRUPTION the oligarchies-despite his extensive commitments to those very forces. When Quadros suddenly resigned after only seven months in office, Vice-President Jolo Goulart-his political rival and heir to the Vargas legacy-assumed power. Goulart found himself the object of a vicious campaign accusing him of corrup- tion and subversion. Under the anti-corruption banner, the military-with Lacerda's support-ousted Goulart in a 1964 coup, inaugurating a dictatorship that lasted 26 years. Fernando Collor, the first directly elected presi- dent after the years of military rule, ran as an anti-corruption candidate. As governor of his home state of Alagoas, Collor fired highly paid gov- ernment employees and promised a government of public morality. It was his well- publicized campaign against "maharajahs" in government that gave him the credentials to run for president. His enormously expen- sive, modern advertising campaign cast him as a superman-a lone hero in an American Western bat- tling all sorts of corrupt individuals. His statement-"Anyone in my government who steals goes to jail"-became famous. It seems incredible that a party- less politician with no clear com- mitments to the oligarchy-except to some wealthy relatives and TV Globo, the national television net- work-could become president of a country with 150 million inhabi- tants and about 90 million voters. Collor's election was a legacy of the dictatorship that had outlawed political parties, but it was also to some extent a repeat of the Janio Quadros episode. Brazilians have not been able to create solid party structures, and are still seeking a president who as a political outsider can stand up to the powerful and the corrupt. Thus, they reason, the fewer ties to organized social forces a president has, the stronger he will be. Perhaps Collor's victory was the expression of the last flicker of hope in such a solution. But who was Fernando Collor de Mello? A wealthy party-going womanizer, with a cultivated play- boy image, he was a man who led a fast and easy life. Persistent rumors circulated-later confirmed by his younger brother Pedro--that during his youth in Brasilia, he experimented with cocaine and LSD. 2 The son of a senator of the old National Democratic Union-the party of Carlos Lacerda- Collor understood how powerful a vote-getter moral- istic demagoguery could be. His uncle Lindolfo Collor was a cabinet minister in the first revolutionary Var- gas government in 1930, but broke with Vargas two years later. Lindolfo then turned to Mussolini's fas- cism for ideological inspiration, which led him to the Brazilian fascist movement, known as integralism. Fernando also venerated Mussolini, and was reputed to be as hot-tempered and prone to violence as his father, who once killed a senator in the midst of a ses- sion of Congress. Collor's presidency was a family affair, with political and family matters-ranging from the routine to the scandalous-thorough- ly intertwined throughout all levels of government. None of this gave his campaign sponsors pause. At first, they appeared not to have thought his candidacy would go far, and aspired to negotiate a spot for him as vice-presidential candidate on the ticket of a more established political party. That politi- cal formula was actually suggested to Mario Covas, the Brazilian Party of Social Democracy (PSDB) presiden- tial candidate. Covas ruled it out, however, perhaps because he regarded Collor's support as weak-at that point he had only a 5% rating in the polls. As Collor moved into first place in opinion surveys, he began to create his own power clique. In the second- round run-off, he faced Luis Inicio da Silva ("Lula"), the labor leader and candidate for the leftist Workers Party (PT). Taking advantage of the panic among the business oligarchy at the prospect of a socialist president, Col- lor's campaign treasurer, P.C. Farias, acquired enormous contributions totaling $100 million, far exceeding what the campaign required. It is not unusual in Brazil for candidates to pocket such excesses themselves; what made that episode different was its scale. It later became known that Collor and P.C. Farias squandered $25 million dollars of "campaign left- overs" on genuine maharajah-like spending sprees. The newly elected Collor formed a cabinet composed of unknown person- alities and some conservative politi- cians. The public was led to believe 18NACLA REPORT ON THE AMERICAS NACIA REPORT ON THE AMERICAS 18REPORT ON CORRUPTION that he would be the country's savior. They even went along with the president's ill-fated attempt to curb inflation by freezing $115 billion of the $150 billion in the country's bank accounts on his first day of office. During the president's first two years in office, at least 13 different cases of alleged corruption arose, forcing Collor to remove many top officials. Then, he decided to form a new government made up of distin- guished citizens and conservative politicians. The media claimed that with the bandits in the president's entourage out of the way, the new team would resolve everything. But inflation, after a period of decline, increased once again, and wages continued to lose purchasing power day by day. Collor's presidency was a family affair, with politi- cal and family matters-ranging from the routine to the scandalous-thoroughly inter- twined throughout all levels of gov- ernment. On the routine side, his brother-in-law Marcos Coimbra was one of the mainstays of his adminis- tration, and his sister Ana Luiza de Mello was continually under fire for meddling in the government. Moving toward the scandalous, his wife Rosane has been accused of embez- zling funds from the large state chari- ty she oversaw. The Supreme Court has now launched an investigation into her activities. Even Collor's mother Leda Collor de Mello joined the fray. Moving things from the scandalous to the ridiculous, she pleaded in the press with her son not to risk his life by flying jets without a pilot's license and driving Ferraris at high speed. The country was under the aegis of the "Republic of Alagoas" to the disgust of many in the establishment. The oligarchy and the conservative middle classes were horrified at the monster they had cre- ated. Finally the dam of impunity built by Collor over two years with such audacious presumption began to wash away under the pressure of those who found their interests harmed by his brutal assaults on both private and public assets. As is usual in these kinds of cases, attacks began from the side. Allegations of corrup- tion dogged P.C. Farias and other low-level officials throughout the spring of 1992. Then the bomb of domestic strife exploded. In an exclusive interview in the news weekly Veja in May, Fernando's brother Pedro accused the president of using P.C. Farias as a "front man" for illicit kickbacks and influence-peddling schemes that netted millions of dollars. These accusations resulted in an investigation by a 22-member congressional committee. It seems that Pedro was provoked when his control over the Collor de Mello family media empire in Alagoas was threatened by a rival media group headed by Farias. Fernando's attempts to seduce his brother's wife Tere- sa also aroused Pedro's wrath. Pedro began by attack- ing Farias, but gradually took aim at the president himself. The public was hesitant at first to turn against their president. Polls in late June indicated 67% of Brazil- ians wanted Collor to remain in office. But new revelations began to tarnish the president himself. His brother went on the offensive, talk- ing to every media outlet that asked. Pedro asserted that the president was the ring leader and P.C. Farias simply his henchman. Although Collor claimed that he had severed his ties with Farias in 1990, the Brazilian magazine Isto E reported that Collor's personal secretary rou- tinely paid the family's household and personal expenses out of a checking account fed by Farias. Collor's unwillingness to take spe- cific measures against P.C. Farias was a sign to many that he too was guilty. The congressional inquiry became a Pandora's box, continually unearthing shocking new evidence. Congressmen scrutinized more than 30,000 checks drawn on accounts linked to Farias which revealed a host of fiscal subterfuges by Farias and financial links between Farias and Collor. Congressional testimony and these checks revealed that P.C. Farias had set up in each of the main state agencies a group of representa- tives who skimmed millions through fixed bidding practices on govern- ment contracts. In addition, it became known that Farias had extorted millions more from Brazil's main business people-both national and multinational-no doubt in exchange for his services within the VOL XXVII, No 3 Nov/DEc 1993 19 VOL XXVlI, No 3 Nov/DEc 1993 19REPORT ON CORRUPTION presidential circle. 3 A network of bank accounts registered under false Ultim names was also discovered. The congressional investigation state suL turned up countless examples of the oliga greed that had virtually no limits. It discovered that Collor and his the priva cohorts had set up a caixinhas, a "kitty" in which to collect off-the- are more books funds. In small, closed meet- than the ings, they set the goal of collecting two billion dollars. According to transf( gossip in Brasilia, they held a party one year later to celebrate their first commit billion. New evidence emerging this knov June from investigations by police and Kroll Associates, the interna- "corru tional accounting firm, suggests that in this way Farias amassed about $1.4 billion. More serious yet were P.C. Farias' possible ties to drug traffickers. Farias did favors for politicians of all stripes with a fleet of planes that periodically flew out of the country on a route very close to that used for drug contraband. Pedro Collor said a Miami banker had told him that he had serious misgivings about the source of P.C. Farias's wealth. The banker speculated that such a large amount of cash could only come from drug trafficking. 4 Suspicions were further increased when the Collors bought a $4 million apart- ment through the services of Guy de Longchamps, a man with ties to international drug trafficking. Subse- quently, a figure in Argentine organized crime gave a detailed interview to Isto E accusing P.C. Farias of being directly involved in drug trafficking. This avenue of inquiry was immediately suspended and forgotten. .C. Farias went on the offensive and threatened to bring a lot of people down with him if these charges were pursued. 5 The president too began to fight back. He went on television several times to deny any wrongdoing, and to insist he was the victim of special interests trying to thwart his economic reforms. His words failed to convince the Brazilian public of his innocence. The leaders of three opposi- tion parties that normally have little to do with one another-Lula (PT), Tasso Jeireissati (PSDB), and Orestes Qu6rcia (PMDB)-came together to call for the president's impeachment. Struggling for his political life, Collor called on Brazilians to show their support by wearing green and yellow-the colors of the national flag-at a mass demonstration. Few heeded his call. Instead, thou- sands of Brazilians wearing mourning black marched ately, )sidies to irchy and te sector harmful irregular Mrs and missions, vn as ption." through the streets. Pro-impeachment demonstrations involving hundreds of thousands of protesters were held in a number of cities, in an uncanny replay of the 1983 "Direct Elections Now" campaign. Many of the demon- strators were students, quickly dubbed "painted faces" for the color- ful paint they applied to their faces. The television networks--earlier hes- itant to impugn Collor-now zestful- ly covered the protests. The vast majority of Congress and governors also cast their lot against the presi- dent. Collor had, by then, lost the uncon- ditional support of the Globo TV net- work which had brought him to power. The oligarchy, now aware of the enor- mity of the mistake it had made, was looking for an out. The only possible route was impeachment. But who was to succeed the president? Members of the oligarchy were loath to see Collor's vice-president, Itamar Franco, come to power. Franco, a former PMDB senator from Minas Gerais state, lost his bid for the governorship of his home state in 1986. He was a consistent foe of the military dictatorship, while Collor had collaborated with it. He had also led a congressional committee investigating corruption in the Sarney government in the late 1980s.6 Collor selected Itamar as his running mate because he needed an honest, established politician from a populous state to round out his ticket. This partnership was awkward and full of political and personal frictions from the start. Itamar was renowned for taking nationalistic stands. He opposed Collor's neoliberal market reforms, including privatizing state industries. He had also opposed Collor's first economic plan in which private savings were frozen. The armed forces, on the other hand, were inclined to support Franco as a suitable replacement. Collor had angered the military by destroying the National Information Service, closing nuclear research sites, signing the agreement committing Brazil to the nuclear non-proliferation treaty, and drastically reduc- ing the military budget. The armed forces did not favor dismantling the state, and feared that the exces- sive opening of the national market to foreign compe- tition might sink the nation's industry and advanced technological research apparatus. Franco's support among the armed forces was per- haps the most decisive factor impeding efforts to depose the vice-president along with Collor. The loose-cannon governor of Bahia, Antonio Carlos Mag- alhdes, a right-wing populist and faithful servant of 20NACLA REPORT ON THE AMERICAS NACLA REPORT ON THE AMERICAS 20REPORT ON CORRUPTION Globo TV, and Globo's president Roberto Marinho led a behind-the-scenes campaign to drop Itamar. At the opposite end of the political spectrum, the far-left flank of the PT called for general elections, inadver- tently supporting the agenda of the oligarchy, which wanted to pass over Franco. This maneuvering occurred as a pageant of civic spirit unfolded on the streets, broadcast nationwide on all the TV channels. The Congress professed its fideli- ty to the voice from the streets, and prepared to impeach the president. Collor played his last card by resigning before the Senate reached a verdict. But under popular pressure, the Senate decided to go ahead with the trial, convicting Collor by 76 to 3 on charges of official misconduct. By then, the Attorney General had brought criminal charges against Collor for "passive corruption" and "criminal association." The nation's elites were united in their abomination of the felon. By the date of the impeachment vote, Collor faced solid opposition from Congress, Brazil's major business groups, the major media, and from 23 of 26 state governors. Vice-President Itamar Franco was named acting president for the remaining two years of Collor's term. Policymakers were initially elated and triumphant. They gloated that they had dutifully obeyed the wish- es of the citizenry. Seizing advantage of the postLve mag1e t Liad acquIre of the impeachment vote, gress decided to move up date of the plebiscite c Brazil's system of gover- nance. Brazilians, however, thwarted their ambitions, voting overwhelmingly against weakening the pres- idency by changing to a parliamentary system. he Brazilian elite is unhappy with the Ita- mar Franco govern- ment, which is at odds with it over economic policy. That may be why the legal proceedings against ex- President Collor for crimi- nal activity are moving so slowly. It may also partly explain why P.C. Farias has been treated so gently, and has even managed to go into hiding and perhaps flee the country when he should be in jail by now. Brazilians are still waiting for justice to be done. Calls for public morality did not prevent Paulo Maluf-a true symbol of the corruption of the dicta- torship era-from winning the mayor's race in Sdo Paulo in November. Not even the revelations of corruption that surfaced during his mayoral campaign have harmed the presidential prospects of this author- itarian former governor of Sdo Paulo and leader of the right-wing Democratic Social Party. Maluf's con- stituency is made up of the very same conservative sectors that tried to overthrow Vargas and that sup- ported the overthrow of Goulart in the name of public morality. Maluf's past has been forgotten, and he is being presented as an honest and moderate politician. He is now running second behind Lula in polls asking people who they would prefer as their next president. It would seem that more important issues are at stake. Yes, the truly corrupt must be punished. Corrup- tion, however, is embedded in a much broader and more complex political process. Corruption is just one facet of the general control of the state by private inter- ests. Ultimately, state subsidies to the private sector or oligarchical interests are more harmful than the irregu- lar transfers and commissions, known as "corruption." The next general election in October, 1994 will be the most sweeping in Brazil's history. The president, two-thirds of the Senate, the Chamber of , Lhe governors of all 2 s, and deputies in the state semblies all come up for election. Naturally, the elite is worried. All the dissatis- faction that has been building up over the many years of struggle is being channeled into this coming contest. Brazilians will decide between a more collectivist, social-oriented policy and a conservative, private-oriented one. Infla- tion will be a central con- cern; so too will the ques- tion of the degree of Brazil's integration in the world economy and the orientation towards the internal market. The Col- lor episode will surely weigh on the minds of Brazilians when they vote. Corruption will no doubt be important-but it will not be the only issue, nor even the main one. 0 Brazil's Controlled Purge: The Impeachment of Fernando Collor 1. During the 1980s, corruption expanded prodigiously due to increased financial speculation. Commissions on financial activity rose a great deal, and the money available for that purpose expanded enormously. At the same time, the burgeoning drug trade gave rise to illegal profits along with a vast number of businesses linked to laundering drug money. 2. After describing his brother's wild youth in Brasilia, Pedro Collor said, "I think these crises of violence were caused by taking hard drugs. I see no other explanation. From a certain age, more or less between 18 and 20, Fernando became known around town as a violent person." He describes how his brother tore a bordel- lo apart, beat up several women, and knocked people around using his karate training. See Pedro Collor de Mello, Passando a Limpo: A Trajet6ria de um Farsante (Rio de Janeiro: Editora Record, 1993), pp. 37-38. 3. "It was a thirsty and gluttonous way of using power," said Renan Calheiros, a leader of the "bandits," the term he himself coined for the group that robbed the country along with Fer- nando Collor. "The net result: it brought on hatred, caused scandal, and affected the very core of the government." See interview in Veja, June 24, 1992, p. 7. A DOCUMENTARY FILM Cuban Youth Debate Cuba's Future "One of the m documentaries transitional cr which Cuba is Dr. Wayne Smith, Center for International Policy troversial look at Cuba today rom the dynamic perspective of Cuban youth. Committed socialists and disillusioned dissidents passionately debate Cuba's future. Views of Cuba never before seen by a U.S. audience. A unique and timely documentaryl Released August 1993. who are concerned, ous, or deeply care. " Alice WalKer, Author For Sales & Rental Information in Film or Video: CUBA VA VIDEO PROJECT 12 Liberty Street, Sari Francisco, CA 9411o - 415/282-1812 - fax 415/282-1798 VOL XXVII, No 3 Nov/DEC 1993 39 REPORT ON CORRUPTION 4. According to Pedro Collor, the banker said, "As it stands, on the basis of the volume of cash being handled here, people are beginning to say that Farias may be involved in drug traffick- ing," (Pedro Collor, Passando a Limpo, p. 209). In his chapter on the Miami connection, Pedro Collor provides incriminating infor- mation about Farias' alleged involvement in the drug trade. He discusses photocopies of about 20 documents that he received which show Farias' operation of nine cover enterprises in the United States, the Caribbean, France, England and Switzerland, from which he earned a total of $400 million. He also docu- ments Farias' close relationship to Andres Gomez-Mena and Guy de Longchamps, both connected to international drug traf- ficking (pp. 214-215). Moreover, in October, the Brazilian press reported that Pablo Escobar and P.C. Farias had a meeting in 1991 in Brazil. The Brazilian federal police may now seriously investigate the connection between P.C. Farias and international drug trafficking. 5. In his first statement to the congressional investigating commit- tee, Farias cynically threatened to reveal the recipients of money from his "kitty." The cover headline of the June 17, 1992 issue of Isto E was: "P.C. says he won't go down alone." Such threats continued until he went into hiding. His brother, a federal deputy from Alagoas, threatened to use a secret dossier of P.C. Farias if people pursued the charges against him. 6. For further analysis of corruption during the dictatorship and the Sarney government, see Jos6 Carlos de Assis, Os Mandarins da Repi(blica, Anatomia dos Escindalos da Administra~co Ptblica (Sao Paulo: Paz e Terra, 1984).
