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Brazil’s President Charged in Bribery Scandal

What are the consequences of political corruption in the Brazilian government?

Brazilian President Michel Temer has been charged with taking multimillion-dollar bribes stemming from a scheme involving the world’s largest meatpacker, JBS SA. Temer replaced impeached President Dilma Rousseff just over a year ago, but scandals continue to shake the country’s political and business  establishment.

In previous plea bargain arrangements, JBS executives claimed the president took bribes for resolving tax matters, orchestrating loans from state-run banks and other matters. In submitting the charge to the Supreme Court, federal prosecutor Rodrigo Janot said, “he fooled Brazilian citizens” that he owed the nation millions in compensation for accepting bribes.

Under Brazilian law, lawmakers must now vote on whether the president should face a trial.  Although Temer’s coalition may have the votes to block the two-third majority to proceed with trial at this juncture, his support may wane as more charges are brought by Janot.

Potential Charges Against President Temer

With his popularity swooning, the president faces charges of racketeering, obstruction of justice, and other charges that have yet to be specified. Prosecutors allege that Temer arranged to eventually receive a total of 38 million reais ($11.5 million) from JBS in the next nine months.

One of the brothers who controls JBS, Joesley Batista, make a secret recording of a conversation with Temer in which he apparently condoned bribing a potential witness. Batista also claimed that the president and his staff garnered millions of dollars in illegal donations for the Brazilian Democratic Movement party. Temer’s office declined to comment on the charges, but he repeatedly said he is innocent of any wrongdoing.

Nonetheless, one-third of his cabinet, four former presidents and countless lawmakers are being investigated or have already been charged in an array of schemes. This is part of long running corruption scandal that centers on companies paying billions of dollars in bribes to politicians and executives at state-run enterprises in exchange for lucrative contracts.

The Takeaway

Some observers believe that the scandal will undermine the president’s ability to enact reforms aimed at helping the Brazilian economy rebound from its worst recession ever. In any event, the ongoing political uncertainty adds another level of risk to those considering cross border transactions in Brazil Now more than ever, having the advice and counsel of an attorney well versed in the complexities of the Latin-American markets is indispensable.

Posted in: Cross Border Tax Transactions

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