Brazil’s calvary

On July 12, Sergio Moro, the federal judge presiding over the Operation Carwash (Lava Jato) corruption investigations in Curitiba, duly delivered his most important contribution to the coup process in his country. He sentenced former Workers’ Party president Lula da Silva to nine and a half years in prison for passive corruption and laundering money received in return for favours received by the OAS construction company in securing contracts with Petrobras. Although at an earlier stage in his investigations Moro had sent deal police to Lula’s home to take the ex-president off for questioning under compulsion, a move it was hard to interpret as anything other than an unnecessary piece of political theatre designed to damage his reputation and that of the PT, on this occasion he did not order preventative imprisonment, but left the ex-president in liberty pending confirmation of the sentence by a higher court, which could be followed by further appeal processes.

The higher court in question is the Federal Regional Tribunal of the 4th Region, composed of three judges. On a 2 to 1 vote this tribunal recently overturned Moro’s fifteen year sentence on the former PT treasurer João Vaccari Neto on the grounds that the material evidence on which Moro based his judgement was too fragile. Moro devoted considerable space in the written argument for his judgement of Lula to countering its being rejected on the same grounds. If the question were solely judicial, it is dubious whether these arguments would stand up to scrutiny, but the judgement of Lula is political in a way that defies comparison with any other case. Lula has already declared his candidacy in the presidential elections scheduled for 2018, and all polls currently show him beating all comers with a wide spectrum of support across the class, age and gender spectrum.

If Lula is elected president for a third time, it is hardly likely that his government would return to the policies of compromise with Brazilian capitalism that marked his earlier administrations. Indeed, even if he decided that magnanimity would be the best way to restore some semblance of unity to a deeply divided nation, the coup itself would fail. However much one might criticise what André Singer called “Lulism” and the PT’s embrace of neoliberalised social democracy, or the dependence of the PT’s strategy for reducing poverty and inequality on the global commodity boom, the coup agenda is in a different league. It is what Argentina’s Carlos Menem once called “surgery without anaesthesia”, but it cuts deeper and inflicts even more social injustice than past neoliberal restructuring in Latin America. The coup seeks to force workers and lower middle class people to pay for Brazil’s economic crisis while leaving a financialised rentier capitalist class’s wealth and privileges unscathed, through policies that are the diametrical opposite of those for which a majority voted in the 2014 general election.

The coup’s legislative package is firmly rejected by an even larger majority of the Brazilian electorate today, including many people who originally supported the impeachment of Dilma Rousseff.  So far the coup has produced a twenty year freeze on public spending that threatens to destroy the already inadequate system of universal public healthcare and will have devastating effects on public education. A reactionary congress dominated by private sector lobbyists has dismantled laws protecting the rights of labour in a way that will produce a new round of precarianisation, depress wages, and weaken trade unions. Individual workers will now have to find the full costs of challenging employers over matters such as unfair dismissal from their own pockets. Health and safety regulations have also been weakened severely, even when they relate to pregnant women. The future for rural workers, covered by separate legislation, is bleaker still, and the agribusiness lobby has also secured a weakening of environmental regulations that will have planetary consequences. In the countryside foreign land grabbing is favoured, whilst the territorial rights of indigenous people and quilombolas are to be rolled back. However, the third major item on the coup agenda, so-called “reform” of the pension system, has yet to pass through congress. The forces behind the coup are unlikely to stop at anything politically in order to secure their objectives and make it as difficult as possible for them to be reversed by a new government in the future.

This is the context in which we have to evaluate Judge Moro’s decision. I described the judicial persecution of the PT as “lawfare” in this blog at the start of that process, and the concept has been deployed by Lula’s defence team inside and outside the country (including in their representations to the UN). It is, if anything, even more relevant today, because the judicialisation of Brazil’s political life has continued to function in ways that help to sustain the coup. This is despite the fact that the PMDB vice-president who became president after betraying Dilma Rousseff is now even less popular than his predecessor was at her lowest ebb, and has been formally charged by the Attorney General with committing a criminal offence whilst in office, for which he has no immunity from immediate prosecution should the congress vote in favour of his answering the case. Even more preoccupying in many ways is that a supreme court judge revoked the suspension from the Senate of suspended PSDB national president Aécio Neves, who lost the 2014 election to Rousseff, on the grounds that he had not yet been convicted of the multiple charges of corruption that the Attorney General has brought against him. The judge ruled that Minas Gerais, the state that he has been accused of plundering since his days as its governor, deserved to continue being represented. He did not temper this judgement with any consideration of the rights of the 54 million Brazilians who had voted for Dilma Rousseff.

But let me start with Lula. There are six different legal actions pending against the ex-president, in Brasilia as well as Curitiba, but Moro’s July 12 judgement concerned only two of them, linked to Lula’s relations with the OAS construction company, headquartered in Salvador, Bahia. The hope in Curitiba was to link Lula personally to the scandals surrounding Petrobras. Curitiba prosecutor Deltan Dallagnol declared publicly that Lula was the supreme commander of all the corruption schemes that targeted Petrobras. He contended that PT rule created a “criminal system of governability” on the basis of the party’s share of what Dallagnol’s team estimated as more than two billion dollars that had passed through the “bribe-duct” centred on the company. Dallagnol became famous, a hero for some, a very bad joke for others, on the basis of his Powerpoint presentation of Lula’s central place in the country’s webs of corruption, unsupported at the time by anything that could pass for material proof. “Following the money” to Lula did in fact prove extremely difficult. Judge Moro hired KPMG to carry out an independent audit to seek evidence connecting Lula to illicit activities in relation to Petrobras. KPMG is one of the most respected global companies in its field. It reported that it had found no evidence whatsoever of action by Lula in relation to crimes involving Petrobras.

On July 12, Moro declared that there was insufficient evidence to support one charge against Lula, relating to OAS support for the archiving of official gifts that he had received as president. Lula had been able to call on former PSDB president Fernando Henrique Cardoso as a defence witness, who assured Moro that dealing with this legacy of office was a nightmare that Lula had handled in pretty much the same way as he himself had done. Moro’s remarkably fawning approach to the PSDB ex-president in sessions that were made available to the public as video recordings added to suspicions of political partiality created by photographs of his extremely friendly conversations with Aécio Neves at a public event. His apparent deflection of witnesses in other hearings from mentioning anything that might lead to the suspicion that Neves himself might not have “clean hands” excites the suspicion that he is not as committed as he claims to replicating the project of colleagues who ran the anti-corruption operation of that name in Italy, which destroyed all the established mainstream Italian political parties (but unfortunately ended up opening the door to the scarcely “clean” nine year rule of media magnate Silvio Berlusconi). Sensitive to these accusations, Moro devoted considerable space in his judgement to assuring that it had nothing to do with Lula’s politics and everything to do with the principle that nobody should be above the law, whatever their service to their country or their international prestige.

The case on which Moro found Lula guilty concerns a triplex apartment in São Paulo. Lula’s wife Marisa Leticia, who sadly died of a cerebral stroke at the age of 66 in February this year, had taken out an option on a more modest apartment in the same building in 2005. The building then belonged to the Housing Cooperative Bank of São Paulo, which was founded by a former PT party president and cabinet minister, Ricardo Berzoini and secured finance from pension funds administered by what Francisco de Oliveira has called the “fund management stratum” within the core PT leadership, which emerged before Lula first won the presidency as a result of worker representation on the boards of major private pension funds. Mired in scandal during Lula’s first term, BANCOOP sold the building to OAS in 2009. OAS invested heavily in improving the triplex. Lula and his wife did not respond to the offer to buy the original apartment or withdraw from the sale, so Moro’s interpretation is that this was because OAS had promised them costless acquisition of the improved triplex instead, a pay-off in property rather than cash that would launder ill-gotten gains.

This story in part depends on testimony provided by OAS boss Leo Pinheiro. Pinheiro’s original story absolved Lula of any wrong doing, but he subsequently modified it. He still does not enjoy the reduction of sentence that other business figures willing to denounce politicians have received through the plea-bargaining procedure that has been central to the entire Lava Jato process. But the suspicion must be that he fingered Lula in the case of the triplex in the hope of receiving such leniency, although Moro argues that his failure to provide incriminating evidence in the case of the archive shows that his testimony could not be the result of coercion or motivated by promises of leniency. Perhaps, but the question of the safety of plea bargaining evidence in general must arise, and the change of story might be considered a problem. Moro argues, however, that his judgement does not rely solely on Pinheiro’s testimony, since there is also documentary evidence, particularly an unsigned 2004 document found in a search of Lula’s home that is an agreement to pay condominium services in the building. The idea, then, is that Lula was going to take up OAS’s kind offer of the triplex and asked for the improvements to be made, including the installation of a special lift, but then backed out as the heat turned up on corruption investigations and he realised that he would have difficulty concealing the illicit origin of his new home.

The problem with the case is that Lula has never lived in the building. His defence lawyers have established OAS transferred rights to the entire property to the Caixa Econômica Federal bank as security on a loan, so the triplex was never his property, and could not become so without negotiation with the Caixa and payment of the value of the asset acquired. He still lives in the same modest apartment in which he lived before becoming president and nobody has yet managed to uncover vast amounts of undeclared personal patrimony in terms of property elsewhere or foreign bank accounts. The entire case rests on the imputation that Lula was going to commit a crime but was frightened off and told Pinheiro to conceal the evidence of his original intentions. Despite the length of Moro’s justification of his decision, and the Globo news network’s strong efforts to argue for the solidity of the “material evidence” by publishing it in detail, under normal circumstances the verdict and sentence would be strong candidates for revision by a higher court.

But in this case, the three judges are under intense political pressure, and may well fear the personal repercussions of refusing to confirm Moro’s judgement. Even if they do confirm it, however, Lula and his defence team will have recourse to further appeals. This conviction, or any further convictions in other cases, may not be sufficient to block Lula’s competing in the 2018 elections, unless the normal sluggishness of legal processes is unaccountably accelerated. Once elected to the presidency, Lula would enjoy immunity from prosecution for crimes committed before assuming it. Lula himself has immediately moved onto the offensive, arguing that he is the victim of an unjust persecution by a politically biased judge and prosectors who have consistently resorted to dubious methods, against whom his defence team has launched demands for redress. This may not help him to win new votes, but it is likely to be accepted by most of those who intend to vote for him already, especially in the light of further evidence of lack of even-handedness in the judicialization of politics.

Many voters probably no longer care if Lula has engaged in any acts of corruption, either personal or in relation to illegal campaign funding. Their principal concerns are an economy in continuing decline, rising unemployment and informalisation, and, above all, the negative impact that the coup’s reform package will have on everyone bar the extremely rich, the extremely rich including the kind of private sector actors who paid the bribes but are now securing clemency in sentencing via plea bargaining deals. Lula may be a detested “populist” whose conduct was to be expected from someone who had risen above their assigned status for some socially illiberal upper middle class Brazilians. But for many others, including much of the educated middle class, Lula was a truly “popular” president who tried to do something for the poor, created jobs, and made the country a dignified and influential force on the world stage. Even those who did not admire him greatly in office are now tending to come to the conclusion that he is the only available national leader with the force of personality, political skills and charisma to sort out the mess that the coup has created and get the country moving forward again.

But some voters, including voters from the poorest sections of Brazilian society, do still care about corruption and many who once voted solidly for the PT remain disillusioned with the party for turning out just like the rest. The orchestrators of the coup have been unable to prevent the public learning about the corruption of the other main parties and their senior politicians. The danger in the present situation, particularly if Lula’s candidacy were to be blocked in the end, is that it could deepen an existing “anti-political”, “plague on all your houses”, reaction marked by a sharp increase in the number of null and blank votes cast, allowing candidates to be elected that do not enjoy the support of a majority of voters, as happened in major metropolitan cities in the municipal elections of 2016.

Other developments this week are likely to increase Brazilian skepticism about politics. Michel Temer managed to survive the appointed rapporteur’s conclusion that he had to answer the charge of corruption brought against him by the Attorney General (another obstruction of justice charge is in the works) by substituting many existing members of the House Constitution and Justice Committee with his cronies, and promising resources and posts to others. The offended rapporteur, Sergio Zveiter, a carioca deputy from Temer’s own party, the PMDB, complained that: “Senhor Michel Temer,  against whom there is a serious weight of evidence, thinks that being able to use public money, billions of reais, he can bring the Chamber of Deputies into submission”. In the event he could, but probably only for the moment. After the House reconvenes from a recess on August 2, Temer may well find that there are enough votes against him in the plenary session to suspend him from office, and executive power will pass to Rodrigo Maia, of the right-wing DEMs, as leader of the House. Yet Maia is also under investigation for corruption. This does not seem to worry the Globo media empire, which has already made its position crystal clear: Temer must go but be replaced by indirect election of a successor willing and able to carry through the rest of the coup’s “economic reform” agenda.

Globo has been orchestrating coups in Brazil since 1954, when Globo journalist and the right-wing populist standard-bearer of the National Democratic Union (UDN), Carlos Lacerda, launched attacks on Getúlio Vargas that were intended to precipitate a coup, although the coup was thwarted and democracy preserved for another decade by Vargas’s suicide and testament letter to the Brazilian people. Maybe Lula can pull off a similar feat, in a less tragic manner, by playing on the victimisation strategy. The justice system has probably not given Globo’s propagandist efforts much assistance by returning the now thoroughly discredited Aécio Neves to the Senate to continue to participate actively in political chicanery. The difference between the cases of Lula, on the one hand, and Temer and Neves, on the other, is that that the federal police and prosecutors have had no problems “following the money” to Neves and Temer. In addition to conversations secretly recorded by plea bargaining crony capitalists, they have material evidence of “bag men” delivering cash money.

But one of the “bag men”, Temer’s Rocha Loures, has now been released from gaol. So has the PMDB boss of Bahia, Geddel Vieira Lima. Geddel was forced to resign his cabinet post for trying to bully the then Minister of Culture into suspending orders by the National Institute of Historical and Artistic Patrimony (IPHAN) that blocked construction of a huge tower condominium in which he and his family had bought apartments. But he has now been charged with frauds relating to credits from the Caixa Econômica Federal, and like many others, is probably dreading the revelations likely to come from his former party colleague, former House leader Eduardo Cunha, imprisoned for extensive and well-documented corruption once he had played in his role in the coup by making the impeachment of Dilma Rousseff possible, Cunha is now likely to talk, since Temer’s role in  buying his silence has now been publicly exposed. Despite having something of a history of attempting to obstruct justice, the federal police claim not to have an electronic ankle bracelet with which to monitor Geddel’s movements now that he is back home in Bahia. No wonder Moro decided not to risk enhancing Lula’s profile as a victim by opting for preventative prison in his case.

The coup has been administered through a generalised “state of exception”, but it is now driving Brazil into an ever deeper institutional crisis. The congress has lost credibility. Both the main parties backing the coup and participating in Temer’s government, the PMDB and PSDB, have lost credibility. This is not to say that there are not still some decent people in the PMDB, despite the sins of Temer and his associates. Paraná PMDB senator Roberto Requião, for example, has been an outspoken critic of the coup from the start, passionately rejecting the case for the impeachment of Rousseff. Also a strong critic of the coup’s “labour reform”, he recently spoke in a meeting organised by PT senator Gleisi Hoffman to promote immediate direct elections, encouragingly attended by representatives of the PSOL and PDT as well as from all the trade unions, including those that supported the impeachment. That the entire left and centre-left, including parties previously critical of “Lulism” and the PT’s shift to social democracy and compromise with “the system”, is now so dependent on Lula winning back the Presidency cannot really be taken as a sign of strength. But the coup’s problem is that its economic package is unpopular and increasingly lacking in credibility, while the cynical political means being adopted to defend this agenda are revolting the country’s citizens. Surveying their corrupt congress and thinking about the number of ministers currently under investigation, many are beginning to say they are ashamed to be Brazilian.

The stock exchange lifted, and the real strengthened, at the news of Moro’s conviction of Lula, but Brazilian capitalists have shown themselves to be the root cause of corruption and, through their many unpaid debts to the Union as well as absurdly high interest rates, also root causes of a fiscal crisis that other Brazilians experience as unplayable debt and will soon experience as loss of pension benefits and a decent period of retirement if the coup project is carried to completion. Lula’s biggest mistake was to be too accommodating to crony capitalists on the assumption that strong Brazilian companies such as Odebrecht, OAS and JBS must be good for the country and that tax payers’ money should be used to support their internationalisation. Odebrecht kickback capitalism has already resulted in former Peruvian president Alejandro Toledo becoming a fugitive from justice, and his successor, Ollanta Humala, has just been dispatched, along with his wife, into preventative imprisonment for the same reason. Their predecessor, neoliberal shock therapist Alberto Fujimori, who shut down the Congress in an auto-coup, was already serving a twenty-five year sentence for corruption and organising death squads. Even without an Odebrecht, market friendly policies are no bulwark against corruption or guarantor of democracy.

This, then, is a national calvary. But there seems little doubt that it will prove worse yet if Lula is denied the chance to offer himself to the electorate again and establish a government committed to the deep reforms that he shied away from risking in happier times. The PT governments did defend the independence of the Federal Attorney’s office and federal police, despite the fact that Attorney General Rodrigo Janot has called Lula a thief. Janot, who is retiring in September, is now in frontal confrontation with Temer. The justice system is politicised, and there are different factions within it, as well as the police. As I stressed earlier, irrespective of their personal political affiliations and inclinations, once moves to oust the PT from power judicialised politics, all judges now have to think about the political (and personal) implications of their decisions. The Supreme Court judge Teori Zavascki, responsible for judicial oversight of the Lava Jato investigations, found his house besieged by coup supporters after one decision.  Following Zavascki’s untimely (and still unexplained) death in an air crash, Temer courted controversy by nominating his own Justice Minister (a PSDB supporter) to the Supreme Court, although Alexandre de Moraes did not take over Zavascki’s role, which passed to Edson Fachin, who then authorised a raft of further investigations against serving politicians across the party spectrum. The problem is that the public tend to see all this as “one step forwards, two steps backward”, since the political impartiality of one moment seems to be suspended in another, making the law seem an ass at best and the judicial arm of the coup at worst.

Although many people are too busy trying to make ends meet to participate in street protests that even some militants now feel are largely pointless, and widespread use of social networks have made a good deal of the protest politics of both right and left virtual, there is abundant evidence that Brazilians do not want their future to be decided by judges and would favour what Dilma Rousseff promised them, an early general election so that they could express their own judgement. The triplex that Lula never owned is unlikely to figure very prominently in the factors that weigh on their judgements despite Moro’s insistence on the importance of demonstrating that nobody is above the law (although there may still be a few who buy Dallagnol’s unprovable “bigger picture”). But the biggest fear now is that if “lawfare” fails to stop Lula, a way might be found of postponing the elections scheduled for 2018.

The forces behind the coup have already shown that they are playing hardball, because they have no positive vision of the future to offer Brazilians, only national asset stripping, environmental destruction, and screwing the workers. It is a “reform” that looks backward to models that have already failed, not to the future. The coup has also proved extremely hostile to artistic creativity and human rights. Nobody at the G20 meeting wanted to talk to Michel Temer, the dead man walking of Latin American politics, and the foreign investors are looking to Macri’s Argentina instead of Brazil, in the (possibly mistaken) belief that this will offer greater security from political instability. But Temer and his intimate entourage of other politicians accused of corruption can and almost certainly will be replaced. The real issue is defeating the coup itself. For all its faults, the Lula and Dilma-led PT governments did have a positive vision for the development of a free and sovereign nation in which all citizens would have a stake and for which the world might have some respect. Beyond eliminating political corruption and reforming the political system, the challenge now is to rework a humane social democratic vision into a more radical strategic plan for confronting the challenges of the future and more effective future-orientated forms of state guidance of economic development than subsidising crony capitalists and rentiers who never quite seem to have transcended the mindset of a slave-owning society.