This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 002457 
 
SIPDIS 
 
TREASURY FOR PARODI; DEPARTMENT PASS USTR AND USAID/LAC 
 
E.O. 12958: DECL: 09/16/2015 
TAGS: PGOV PREL ECON BR
SUBJECT: BRAZIL CORRUPTION SCANDAL UPDATE, WEEK OF 12-16 
SEPTEMBER 2005 
 
REF: A. BRASILIA 2219 
     ¶B. BRASILIA 2150 
     ¶C. BRASILIA 2082 
     ¶D. BRASILIA 2025 
     ¶E. BRASILIA 1979 
     ¶F. BRASILIA 1874 
     ¶G. BRASILIA 1973 
     ¶H. BRASILIA 1631 
     ¶I. BRASILIA 2242 
     ¶J. BRASILIA 2237 
     ¶K. BRASILIA 2305 
     ¶L. BRASILIA 2384 
 
Classified By: Political Counselor Dennis Hearne. Reasons: 1.4 
(B) (D). 
 
¶1. (C) INTRODUCTION.  In two important developments this week 
in the continuing political scandals affecting Brazil's 
congress, President Lula da Silva's administration and the PT 
party  (refs), Brazil's Chamber of Deputies (lower house) 
formally expelled Federal Deputy Roberto Jefferson, whose 
allegations unleashed the current crisis, and moved toward 
expulsion of Chamber President Severino Cavalcanti on bribery 
allegations.  Cavalcanti's fall looks virtually certain, and 
succession scenarios for him are difficult to predict at this 
stage.  The week's events point up both the increasingly 
tense and fragmented environment within Brazil's legislature 
and, at the same time, the relatively effective functioning 
of the institution's investigative and ethics processes.  End 
introduction. 
 
BRAZILIAN CONGRESSMAN JEFFERSON EXPELLED 
----------------------------------------- 
 
¶2. (SBU) On 14 September, by a vote of 313 to 156, the 
Brazilian Congress formally expelled Congressman Roberto 
Jefferson, the man whose allegations of PT party financial 
improprieties and vote buying triggered the political crisis 
that has shaken the Lula government and Brazilian politics 
generally for over four months now.  Per refs, Jefferson 
launched his series of sensational revelations and 
allegations of corruption within the GOB, PT and its allied 
base -- most of which have been proven true in the 
investigations of recent months -- after Jefferson himself 
was implicated in corruption schemes linked to contracts in 
Brazil's postal service.  Jefferson is the first of 18 
federal deputies formally named in allegations to be 
expelled, and in this punitive action by he loses his 
mandate, the right to run for public office and other 
political rights for the next eight years.   In his 
forty-minute defense speech, the vainglorious and orotund 
Jefferson introduced no new allegations.  But he excoriated 
the PT for producing a corruption scandal of unprecedented 
proportions, called Lula a "lazy scoundrel," chastised his 
colleagues for allowing the Lula government and PT to reduce 
the Brazilian congress to "fratricide" when origins of the 
corruption "came from over there" (a reference to the 
Planalto Palace of the Presidency, across the Esplanade from 
the congress) and claimed to be proud of his role in exposing 
the dishonest and "inhuman" face of the PT to Brazil, even at 
the cost of his own political career. 
 
¶3. (SBU)  Fearing he would have the same fate as Jefferson, 
Carlos 'Bishop' Rodrigues (PL), also involved in the 
bribes-for-vote scandal, resigned his mandate on 13 
September.  Others are expected to resign in the next few 
days: Vadao Gomes (PL), Jose Borba (PMDB), Paulo Rocha (PT), 
and the president of the Lower House Severino Cavalcanti 
(PP).  Those who resign before proceedings against them begin 
will be free to run for re-election in 2006, while 
legislators who are expelled may not run for public office 
for the following eight years.  In related developments, a 
temporary injunction ruling made on technical grounds by 
Brazil's supreme court on 15 September halted the expulsion 
process against former minister Jose Dirceu.  Six other 
implicated congressmen have already benefited from similar 
injunctions. 
 
 
SUN SETTING ON SEVERINO 
----------------------- 
 
¶4. (SBU) Per ref m, Chamber of Deputies President Severino 
Cavalcanti faced developments this week in bribery 
accusations against him which appear to point inevitably to 
loss of his position as chief of the lower house, and quite 
possibly his mandate as a congressman.  Restaurant owner 
Sebastiao Buani said at a news conference on 8 September that 
he had been forced to pay about $20,000 in kickbacks to 
Cavalcanti in 2002 and 2003 in exchange for a restaurant 
concession in the congress (ref m).  Cavalcanti denied the 
accusations and stated that the documents presented by Buani 
were forged. Nonetheless, on 14 September, Buani publicly 
presented a copy of a check in the amount of 7,500 reais 
(approximately $3,200) payable to Cavalcanti's personal 
secretary, Gabriela Kenia.  Buani also presented to the 
 
SIPDIS 
Brazilian Federal Police copies of his bank statements 
showing the withdrawal of large sums of money, allegedly used 
to pay Cavalcanti.  This documentary evidence, validated by a 
documents expert (though contested by a second expert 
presented by Cavalcanti) and supported by testimony by Buani 
and other employees of his restaurants, looks likely to seal 
Cavalcanti's fate.  Cavalcanti's early efforts to challenge 
the allegations are fading, as he sought reclusion in his 
Brasilia residence at week's end.  He is reported to be 
seeking a meeting with President Lula, who has waffled 
between support and an appearance of distance from 
Cavalcanti, and who Cavalcanti now reportedly believes has 
abandoned him. 
 
¶5. (SBU) On 13 September, representatives from five 
opposition parties formally requested the removal of 
Cavalcanti on the grounds of "violation of parliamentary 
decorum", claiming that "someone accused of taking a small 
bribe can't judge others accused of taking big bribes".  The 
head of the Ethics Committee stated he would open 
investigations.  The only options realistically available now 
for the embattled Cavalcanti are: first, he may resign only 
the Chamber's presidency (which would be assumed by 
opposition PFL Deputy Jose Thomaz Nono) while fighting to 
keep his deputy's mandate; second, Cavalcanti may take 
personal leave from both the presidency and his mandate while 
the Ethics Committee conducts the investigations; and third, 
he may refuse to resign the presidency and the mandate while 
the investigations are underway, creating a chaotic impasse 
within the congress; fourth, he may resign both his mandate 
and the presidency before the Ethics Committee begins formal 
impeachment procedures, thus saving his right to run for 
office in 2006.   There is no clear scenario or favorite at 
this stage for a replacement for Severino, and the 
increasingly free-for-all environment within the lower house 
makes predictions difficult. But the succession drama will be 
the next major spin-off story in the crisis that continues to 
roil Brazilian internal politics. 
 
CPI CONTINUES TO INVESTIGATE MAYOR'S MURDER 
-------------------------------------------- 
 
¶6. (SBU) The congressional inquiry committee (CPI) on 
corruption related to bingo game operations and municipal 
kickback schemes called various witnesses to testify in the 
case of the 2002 murder of Santo Andre's PT mayor Celso 
Daniel (refs).  On 15 September Sao Paulo police officers 
that conducted criminal investigations in 2002 were summoned 
to testify in closed sessions of the CPI, as was Gilberto 
Carvalho, President Lula's chief of cabinet.  Carvalho was 
mentioned in earlier testimony by Francisco Daniel, brother 
of Celso Daniel.  According to Francisco Daniel, his brother 
was involved in a corruption scheme to funnel payoffs on 
municipal contracts to PT campaign coffers, together with 
Carvalho and former minister (and then PT president) Jose 
Dirceu.  Francisco Daniel claims crooked businessmen involved 
in the scheme commissioned the killing of Celso Daniel when 
he began to consider exposing their activities.  Carvalho 
denied all of Francisco Daniel's allegations in the September 
15 hearing, and the CPI is now reportedly considering 
convoking both Carvahlho and Francisco Daniel to face off 
against each other in a joint hearing. 
 
 
¶7. (C) Comment. Both the expulsion of Jefferson and the 
almost certain demise of Cavalcanti as Chamber President are 
key events, providing the strongest signs since last week's 
opening of expulsion procedures against 18 congressmen (ref 
l) that powerful figures implicated in the scandals or other 
impropriety will be held to account.  On balance, both events 
are likely to be seen as evidence that Brazil's legislature 
can and will police itself if placed under sufficient public 
scrutiny, and Jefferson's farewell exclamations that the 
government had succeeded in focusing the scandal on congress 
and inducing fratricide therein while avoiding further blame 
are given the lie by the continued plummet of Lula's standing 
in the polls.  However, the vacuum emerging with Cavalcanti's 
demise may exacerbate for a time the sense of fragmentation 
and drift that is now undeniably prevalent in the congress. 
Emergence of a replacement figure who can lead the 
institution back toward coherence and comity would be a 
salutary development for Brazil as it faces a continuing 
crisis. 
 
 
 
 
 
 
CHICOLA