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UNCLAS SECTION 01 OF 02 BRASILIA 001798 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON BR
SUBJECT:  BRAZIL INTERNAL POLITICS UPDATE, 21-25 AUGUST 2006. 
 
REF: BRASILIA 1744 AND PREVIOUS 
 
¶1.  (U) SUMMARY.  The Chamber of Deputies began proceedings against 
67 of its own that could result in expulsion from Congress and 
several years' banishment from political life.  They were implicated 
in the "Bloodsuckers" scandal involving rigged ambulance contracts 
and kickbacks for congressional supporters.  The electoral court in 
Rio de Janeiro disqualified several incumbent federal deputies 
because of accusations against them in the scandal. Lula's 
government has taken steps to keep ample benefits flowing to 
retirees and the poor in this pre-electoral period.  A new drug law 
gets tougher on dealers, sends users to treatment, not jail.  END 
SUMMARY. 
 
-------------------------------------------- 
Chamber of Deputies Acts against 67 Deputies 
-------------------------------------------- 
 
¶2.  The Chamber of Deputies opened its proceedings against 67 
deputies implicated in the "Bloodsuckers" corruption scandal 
involving overpriced ambulance purchases and kickbacks to members of 
congress.  The accused were named by a Parliamentary Committee of 
Inquiry (CPI).  The investigation now moves to the Chamber of 
Deputies Ethics Council.  They are charged with violation of 
parliamentary decorum and could be expelled from congress and banned 
from electoral office for a period of time to be determined by the 
congress. The overwhelming majority of the accused are candidates 
for re-election.  Two accused deputies escaped the Council's action 
by resigning from Congress.  The process will take time:  Ethics 
Council chairman Ricardo Izar predicted the Council will finish only 
20 cases by year's end. 
 
------------------------------------- 
Court Disqualifies Accused Candidates 
------------------------------------- 
 
¶3.  (U) The Regional Electoral Court in Rio de Janeiro (TRE-RJ) 
disqualified four federal deputies running for re-election to the 
Chamber of Deputies because they were implicated in the 
"Bloodsuckers" scandal.  A fifth candidate, a soccer club owner and 
former federal deputy, was also disqualified for past corrupt 
allegations. One accused federal deputy was allowed to continue her 
campaign.  One of the five TRE-RJ judges voted against the 
disqualifications because none had been convicted of a crime. The 
TRE of Sao Paulo has also barred numerous would-be candidates from 
seeking office, mainly for irregularities in campaign documents 
presented.  TRE rulings are subject to appeal before the Superior 
Electoral Tribunal. Many media pundits praised the moves as steps 
forward in ending impunity for corrupt politicians, though there are 
questions regarding the constitutional aspects of the decision.  In 
any case, the TRE actions fit into a pattern of growing 
institutional strength that can be seen in a few prominent 
governmental bodies, notably the electoral courts, the Federal 
Police and the Federal and state-level Public Ministries.  These 
organs, along with a professional and vigilant media, have 
investigated and sought sanctions in many of the myriad scandals of 
the past year, and their increasing efficacy is one encouraging 
aspect of Brazil's battle with corruption. 
 
----------------------------------- 
Lula Orders September Pension Bonus 
----------------------------------- 
 
¶4.  (U) President Lula has drawn fire from critics, including Marco 
Aurelio Mello, president of the Superior Electoral Tribunal, for 
decreeing an early half-payment of the "thirteenth month" bonus for 
pensioners in the federal pension system (INSS, equivalent to U.S. 
Social Security), to be disbursed just two weeks before national 
elections.  The "thirteenth month" bonus is normally disbursed in 
December.  Mello said the "sack of goodies is always opened around 
election time and that is not good for democracy."  At the same 
time, new figures show a sharp rise in public spending; leading 
daily O Estado de S. Paulo suggested an electoral motive.  Federal 
spending in July rose 12.9 percent over June, and in the 
January-July period was up 14.8 percent over the same previous 
period.  (Government income rose only 11.1 percent during 
January-July.) The government also announced that it is relaxing the 
criteria for families under threat of suspension from the Bolsa 
Familia program benefits.  Without the rule change, 164,000 families 
would have been removed from the program in September, according to 
press reports. 
 
--------------------------------------------- --------- 
Lula Signs New Drug Law; Tough on Dealers, Easy on Users 
 
BRASILIA 00001798  002 OF 002 
 
 
--------------------------------------------- --------- 
 
¶5.  (U) President Lula signed into law a new drug law that increases 
penalties for dealers and establishes alternative sentences such as 
counseling and community service for users.  The new law could 
reinforce the president's weak credentials on crime and the drug 
problem. 
 
¶6.  (U) Polling shows continuing small upticks in Lula's re-election 
chances, and opponent Geraldo Alckmin is trying to be heard amid the 
din of corruption reporting, which grabs page one headlines day 
after day.  The publicity surrounding the corruption scandal should 
work in Alckmin's favor, but it is not.  Lula's Teflon continues to 
deflect, and the approval rating of his government has hit a record 
high of 52 percent, according to a Datafolha poll. 
CHICOLA