Mensalão: The Implications of Brazil’s Largest Corruption Scandal

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Since last August, Brazilians have watched with bated breath as the drama of the ‘mensalão‘, or ‘big monthly bonus’ scandal, has unfolded in the nation’s Supreme Court, toppling some of the South American country’s most influential political figures and even threatening to tarnish the reputation of its most celebrated former president, Luiz Inácio Lula da Silva.

The scandal came to light in 2005 when it was revealed that, throughout Lula da Silva’s first term as president, public funds were diverted by officials from the ruling Partido dos Trabalhadores (PT) and used to buy the support of coalition politicians. Lula da Silva has denied involvement in or knowledge of the scheme, which has been found to have involved former chiefs of staff, campaign managers, numerous former congressmen, personal secretaries, and some of Brazil’s largest state companies and financial institutions.

The case, dubbed “the trial of the century” by local media, brings corruption to the forefront of the nation’s political dialogue and could strike a definitive blow against illicit practices that many have formerly been accepted as inherent to Brazilian politics. So far 25 out of 37 defendants have been convicted, among them key members of PT.

The mensalão scandal – and Lula da Silva’s possible ties to it – is one of many challenges facing a Brazil eager to revitalise its image as it prepares to host two major international sporting events (the 2014 FIFA World Cup and the 2016 Summer Olympic Games) and take on a role of regional leadership as Latin America’s largest economy. It also casts a shadow over the 2014 elections, in which Lula da Silva has hinted at running for a non-consecutive third term.

The Most Popular Politician in the World

Lula da Silva official photo (courtesy of Wikipedia)

Lula da Silva, hailing from Pernambuco in Brazil’s poor northeast, left office in 2010 with approval ratings hovering near 90%, the highest in the country’s history. The former metal worker and unionist is most remembered for his wide-reaching social programmes and for presiding over a period of unprecedented economic growth of over 4% annually (the foundations of which, some say, were laid by opposition figure and former president Fernando Henrique Cardoso), which raised 30 million Brazilians out of poverty and into the middle class.

He has been called “the most successful politician of his time” and even “the most popular politician in the world” by US President Barack Obama. He was re-elected for a second term in 2006, despite the tip of the mensalão iceberg making itself visible just one year earlier, and has continued to enjoy widespread popularity both at home and abroad. It was during this second term that Brazil was selected to host both the 2014 FIFA World Cup and the 2016 Summer Olympic Games (announced in 2007 and 2009, respectively).

“Lula’s silent revolution has increased the national wealth and distributed the excess to the poorest classes” said friend and biographer Denise Paraná. “Lula has shown that a worker can be the boss, that an outsider can be president. He has symbolically redefined Brazil’s class boundaries.”

Immense popular support secured the PT’s dominant position within Brazilian politics and allowed Lula da Silva to weather the damning accusations, in 2005, of bribery and conspiracy that otherwise may have toppled his government. The possible effects of the scandal’s initial exposure were relatively contained by Lula’s economic successes, the prevalence and resigned acceptance of corruption within Brazilian politics, and by the passage of time (it took seven years for the case to be brought to court).

One immediate effect that would have lasting repercussions, however, was the resignation of Chief of Staff José Dirceu, a co-founder of the PT and one of Lula’s closest advisors. Although the extent of his involvement was not known at the time of his resignation, Dirceu was eventually found guilty in October of essentially masterminding the mensalão scheme. Seen by many as a possible successor to Lula, his resignation paved the way for a pragmatic Minister of Energy and former Marxist guerrilla from Minas Gerais, Dilma Rousseff.

Enter Dilma 

“Seriousness is being imposed [on the presidential staff]” Rio Grande do Sul senator Pedro Simon told Brazilian newspaper Estadão on Rousseff’s appointment as Chief of Staff by Lula in 2005 – the first female to ever hold the office.

Like her predecessor Dirceu, Rousseff entered politics as a left-wing militant working against the military dictatorship which ousted democratically-elected João Goulart and ruled from 1964-1985. She co-founded the Partido Democrático Trabalhista (PDT) of which she was a member until 2000, when rifts within the party led her to join Lula’s PT (which, since the ‘80s and under Dirceu’s guidance, had shifted more towards the centre of the political spectrum – a move which many credit as allowing for Lula’s election).

Dilma and Lula campaigning for her Presidency (Photo: Wikipedia)

Rousseff received Lula’s endorsement to succeed him as president in the 2010 elections as the PT candidate and leader of the ‘Para o Brasil Seguir Mudando’ (‘For Brazil to Keep Changing’) coalition, made up of various leftist and centrist parties. Her platform of continuing the social and economic programmes put in place by Lula won her 56% of runoff votes to opponent Jose Serra’s 43%, although polls at the time found that many Brazilians, if possible, would have voted for Lula again had the constitution allowed it.

Whereas Lula left a Brazil basking in economic glory (it is frequently cited along with China and India as one of the world’s emerging economic superpowers) and jubilant in anticipation of the upcoming sporting events (the first FIFA World Cup to be hosted in South America since Argentina had the honour in 1978, and the first Olympic Games to ever be held on the continent), Rousseff took office with the daunting tasks of continuing the country’s upward trajectory and preparing it to receive the thousands of visitors and media attention expected to descend upon it in the coming years. This has meant extensive anti-crime and drug initiatives in the hundreds of favelas, or slums, encircling the country’s largest cities, as well as a massive overhaul of the nation’s infrastructure – something Lula is accused of not devoting enough attention to during his presidency.

As a relative newcomer to the PT, Rousseff has been able to avoid the intricate conflicts and political squabbles existing within the party, specifically among politicians and aides close to former president Lula. It was presumed in the Brazilian media that her presidency was meant to distance the modern PT from the corruption allegations of 2005 and to allow for a ‘leap-frogging’ of the presidency in 2014, holding the office for a returning, influential Lula.

“I will return to political life because I believe Brazil needs to continue to grow, develop, generate jobs, improve the lives of millions and millions of Brazilians who managed to enter the middle class […] as well as those who dream of joining the middle class”, the former president announced in March after successful cancer surgery.

The return to prominence of the mensalão case, however, may dash those hopes.

The Scandal 

Brazilian parliament in Brasilia

Brazilian Parliament (photo by Brazilian Senate Agency)

This August, seven years after Brazilian media first uncovered evidence of the scandal, those accused were finally brought to trial in the nation’s Supreme Court, among them José Dirceu, then-president of the PT José Genoino, former PT treasurer Delubio Soares, PT national leader Marcelo Sereno, and former Speaker of the House João Paulo Cunha – known collectively as the ‘quadrilha‘, or gang.

Judge Celso de Mello called the scandal “one of the most shameful chapters in the country’s political history.”

Also alleged to have been involved are numerous deputies from coalition parties, who received payments of up to 30,000 reals (approximately US$12,000) every month in exchange for political support. The money for these ‘mensalãos‘, or monthly bonuses, is said to have come mostly from the advertising budgets of major state companies, such as power company Furnas and multinational energy corporation Petrobras.

Withdrawals made from the bank accounts of businessman Marcos Valério – allegedly responsible for dispensing payments each month – were found to correspond chronologically with major votes in the Brazilian Senate and Chamber of Deputies, regarding issues such as tax reform, the minimum wage, and social security reform.

“The legislators were bought out to form the base of the new government”, said Supreme Court President Joaquim Barbosa, the first black Chief Justice of Brazil and “hero” of the trial.

Many defendants claimed that the funds were used solely for paying off campaign debts rather than bribing legislators, a practice that, although illegal, is commonplace in Brazilian politics. The trial is scheduled to resume on 1st February, when those found guilty are expected to appeal the court’s decision. Some of them have also anticipated that they could appeal to the Interamerican Court of Human Rights.

Despite the quantity of PT officials found guilty and their important roles within the Lula administration, the former president himself managed to remain above any official accusations and retain his popular support throughout most of the trial. Opposition politicians and political analysts have expressed disbelief that Lula could have been unaware of the scandal, however, and statements made in September by Valério – who was sentenced to over 40 years in prison for bribery, embezzlement, money laundering, tax evasion, and conspiracy – have cast doubt upon Lula’s ignorance and prompted an investigation into the matter by Brazilian Attorney General Roberto Gugel.

“Marcos Valério has frequently made statements that can be considered bombastic, and when we analyse them further, there’s nothing there. But we’ll see what there is in his testimony that could motivate a future investigation”, Gugel said last Wednesday, speaking in front of the Supreme Court.

Valério claimed, in statements made public last week by the newspaper O Estado de São Paulo, that Lula was aware of the scheme and even used some of the diverted funds for personal expenses. Lula has denied the claims, accusing Valério of making desperate attempts to reduce his sentence. Regardless of the outcome of the investigation, the mensalão trial has significantly tarnished the former president’s reputation and leaves doubts regarding his political future and the direction of the PT.

Power Struggles and 2014

Although the PT remains one of the most influential political parties in Brazil, the mensalão scandal has provided opposition figures with a certain leverage they had lost in the wake of Lula’s golden era. In the midst of the São Paulo mayoral elections in October, Partido do Movimento Democrático Brasileiro (PMDB) candidate José Serra stated that “the mensalão is a work of the PT, it’s a trademark of the party”, in efforts to discredit PT opponent Fernando Haddad.

Haddad eventually won in a runoff vote despite trailing in early tracking polls, although the PT did not fare as well in Belo Horizonte and Recife – the capitals of the home states of Rousseff and Lula respectively – losing to the Partido Socialista Brasileiro (PSB), a coalition party that, like others, has begun fielding its own candidates in local elections.

Within the PT itself, President Rousseff has taken advantage of her “newcomer” status, filling her Cabinet with her own people, dismissing – rather than defending – politicians accused of corruption, and distancing herself from the Lula faction within the party. Although she has defended the former president against detractors such as Valério, she has made it clear that her PT and that of 2005 are not one and the same.

Lula has stated that he would only run in 2014 if Rousseff decided against re-election, a possibility that grows more and more unlikely as her approval ratings go up (78% as of December) and more corruption allegations come forth. Regardless of the findings of the Attorney General’s investigation, Lula’s once stellar reputation has taken a beating, particularly amongst the middle class he helped to create.

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