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UNCLASSIFIED U.S. DepartrUNCLASSIFIED05-03114 Doc No. C18590845 Date: 08/16/2012 g j 4 OCONFIDENTIAL

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C 0 N F I D E N T I A L SECTION 01 OF 06 BRASILIA 05514

E.O. 12356: DECL: OADR

TAGS: KPRP, AINF, PGOV, PINR, SOCI, BRSUBJECT: HOW CORRUPT IS BRAZIL?

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1. C — ENTIRE TEXT.

SUMMARY/INTRODUCTION

2. PRESIDENT COLLOR'S DRAMATIC APRIL RESHUFFLE OF HISCABINET DEFUSED THE POLITICAL DAMAGE INFLICTED BY ASUCCESSION OF CORRUPTION CHARGES AGAINST MEMBERS OF HISGnvvRNMFNT vrtE ALLEGAvvnws RY PEDRO COLLOR AGAINST HISUNITED STATES DEPARTMENT OF STATEREVIEW AUTHORITY: ADOLPH H KISNKRCLASSIFICATION: CONFIDENTIAL REASON: 1.4(B), 1.4(D)DECLASSIFY AFTER: 26 MAY 2017DATE/CASK ID: 30 APR 2009 200503114

UNCLASSIFIEDUNCLASSIFIED U.S. Department of State ~ase i~o. r-~uuo-uo i ie r)oc No. C18590845 Date: 08/16/2012

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BROTHER, PRESIDENT FERNANDO COLLOR, RETURN THE CORRUPTIONISSUE TO THE FOREFRONT. RATHER THAN A PROBLEM LIMITED TOCOLLOR, IT REFLECTS A WIDER AMBIVALENCE AND CHANGINGATTITUDES IN BRAZIL TOWARD CORRUPTION.

3. "THE POLITICAL CLASS IS CORRUPT, " IS A COMMON

ASSERTION IN BRAZIL, TO THE EXTENT THAT POLITICIANS INGENERAL HAVE AN APPROVAL RATING OF ABOUT TEN PERCENT AND

INCUMBENTS ARE WIDELY REJECTED FOR RE-ELECTION.PRESIDENT COLLOR, ELECTED ON AN ANTI-CORRUPTION PLATFORM,HAS NOT RUN A SQUEAKY-CLEAN ADMINISTRATION, ALTHOUGHCOLLOR HAS RESPONDED QUICKLY WHEN THE ALLEGATIONS BECAMETOO FREQUENT AND HIT TOO CLOSE TO HOME. SEPTEL REPORTSACCUSATIONS MADE BY COLLOR'S BROTHER, PEDRO, THAT THEPRESIDENT HIMSELF USED A SHADY ALAGOAS BUSINESSMAN AS AFRONT MAN FOR ELECTION-FIXING AND PRIVATE DEALINGS.

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BUT THE DEFINITION OF CORRUPT PRACTICES INBRAZIL DIFFERS SUBSTANTIALLY FROM THAT OF THE U. S. ; MANY

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PAGE 03 BRASIL 05514 01 OF 06 272033ZPRACTICES CONSIDERED CORRUPT BY AMERICANS ARE CULTURALLYINGRAINED IN BRAZIL, AND IN MANY CASES ARE NOT ILLEGAL.THE "CORRUPT" POLITICAL CLASS REFLECTS A SOCIETY THAT ISDEFINED BY THE "JEITINHO, " OR INFORMAL WAY OF GETTINGMATTERS TAKEN CARE OF. FOR THIS REASON THERE IS LITTLEBROAD-BASED REVOLT OR INDIGNATION AGAINST POLITICIANS.THE MORE TYPICAL REACTION IS CYNICISM OR INDIFFERENCE.

4. THE AMOUNT OF CORRUPTION IN BRAZIL HAS PROBABLY BEENRELATIVELY CONSTANT IN THE PAST FEW DECADES. WHAT

APPEARS TO BE CHANGING IS THE EXTENT TO WHICH ELITESRECOGNIZE THE PROBLEM AS UNACCEPTABLE AND INCOMPATIBLEWITH STILL-EVOLVING DEMOCRATIC INSTITUTIONS. EVEN MOREUNACCEPTABLE IS THE SPECTER OF GOVERNMENT OFFICIALS ORTHEIR CRONIES ENRICHING THEMSELVES WHILE THE REST OF THECOUNTRY SUFFERS THROUGH A GOB-INDUCED RECESSION--WITHHIGH UNEMPLOYMENT AND DEPRESSED WAGES. FREE AND

AGGRESSIVE MEDIA HAVE EXPOSED MUCH CORRUPTION AT HIGHLEVELS OF GOVERNMENT. SOME BIG FISH HAVE EVEN BEENCAUGHT AND "FRIED. " THERE IS A HIGH-LEVEL CORRUPTIONCOMMISSION AT WORK AND BILLS IN CONGRESS THAT AIM TOADDRESS SUCH ISSUES AS FIXED BIDDING, ELECTORAL FRAUD AND

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SO ON. SEVERAL EX-MINISTERS MAY EVEN BE TRIED FOR RECENTCH ICANE RY . BUT IN BRAZ IL THERE ARE LAWS, AND EVENPROVISIONS IN THE CONSTITUTION, THAT TAKE EFFECT AND

THOSE THAT DO NOT. WHAT HAS TO TAKE PLACE FOR THE LAWS

TO BE FULLY IMPLEMENTED IS A GENERATIONAL CHANGE INCULTURAL ATTITUDES. WE MAY BE SEEING MOVEMENT IN THATDIRECTION. HOWEVER, IN A COUNTRY WHERE THEOVERWHELMINGLY POOR MAJORITY BELIEVES LAWS PROTECT ONLYTHE RICH, AND ELITES ACT AS THOUGH THEY ARE ABOVE THE

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PAGE 04 BRASIL 05514 01 OF 06 272033ZLAW, SIGNIFICANT CHANGE WILL NOT COME EASILY. END SUMMARY.

FORMS OF CORRUPTION

5. ELECTORAL FRAUD: THIS IS ONE AREA WHERE THERE ARELAWS ON THE BOOKS THAT GENERALLY ARE IGNORED OR WEAKLYENFORCED. CULTURAL TRADITIONS, PARTICULARLY IN THEIMPOVERISHED NORTHEAST, DICTATE THE COURSE OF A CAMPAIGN,AND INCLUDE BUYING OF VOTES WITH CASH, OR MORE TYPICALLYWITH BASKETS OF GOODS, T-SHIRTS, SHOES, OR EVEN MEDICAL

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SERVICES (TUBAL LIGATION OF WOMEN IS COMMON). THE 1989PRESIDENTIAL ELECTIONS WERE GENERALLY FREE AND FAIR, BUTTHE 1990 CONGRESSIONAL AND GUBERNATORIAL ELECTIONS WEREFRAUGHT WITH PROBLEMS IN THE NORTHEAST. FOR EXAMPLE, ATTHE HEIGHT OF THE CAMPAIGN, THE BLACK-MARKET DOLLAR RATEIN ALAGOAS' STATE CAPITAL MACEIO WAS 60 CRUZEIROS TO ONE,WHILE IN RIO AND SAO PAULO THE GOING RATE WAS 90 TO ONE.AT THE TIME, NEW CRUZADO ACCOUNTS WERE BLOCKED, SOALAGOAS POLITICIANS BROUGHT IN BAGS OF DOLLARS TO BUYVOTES FOR THEMSELVES AND ALLIES. THE RECENT BARRAGE OFACCUSATIONS BY PEDRO COLLOR AGAINST HIS BROTHER, THEPRESIDENT, INCLUDES ALLEGATIONS ABOUT THE LATTER'SINVOLVEMENT IN SABOTAGING THE 1990 ALAGOAS ELECTIONS.ADDITIONALLY, LAWS CONCERNING PROCEDURES FOR TRANSPORTINGVOTERS AND CAMPAIGNING NEAR POLLING STATIONS WERE NOTOBSERVED GENERALLY ACROSS THE COUNTRY.

6. THERE ARE MANY UNFAIR PRACTICES BUILT INTO THE

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ELECTORAL SYSTEM THAT, WHILE NOT CORRUPT PER SE, AREDEMORALIZING TO THE ELECTORATE. APPORTIONMENT IS SOSKEWED THAT A FEDERAL CONGRESSMAN IN SAO PAULO STATEREPRESENTS 30 TIMES MORE CONSTITUENTS THAN HISCOUNTERPART IN A SMALL STATE IN THE AMAZON REGION. THEPROPORTIONAL VOTING SYSTEM PRODUCES WINNERS WITH VOTETOTALS GREATLY INFERIOR TO SOME OF THE LOSERS —-DUE TO THECOATTAIL EFFECT WHEN A PARTY HAS A BIG NAME AT THE TOP OFITS TICKET. CANDIDATE NOMINATION PROCEDURES ARETYPICALLY UNDEMOCRATIC, ESPECIALLY AT THE STATE AND

MUNICIPAL LEVEL. FINALLY, ELECTED OFFICIALS COMMONLY

HAVE QUESTIONABLE WORK HABITS: THEY SHOW UP TWO TO THREECONFIDENTIAL

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PAGE 03 BRASIL 05514 02 OF 06 272034ZDAYS PER WEEK, AND SOMETIMES COVER FOR EACH OTHER BYILLEGAL PROXY VOTING.

7. MIDDLEMEN: IT WAS COMMON AT THE BEGINNING OF THECOLLOR ADMINISTRATION FOR MAYORS OF SMALL TOWNS SEEKINGFEDERAL LARGESSE TO HAVE TO GO THROUGH INTERMEDIARIESBEFORE EARNING THE RIGHT TO SEE ANY BUDGETED FUNDS. APOLITICIAN FROM COLLOR'S HOME STATE OF ALAGOAS TOLDPOLOFF AT THE TIME THAT COLLOR'S AND MRS. COLLOR'SALAGOAS CRONIES HAD ESTABLISHED A COTTAGE INDUSTRY INBRASILIA AS MIDDLEMEN. THE MINISTRY FOR SOCIAL ACTION,RUN BY ONE ALAGOAS CRONY, MARGARIDA PROCOPIO, WAS THEMOST NOTORIOUS FOR SURROUNDING ITSELF WITH MIDDLEMEN;OTHERS WERE THE REGIONAL DEVELOPMENT SECRETARIAT, RUN BYEGBERTO BATISTA, AND THE STRATEGIC AFFAIRS SECRETARIAT OFPEDRO PAULO LEONI RAMOS, A BUSINESS CONTACT OF THEPRESIDENT. COLLOR SACKED ALL THREE OFFICIALS IN RECENTROUNDS OF CABINET CHANGES —— RESPONDING TO A TORRENT OFCHARGES OF INFLUENCE-PEDDLING BY THEM.

8. BRIBERY: FORMER LABOR/SOCIAL SECURITY MINISTRY MAGRIWAS TAPE-RECORDED IN LATE 1991 EXPLAINING TO AN ASSOCIATEHIS ACCEPTING A USDOLS 30, 000 BRIBE FROM A PRIVATECOMPANY. BRIBERY IS CLEARLY ILLEGAL AND MAGRI IS BEINGPROSECUTED. SOME COMMENTARY ON THE CASE HAS SOUGHT TOPORTRAY MAGRI AS STUPID FOR HAVING GOTTEN CAUGHT--AND FORA RELATIVELY SMALL BRIBE BY LOCAL STANDARDS. (30,000DOLLARS HAS NOW BECOME A NEW UNIT OF BRAZILIAN CURRENCY:"ONE MAGRI. ") ALSO IMPORTANT IN THIS CASE WAS THEDIFFICULTY THE "WHISTLE-BLOWER" HAD IN GETTING THE STORYTOLD. COLLOR HAS BEEN CRITICIZED FOR KEEPING MAGRI IN

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PAGE 04 BRASIL 05514 02 OF 06 272034ZOFFICE TOO LONG AFTER HE MISBEHAVED AT THE JUNE, 1991I.L.O. CONFERENCE IN GENEVA.

9. NEPOTISM/SINECURES: NEPOTISM IS NOT ILLEGAL PER SE,ALTHOUGH THE PRESS FREQUENTLY EMBARRASSES POLITICIANS WHO

HIRE MANY FAMILY MEMBERS FOR THEIR PRIVATE STAFFS. THISOCCURS IN ALL BRANCHES OF GOVERNMENT, AND AT ALL LEVELS,ALTHOUGH COLLOR HAS NOT ABUSED THE PRACTICE IN HISPRESIDENCY. HIS BROTHER-IN-LAW, MARCOS COIMBRA, HAS BEENHIS "PRESIDENCY SECRETARY-GENERAL" SINCE THE BEGINNING OFTHE ADMINISTRATION, AND HIS WIFE, ROSANE, SERVED ASUNPAID PRESIDENT OF THE LEAGUE OF BRAZILIAN CHARITIES.

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COLLOR HAS BEEN SEVERELY CRITICIZED FOR HIRING MANY

ALAGOAS CRONIES FOR HIGH-LEVEL POSITIONS FROM WHICH THEYBENEFITED PERSONALLY OR IN WHICH THEY PERFORMEDINCOMPETENTLY. HOWEVER, THOSE JOBS WERE NOT SINECURES.PAULO CESAR FARIAS, COLLOR'S CAMPAIGN TREASURER IN 1989,HAS HAD NO APPOINTIVE POSITION IN THE ADMINISTRATION, BUTHAS USED HIS ACCESS TO COLLOR AND TO INSIDE INFORMATIONTO BENEFIT HIS PRIVATE BUSINESSES. COLLOR'S CONTINUINGBUSINESS RELATIONSHIP WITH PAULO CESAR FARIAS, AS ALLEGEDBY COLLOR'S BROTHER PEDRO, HAS RESULTED IN BOTHINFLUENCE-PEDDLING AND MISUSE OF PUBLIC FUNDS.

10. RIGGED BIDDING: BIDDING ON GOVERNMENT CONTRACTSPROBABLY IS THE MOST WIDESPREAD FORM OF CORRUPTION.EXISTING LAWS PROHIBIT "FIXING" BIDDING AND ALLOWSOLE-SOURCE BIDS IN CASES OF EMERGENCY OR NATIONALINTEREST, BUT THOSE ARE THE KINDS OF LAWS THAT ARE RARELYENFORCED. IT IS NOT EASY TO PROVE THAT A TENDER WAS

GRANTED TO A CERTAIN BIDDER FOR REASONS OTHER THAN PRICEAND QUALITY. THE USG VIEWED THE 1989 AWARD TO NEC FORTHE CELLULAR TELEPHONE SYSTEM CONTRACT IN RIO AS A RIGGEDBID. THEN-COMMUNICATIONS MINISTER ANTONIO CARLOSMAGALHAES (CURRENTLY GOVERNOR OF BAHIA) WAS HIMSELF INPARTNERSHIP WITH NEC'S AFFILIATES IN BRAZIL, AND TURNEDDOWN A MORE COMPETITIVE BID FROM AT & T. (MAGALHAESAPPARENTLY DOES NOT HAVE THIS KIND OF CONDUCT IN MIND

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WHEN HE OFFERS PRONOUNCEMENTS ABOUT CORRUPTION IN THECOLLOR ADMINISTRATION. )

11. THE RECENT RIGGED-BIDDING CASE INVOLVING PURCHASE OFCONFIDENTIAL

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PAGE 03 BRASIL 05514 03 OF 06 272035Z22, 000 OVERPRICED BICYCLES FROM A CURITIBA RETAILER (WITHNO COMPETITIVE BIDS) WAS GIVEN SUFFICIENT PUBLICITY TOCAUSE FORMER HEALTH MINISTER ALCENI GUERRA TO RESIGN.THE STORE IN QUESTION HAD NEVER BEFORE EVEN DEALT INBICYCLES, BUT DID HAVE AN IMPORTANT CONNECTION TO THEHEALTH MINISTER--WHICH AT THE TIME MATTERED MORE. GUERRA(AND SOME OF HIS AIDES) MAY NOW FACE CRIMINAL PROSECUTION.

12. THE AWARDING OF A BID FOR A WATER TREATMENT PROJECTAND A SEWAGE DISPOSAL CANAL IN RIO BRANCO, ACRE, TONORBERTO ODEBRECHT INC. IS CURRENTLY THE OBJECT OF ACONGRESSIONAL INVESTIGATION. SOME OF THE FINANCING ISALLEGED TO HAVE COME ILLEGALLY FROM AN UNEMPLOYMENTCOMPENSATION FUND ADMINISTERED BY THEN LABOR MINISTERANTONIO MAGRI. ACRE GOVERNOR EDMUNDO PINTO WAS TOADDRESS THE ISSUE IN PUBLIC TESTIMONY IN BRASILIA MAY 18,BUT WAS MURDERED IN A HOTEL ROOM IN SAO PAULO ON MAY 17.ODEBRECHT OFFICIALS WERE ALSO AT THE HOTEL. A FEW WEEKSEARLIER, SOME EVIDENCE ON THE ODEBRECHT CONTRACT WAS

CONSUMED BY A FIRE AT THE ACRE LEGISLATIVE ASSEMBLY--AFIRE SUSPECTED TO HAVE BEEN IGNITED BY ARSON.

13. NARCOTICS MAFIAS: INVOLVEMENT OF NARCOTICSTRAFFICKING ORGANIZATIONS IN POLITICS WAS ILLUSTRATEDGRAPHICALLY DURING THE RONDONIA GUBERNATORIAL ELECTIONCAMPAIGN IN 1990 AND ITS AFTERMATH. CANDIDATE OLAVO

PIRES, LONG ASSOCIATED WITH DRUG TRAFFICKING, WAS GUNNED

DOWN GANGLAND-STYLE IN OCTOBER, 1990, IN FRONT OF HISCAMPAIGN OFFICE. ALTHOUGH THE CASE HAS NOT BEENRESOLVED, AVAILABLE EVIDENCE SUGGESTS THAT HE WAS KILLEDBY A RIVAL TRAFFICKING ORGANIZATION. A WINNING

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PAGE 04 BRASIL 05514 03 OF 06 272035ZCONGRESSIONAL CANDIDATE ON PIRES' TICKET, JABES RABELO,WAS IMPLICATED IN DRUG TRAFFICKING AND EXPELLED FROM THECONGRESS IN 1991. CIRCUMSTANTIAL EVIDENCE LINKS MANY

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OTHER POLITICIANS AND MEDIA MAGNATES IN RONDONIA TO THEDRUG TRADE. AS BRAZIL BECOMES INCREASINGLY INVOLVED INTHE REGIONAL NARCOTICS TRADE WE CAN EXPECT MORE DRUGMONEY TO FIND ITS WAY INTO CAMPAIGN COFFERS IN A BROADSWATH OF STATES--NOT JUST RONDONIA. DRUG TRAFFICKERSOPERATE WITH RELATIVE IMPUNITY IN RIO DE JANEIRO STATE,BASED ON A MUTUALLY BENEFICIAL MODUS VIVENDI THEY HAVE

DEVELOPED WITH THE RULING DEMOCRATIC WORKERS PARTY(PDT). THE HIGH VOLUME OF MONEY-LAUNDERING ASSOCIATED

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WITH NARCOTICS ACTIVITIES IN RIO AND ELSEWHERE MUST ALSOINVOLVE CORRUPTION ON ALL LEVELS OF GOVERNMENT--BUTESTIMATING THE ORDER OF MAGNITUDE IS NOT POSSIBLE FROMTHE FRAGMENTARY INFORMATION AVAILABLE.

14. OTHER FORMS OF CORRUPTION NOT FULLY DETAILED ABOVEBUT ALSO COMMON IN BRAZIL INCLUDE: OVER OR UNDER-BILLINGINVOICES, PARTICULARLY FOR FOREIGN-EXCHANGE TRANSACTIONS(E.G. , EXPORTS); INTERVENING TO GET CERTAIN CONTRACTSPAID WHEN THERE IS A GENERAL SLOWDOWN DUE TO BUDGETSTRINGENCIES; AND A WHOLE SERIES OF COMPLEX DEVICESRELATED TO REAL-ESTATE DEVELOPMENT. THE FACT THAT 30-40BILLION DOLLARS WORTH OF THE BLOCKED NEW CRUZADOS WERE"LIBERATED" BEFORE THE OFFICIAL RETURN OF THE MONEY

STARTED LAST AUGUST SUGGESTS EVEN MORE CORRUPTION. WE

WOULD CONSIDER PIRACY OF PATENTS AND COPYRIGHTS ASCRIMINAL; BUT UNTIL BRAZIL PASSES A NEW INDUSTRIALPROPERTY LAW, THE PRACTICE IS NOT ILLEGAL.

EFFORTS TO ADDRESS THE PROBLEM

15. SENATOR PEDRO SIMON (PMDB/RG DO SUL) REPRESENTS THELEGISLATIVE BRANCH OF GOVERNMENT IN A HIGH-LEVEL WORKINGGROUP (ALSO INCLUDING PRESIDENTIAL PALACE, JUSTICEMINISTRY, POLICE AND SUPREME COURT REPRESENTATIVES)SEEKING TO REWRITE THE RULES ON CORRUPTION-FIGHTING.

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17. IN FACT, IN THE WEEK AFTER~FEE CONGRESS PASSED A BILL YEAS DEFINESEMBEZZLEMENT BY PUBLIC OFFICIALS, AND INCLUDES APROVISION THAT WOULD FORCE CONVICTED EMBEZZLERS TOSURRENDER THEIR ILL-GOTTEN ASSETS, AND/OR PAY FINES. THENEW LAW ALSO INCREASES THE INVESTIGATORY POWERS OF THE"TRIBUNAL DE CONTAS DA UNIAOU (TCU--A BRAZILIAN JUDICIARYEQDIPALENY YQ QDR GENERAL ACCQDNYING OFFICE) .~~YRllDIYIQNALLY, A CQBRDPYIQN CASE EASCONSIDERED SUCCESSFULLY CONCLUDED IF THE PUBLIC FIGURECOULD BE FORCED TO RESIGN. UNDER THE NEW LAW (STILL TOBE SIGNED BY PRESIDENT COLLOR), MAGRI WOULD HAVE TO GIVEBACK THE 30, 000 DOLLARS, PLUS ANY OTHER ASSETS HEOBTAINED ON THE SLY--ESTIMATED BY UVEJAU MAGAZINE TO BEWORTH OVER A MILLION DOLLARS. ANOTHER BILL MAKING ITSWAY THROUGH CONGRESS WOULD TIGHTEN THE RULES ON

COMPETITIVE BIDDING.

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PAGE 04 BRASIL 05514 04 OF 06 272035Z18. EVEN UNDER CURRENT LAW, A JUDGE IN RIO DE JANEIRO,NESTOR JOSE DO NASCIMENTO, IS BEING PROSECUTED FORORGANIZING A SCHEME TO DEFRAUD THE BRAZILIAN SOCIALSECURITY SYSTEM OF ROUGHLY 150 MILLION DOLLARS. THEJUDGE AND SIX OF HIS COLLABORATORS ARE ALREADY BEHINDBARS AWAITING TRIAL. THE TOTAL NUMBER OF BENEFICIARIESOF THE SCHEME IS UNKNOWN. VISAO MAGAZINE REPORTS THATTHIS IS THE FIRST TIME THAT A JUDGE OF NESTOR DONASCIMENTO'S STATURE HAS SAT IN THE DEFENDANT'S SEAT IN ACOURTROOM, ALTHOUGH A NUMBER OF LOWER JUDGES AND LAWYERSWERE JAILED LAST YEAR FOR SIMILAR OFFENSES INVOLVING THE

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BADLY-LOOTED SOCIAL SECURITY SYSTEM.

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19. THE MEDIA CONTINUE TO REPORT AGGRESSIVELY ON CASESOF CORRUPTION, EVEN WHEN THE EVIDENCE IS ONLYCIRCUMSTANTIAL. RECENT CASES INCLUDE AN ALLEGATION THATFEDERAL POLICE SECRETARY ROMEU TUMA TURNED A BLIND EYE TOA SMUGGLING OPERATION IN FOZ DO IGUACU, AND THAT FORMERSTRATEGIC AFFAIRS SECRETARY PEDRO PAULO LEONI RAMOS HAD

SET UP AN ELABORATE SCHEME WITHIN PETROBRAS THAT WOULD

AUTOMATICALLY SKIM OFF A PERCENT OF PROFITS FROM OVERSEASOPERATIONS. THE FREQUENCY OF REPORTS OF CORRUPTIONDURING THE COLLOR ADMINISTRATION CAN IN PART BEATTRIBUTED TO AN UNFETTERED FREEDOM OF THE PRESS, RATHERTHAN A MORE CORRUPT GOVERNMENT THAN ITS PREDECESSORS.THE MEDIA ALSO FINDS CORRUPTION REPORTING IRRESISTIBLE INAN ADMINISTRATION RUN BY A PRESIDENT WHOSE PRINCIPALCAMPAIGN THEME WAS CORRUPTION-FIGHTING.

COMMENT

20. THE SIMON COMMISSION IS A SERIOUS EFFORT TO ADDRESSCORRUPTION IN BRAZIL, PARTICULARLY THE ISSUE OFIMPUNITY. THE CONGRESS AND PUBLIC PROSECUTOR'S OFFICEHAS ALSO RESPONDED CORRECTLY, AND QUICKLY, TO THE CURRENTSPATE OF ALLEGATIONS MADE BY THE PRESIDENT'S BROTHER.MOST POLITICIANS UNDERSTAND THAT THE LONG-TERM SURVIVALOF DEMOCRACY IN BRAZIL REQUIRES AUTOMATIC, CONSTITUTIONALMEANS FOR ADDRESSING CASES OF CORRUPTION.

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WAIVED IF THEY ARE A HINDRANCE. IT IS THIS ATTITUDE THATMUST CHANGE IF CORRUPTION IS TO BE FUNDAMENTALLYADDRESSED IN BRAZIL.

21. THE OTHER SIDE OF THE COIN IS THAT CORRUPTION INBRAZIL DOES NOT APPROACH THE KIND AND MAGNITUDE WE

UNDERSTAND EXISTS IN VENEZUELA AND PERU. THE "CORRUPTIONISSUE" HERE HAS NOT SPAWNED ANTI-DEMOCRATIC PLOTTING.NOR IS THERE SUPPORT FOR THE NOTION THAT COLLOR'S MARKETOPENING POLICIES HAVE CREATED NEW OPPORTUNITIES FORILLEGITIMATE ACTIVITIES. HOWEVER, DURING A RECESSIONCAUSED BY THE GOB'S OWNAUSTERITY PLAN, NEWS OFCORRUPTION BY POLITICIAN AND THEIR ASSOCIATES HASGENERATED WIDESPREAD YNICISM. POLLS INDICATE THAT THISYEAR'S MUNICPAL ELECTIONS WILL HAVE A RECORD HIGHABSTENTIO RATE--DESPITE LAWS THAT MAKE VOTING OBLIGATORY.

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