Lawmakers to investigate Brazilian president

BRASILIA, Brazil -- Opposition lawmakers called for a congressional investigation Monday into allegations that an aide to Brazilian President Luiz Inacio da Silva had solicited illegal campaign contributions, the first major scandal to hit his administration.\nSilva, who in the past 24 years has built his leftist Workers' Party on a platform of honesty and service to the poor, fired the aide, Waldomiro Diniz, Friday.\nIn a story last week, the magazine Epoca alleged Diniz had solicited illegal campaign contributions for the party from Carlos Ramos, also known as Carlinhos Cachoeira -- "Charlie the Waterfall." Epoca described Ramos as a kingpin of the Rio de Janeiro-based numbers game, an illegal lottery run from open-air bars and coffee shops and popular among poor Brazilians.\nEpoca based its charges on a videotape of a conversation between Diniz and Ramos in which Diniz appears to solicit cash contributions for two party candidates for state governorships as well as a 1 percent "commission" for himself. According to Epoca, Diniz assured Ramos the donations would not be reported to electoral authorities. Failure to report such contributions is a crime under Brazilian election laws.\nThe tape was shown on Brazilian TV news programs over the weekend.\nDiniz has made no public statement since being fired.\n"This is a very serious case," said David Fleischer, a political science professor at the University of Brasilia. "No one can say, at this point, how it is going to turn out."\nThe opposition Social Democrats began circulating petitions in both houses of Brazil's Congress seeking the creation of a select committee to investigate the allegations.\nInvestors are also watching developments closely, worried such an investigation could hurt Silva's attempts to push through a package of ambitious electoral, judicial, labor and bankruptcy reforms. The country's benchmark Ibovespa stock exchange index has fallen nearly 3 percent since news of the scandal broke last week.\nBefore being fired, Diniz was responsible for congressional liaison and was considered a protege of Presidential Chief of Staff Jose Dirceu. Often considered the second most powerful man in Brazil, Dirceu has also declined comment.\nSilva and the PT, as the party he founded in 1980 is known, spent much of the last two decades investigating allegations of corruption against various administrations, including that of Silva's two-term predecessor, Social Democrat Fernando Henrique Cardoso.\n"For eight years, the PT investigated everything under the sun," said Congresswoman Zulaie Cobra, a Social Democrat. "Now that they are in power, they want to sweep these latest allegations under the rug."\nCobra is leading the drive to set up a select committee to investigate the allegations against Diniz and look into whether a wider network for soliciting illegal campaign donations might be in place.\n"It could easily become a runaway committee," said political risk analyst Walder de Goes, of Goes Consultants. "Campaign finance is the black plague of Brazilian politics. There is plenty of scope for fresh revelations."\nPT National Chairman Jose Genoino played down the scandal, noting Diniz was not a registered member of the party, and questioning the need for a congressional inquiry. "This is nothing more than an attempt by the opposition to get attention," Genoino told reporters Monday.\n"The government is going to try to muzzle the congressional inquiry," said political scientist Amaury de Souza, a senior partner of the MCM Consulting Group. "They have a good chance of succeeding, but they are going to pay a high price in political patronage and pork barrel legislation."\nSilva's problem, according to Souza, is a weak congressional coalition, based on votes from seven different parties in the 513-member Chamber of Deputies and 81-member Senate. The powerful Brazilian Democratic Movement joined the coalition in January, delivering its 77 Chamber of Deputies votes and 22 senators.\nDemocratic Movement lawmakers "will vote against a congressional investigation, but they are going to want more government jobs and budget allocations for their trouble," Souza saId. "This will set a bad precedent, with the administration buying its way out of every scandal from now on"