Brazilian President Temer Officially Charged With Corruption

Just over a month after O Globo newspaper first brought the world"s attention to the fact that Brazil"s President Michel Temer was "allegedly" involved in "hush money" payments, then vehemently denied by him; and just a week after the police confirmed it had evidence that Temer received bribes, O Globo, reports citing court documents, that President Michel Temer was formally charged with corruption by Prosecutor-General Rodrigo Janot.

As we noted last week, almost exactly one month after Brazil"s stock market crashed, and the Real plunged after the country"s never-ending political drama made a triumphal return following accusations that president Michel Temer had encouraged a "hush money" bribe to former House Speaker Eduardo Cunha in return for not getting dragged into the Carwash scandal, Brazil’s federal police force said it has found evidence that the embattled president received bribes to help businesses, Brazil"s O Globo reported.

Then earlier today, Brazil’s federal police confirmed it had found evidence that President Michel Temer allegedly committed three crimes, according to local media reports. As Bloomberg reports,

Federal police sent full report to the Supreme Court regarding allegations gathered through plea bargains from executives at meat-packer JBS.

In the report, police found evidence of corruption, obstruction of justice and failure to report a crime.

Police also said there was no evidence of tampering with the audio of the meeting of Temer and the then-head of JBS, Joesley Batista, secretly recorded by the latter.

While Temer has repeatedly denied the accusation, Bloomberg reports that the accusations are based on JBS"s Joesley Batista"s plea bargain.

Brazil’s Temer was officially charged with corruption by the chief prosecutor on Monday evening, in a highly-anticipated development that may put the embattled president of Latin America’s largest economy on trial.

Rodrigo Janot charged Temer in a case in which the president was accused of corruption and obstruction of justice, according to documents filed at the Supreme Court. The charges need to be approved by two-thirds of Brazil’s chamber of deputies to proceed. It is not yet clear how long that process will take. The president has repeatedly denied wrongdoing.

As a reminder, trying a President in Brazil is not an easy feat:

Step One - Supreme Court

The prosecutor’s case is delivered to the Supreme Court which notifies the speaker of the lower house of Congress, Rodrigo Maia.

Step Two - House Speaker
Maia must formally notify Temer of the charges against him. From that moment on, the president’s lawyers have ten lower house sessions to present their defense. At the same time, Maia sends the paperwork to the Chamber’s Constitution and Justice Committee, which must then appoint a sponsor for the case.

Step Three - Constitution and Justice Committee, or CCJ
After Temer presents his defense, the committee has five sessions to discuss the charges. The sponsor then presents a final report with his recommendation on the case that the whole 66-member committee must vote on.

Step Four - Plenary
Regardless of the outcome of the committee hearing, the report goes to a vote in a plenary session of the lower house. The report can be read the very next day after the hearing or on a date of the speaker’s choosing.
At least two-thirds of lawmakers, or 342 legislators, need to agree for a trial to go ahead at the Supreme Court.
Each lawmaker must cast his or her vote aloud via microphone.

Step Five - Supreme Court
If approved by the lower house, a trial will take place at the Supreme Court. Temer would be obliged to stand down as president for 180 days while the court case goes ahead. If the trial lasts for longer than that, Temer would return to office while the case continues.
If convicted, Temer would be stripped of office and his political rights. He may also be imprisoned.
The house speaker would become president for 30 days before Congress votes for a new head of state via an indirect election.

Contacted by Bloomberg, Presidential Palace wasn’t immediately available to comment.

For now, no markets are open to see if this is affecting anything for now, we will be monitoring the IBOVESPA funds in Japan once they open for any reaction.

"Brazil Now Facing A Major Crisis": Police Says It Has Evidence President Temer Received Bribes

Update: and right on time, the Brazilian house speaker confirmed that the worst case scenario - for Temer - is on the table:

• BRAZIL NOW FACING MAJOR CRISIS: HOUSE SPEAKER MAIA


• BRAZIL JUDGE REJECTS TEMER CRIMINAL COMPLAINT VS JBS’S BATISTA

* * *

Almost exactly one month after Brazil"s stock market crashed, and the Real plunged after the country"s never-ending political drama made a triumphal return following accusations that president Michel Temer had encouraged a "hush money" bribe to former House Speaker Eduardo Cunha in return for not getting dragged into the Carwash scandal, on Tuesday afternoon, Brazil’s federal police force said it has found evidence that the embattled president received bribes to help businesses, Brazil"s O Globo reported.

Investigators said in a preliminary report published Tuesday by Brazil’s top court that Temer deserves to be investigated for passive corruption, a process that would likely culminate with his impeachment. Temer has denied any wrongdoing and has already pledged not to resign.

The news comes hours after a defiant Senate committee voted down a key anchor of Temer"s proposed reform platform, the landmark labor reform bill, whose passage in the lower house in April prompted widespread protests by labor unions who are against the proposed legislation which would abolish mandatory payment of union dues by Brazilian workers. The vote was seen as a blow to the government, amid other political noise embroiling President Temer.

Even before today"s police announcement, Brazil"s Attorney General Rodrigo Janot said last month there were enough preliminary indications of wrongdoing for Temer to be investigated for corruption and obstruction of justice. And if Brazil’s top prosecutor agrees with the federal police recommendation, Congress will decide whether Temer should be investigated by the country’s Supreme Court. The court is the only body that can formally investigate the president.

If two-thirds of Congress votes to allow the investigation, Temer would be suspended from office pending trial, suffering the same fate as his predecessor Dilma Rouseff whose vice-president Temer was originally, and eventually managed to overthrow with an elaborate plot "exposing" her corrupt activities. Karma, it turns out, is a bitch in all jurisdications, including Latin America.

Brazil's President Tells Supreme Court To Suspend Corruption Probe Of Brazil's President

In a move that will surely light the proverbial lightbulb over Donald Trump"s head, Brazilian President Michel Temer, having been officially dragged into Brazil"s massive corruption scandal after a record emerged in which he urged the payment of "hush money", said on Saturday he would ask the Supreme Court to suspend its investigation into allegations he was also involved in the carwash corruption scheme, vowing to remain in power.

Speaking during a televised address on Saturday afternoon, Brazil’s deeply unpopular president, who replaced a just as deeply unpopular president last year when Dilma Rouseff was impeached, claimed the recording that implicated him in the scandal was doctored and said he would file a petition with the Supreme Court to suspend the investigation until it could be verified, the WSJ reported.

In the recording cited by Temer, which unleashed a historic crash of the Brazilian stock market and currency on Thursday when news of Temer"s involvement broke, the president can be heard chatting with Joesley Batista, chairman and heir of the beef-and-chicken JBS empire, apparently him his approval to pay the jailed former speaker of the House Eduardo Cunha - the man responsible for Dilma Rouseff"s ouster last year - to buy his silence. Batista, who made the recording and gave it to prosecutors in hopes for prosecutorial leniency against JBS, said the recording wasn’t edited.

“Our country will not go off the rails—I will continue at the front of the government,” Mr. Temer said in his latest defiant speech about the allegations.

To simplify: Brazil"s president just told Brazil"s Supreme Court to suspend its probe of Brazil"s president which would most likely result in Brazil"s president being impeached. Again.

Temer’s statement comes the day after it was revealed that the executives at Brazil’s meatpacking giant JBS told prosecutors they had paid millions of dollars in bribes to the president and his predecessors, Dilma Rousseff and Luiz Inácio Lula da Silva. In documents released by the country’s Supreme Court Friday, JBS executives told prosecutors the company had paid a total of $123 million in bribes to the country’s politicians over recent years, including payments of $4.6 million to the president.

In his speech on Saturday, Temer immeiately attacked JBS, accusing its executives of “damaging Brazil.” Ironically, in a attempt to drag down JBS with him, Temer also highlighted reports that JBS made money from the latest scandal by buying large amounts of dollars before the news broke. The Brazilian real plunged in value against the dollar on Thursday, the first day of trading after a report about the recording was published.

On at least one thing Temer may be right: the alleged incident involving JBS insider trading is perhaps just as amusing as Temer telling the court to stop probing him. On Friday, Brazil"s regulator said it launched probes against JBS - i.e., the company at the heart of the latest and greatest Brazilian scandal - and other companies controlled by J&F Investimentos to investigate suspicious trades made before Brazil"s markets crashed after the revelation of a plea deal by the company"s top executives.  In a statement late on Friday, the regulator CVM said it is investigating "signs of possible insider trading" of foreign exchange futures, derivatives and JBS stock ordered by meatpacker JBS SA, Banco Original SA and FB Participacoes SA, Reuters reported. The regulator is also examining the sale of shares in the company by its controlling shareholders and subsequent acquisitions by the company´s treasury.

The probe emerged after Brazil"s Valor Economico reported on the same day that JBS and other companies owned by the Batista brothers bought over $1 billion in U.S. dollar contracts in the local market hours before the plea deal news broke.

In other words, the Batistas are accused of going long the dollar in Soros-sized amount, and shorting their own stock, in frontrunning the market turmoil that they themselves would unleash just hours later after news of the plea bargain and Temer"s involvement emerged!

Not even Brazilian telenovellas have this much drama and intrigue, let alone hubris...

Predictably, JBS said denied everything and on Friday said any trades made this week were consistent with the company"s strategy of hedging its large dollar-denominated debt. Amusingly, the company said the recent currency swings could have caused more than 1 billion reais in losses. It has yet to be discloed what gains the "currency  swings" generated instead as a result of the corrupt company"s insider trading, pardon hedging. The real fell 8 percent against the U.S. currency on Thursday, sustaining the largest losses since the country devalued its currency in 1999.

Meanwhile, taking a page out of the Venezuela playbook, protests are planned across Brazil’s major cities on Sunday against Temer, whose popularity rating was less than 9% before the latest scandal broke.

Somewhere, Donald Trump is furiously taking notes.

Unprecedented Corruption Among Brazil's Top Politicians Revealed In Unsealed JBS Plea Bargain

Recall that behind the latest political scandal to grip Brazil, in which president Michel Temer was accused of paying hush money to the jailed former House speaker, Eduardo Cunha (who was responsible for the impeachment of Temer"s predecessor Dilma Rouseff) to keep him from dragging Temer down as well, and which yesterday led to historic losses for the the Bovespa, was a plea bargain by the top executives of Brazil"s meatpacking giant JBS, Joseley Batista and his brother Wesley, which among other things, included an alleged recording of a phone conversation in which Batista told Temer he was paying Cunha to remain silent, to which the president was recorded saying, "You need to keep that up, okay?"

Batista and Temer

Moments ago, Brazil"s O Globo newspaper reported that the latest episode in Brazil"s epic political corruption saga has been unveiled, and two things emerged. First, president Temer is under now officially under investigation for corruption and obstruction of justice.

Second, and more important, the contents of the JBS plea bargain testimony were disclosed, courtesy of Reuters, and they reveal corruption so pervasive that virtually every single current and past top politician has been implicated. Here are the details:

• JBS PLEA-BARGAIN TESTIMONY INDICATES BRAZIL PRESIDENT TEMER ALLEGEDLY RECEIVED 15 MILLION REAIS IN BRIBE IN 2014


• JBS PLEA-BARGAIN TESTIMONY SAYS COMPANY PAID BRIBE TO TEMER TO END PETROBRAS MONOPOLY ON NATURAL GAS


• JBS PLEA-BARGAIN TESTIMONY SAYS EX PRESIDENT LUIZ INACIO LULA DA SILVA RECEIVED $50 MILLION IN BRIBES IN OFFSHORE ACCOUNT


• JBS PLEA-BARGAIN TESTIMONY SAYS EX PRESIDENT DILMA ROUSSEFF RECEIVED $30 MILLION IN BRIBES IN OFFSHORE ACCOUNTS


• JBS PLEA-BARGAIN TESTIMONY INDICATES JOESLEY BATISTA PAID 30 MILLION REAIS FOR EX PRESIDENT DILMA ROUSSEFF"S 2010 CAMPAIGN


• JBS PLEA-BARGAIN TESTIMONY SAYS PAID SUSPENDED SENATOR, EX PRESIDENTIAL CANDIDATE AECIO NEVES BRIBE IN 2014 TO FAVOR COMPANY


• BRAZIL PROSECUTORS SAY JOESLEY BATISTA"S TESTIMONY INDICATES HE PAID EX HOUSE SPEAKER CUNHA MONTHLY BRIBES WITH TEMER"S BLESSING

Some more from Reuters:

Brazil"s Supreme Court released plea-bargain testimony on Friday that includes accusations President Michel Temer received 15 million reais ($4.6 million) in bribes in 2014 before he took office from executives of meatpacking giant JBS SA. 

The testimony also claims former President Luiz Inacio Lula da Silva received $50 million in bribes in offshore accounts from JBS, while ex-President Dilma Rousseff took $30 million in bribes in offshore accounts.

If true, the plea testimony implicates virtually all top Brazilian politicians - from both the current and previous administrations - who have now been thrown under the bus for corruption and bribery, which while no longer surprising in all matters Brazilian, prompt one to ask: is there any politician left in Brazil who is clean "enough" to take over the presidency without fears of compromising recordings emerging just months if not weeks later, resulting in another political scandal and more chaos in the biggest Latin American nation.

Brazil Plunges Into Fresh Political Crisis After Temer "Hush Money" Recordings Emerge; Market Crashes

The presidency of Brazil"s Michel Temer, who replaced disgraced and impeached predecessor Dilma Rouseff last summer, lasted about one year without a major corruption scandal.

That changed tonight, when Brazil"s O Globo newspaper which was instrumental in exposing the Carwash scandal which ultimately led to Rouseff"s downfall and the arrest and incarceration of countless politicians, reported that the chairman of meatpacking giant JBS secretly recorded his discussion with Temer about "hush money" payments to jailed former House Speaker Eduardo Cunha in return for his silence.

Brazil"s President Michel Temer

The allegations are the latest development in Operation Carwash, a sprawling corruption probe that has implicated many of Brazil’s business and political elite, including some in the president’s own party. Temer has repeatedly denied any wrongdoing.

Readers may recall that in a delightfully ironic case study of political irony and power vacuum, Eduardo Cunha, the conservative Brazilian political leader who led the push in 2016 to oust Dilma Rousseff, was sentenced in March to more than 15 years in prison himself, when a Brazil judge found him guilty of corruption, money laundering and illegally sending money abroad, all in connection with the sprawling graft investigation involving the state-run oil company Petrobras, and which Cunha himself used as a pretext to dispose of Rouseff.

The tragically ironic Cunha was the highest-profile politician to be sentenced as a result of the Operation Car Wash investigation into corruption at Petrobras, which has shaken Brazil’s political and business establishments to their core. Ultimately, he was convicted of charges that included receiving bribes during Petrobras’ acquisition of a Benin oil field for $35.5 million in 2011, and of money laundering crimes between 2011 and 2014. Yet somehow he was the man tasked with bringing justice to Rouseff.

Furthermore, Cunha, once a powerful member of Temer"s ruling party, has previously said he had compromising information about a host of senior politicians linked to a vast political bribery scandal at state oil firm Petrobras. And yet he never spokeup.

Now, not only do we know why Cunha kept silent, but there is finally proof of a corruption link between Cunha and Temer himself.

According to the O Globo report, JBS Chairman Joseley Batista recorded the discussion with Temer about hush money the executive paid to Cunha, according to the newspaper. The report did not say what Cunha was asked to keep quiet about. When Batista told Temer he was paying Cunha to remain silent, the president was recorded saying, "You need to keep that up, okay?"

Batista and Temer

Temer on Wednesday acknowledged he had met with the JBS Chairman in March but denied any part in alleged efforts to keep jailed former House Speaker Eduardo Cunha from testifying.

According to O Globo, executives from JBS submitted a tape to the Supreme Court of a secret recording of Temer approving a payment to the abovementioned Cunha. Batista and his brother, JBS Chief Executive Wesley Batista, presented the recording to prosecutors as part of plea bargain negotiations underway since March.

Reuters adds that  JBS also hired a law firm to discuss a leniency deal with the U.S. Department of Justice. JBS declined to comment immediately.

To be sure, the presidential press office immediately issued a statement vehemently denying the allegations. "President Michel Temer never requested payments to obtain the silence of ex-deputy Eduardo Cunha," it said. "The president defends a deep and wide investigation to get to the bottom of the claims put forward in the media."

Unfortunately for Temer, Brazil appears to no longer believe politician lies, especially of Temer, whose approval rating is in the single digits. As a result, as Bloomberg writes, "Brazil has plunged back into political crisis, reminiscent of the chaos surrounding last year’s impeachment process."

Bloomberg adds that O Globo’s report caused an immediate stir in Congress, where opposition congressmen started to shout anti-government slogans. The session was subsequently suspended. Legislators from five opposition parties called for Temer’s resignation and early elections, according to a statement sent by the opposition leader in the lower house. Temer went to his official residence after an emergency meeting with some of his closest aides.

According to further press reports, legislators from 5 opposition parties have demanded Temer"s resignation and call for new elections, according to statement from lower house opposition leader’s press office. And while the US spent much of the day talking about impeachment, in Brazil they actually did it: Rede party deputy Alessandro Molon filed an impeachment request against Temer, according to his press office.

The local authorities already know what"s coming: amid growing protests in Brasilia on Wednesday evening, military police have moved into position around the presidential palace and one of the judges on Brazil’s Supreme Court has called for calm. "It’s a moment for calm, moderation and watching the institutions work," said Marco Aurelio Mello.

"We still need more information, but on the face of it there’s enough to say that it weakens substantially the government," said Andre Cesar, an independent political analyst. "I see a huge increase in the difficulties in approving reforms. Pension reform could take a step back."

The head of the Brazilian Bar Association, Claudio Lamachia, said in a statement that society needs immediate answers and that the alleged recordings need to be made public as soon as possible. "Brazilians can no longer live with doubts regarding their representatives," Lamachia said.

On Wednesday evening, people were already lining up on the streets of Sao Paolo, preparing to protest against Temer:

Anti-Temer protests gathering numbers in #SaoPaolo following audio showing #Brazil"s president endorsing the payment for silence. pic.twitter.com/LB48zOHJgk

— Paul Antonopoulos (@oulosP) May 18, 2017

#protest now in #SãoPaulo against #Brazil #Temer caught negotiating kickbacks & for direct elections in the country (photo: Dani Sampaio) pic.twitter.com/t4ojSzwyoe

— ana cernov (@anacernov) May 18, 2017

Spontaneous protest against President Temer on Avenida Paulista after new recordings emerge. São Paulo, Brazil. ©LOST ART #foratemer pic.twitter.com/Ej2YGrPmcy

— Lost Art (@lostart) May 18, 2017

Meanwhile, the same market which soared last year after the Rouseff impeachment, for some still unknown reason, is now plunging on the news. A Brazilian ETF trading in Tokyo, tumbled more than 8% on the O Globo news, its biggest drop since September 2015.

At this point it is unclear if there is any politician left in Brazil who has not been tainted by the Carwash scandal; it is also not clear who could possibly replace Temer when he too is kicked out of office, in light of the unprecedented power vacuum on all sides that currently exists in the Latin American country.