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### Viewing cable 05SAOPAULO971, Sao Paulo journalists discuss corruption scandal

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05SAOPAULO971 | 2005-08-16 12:10 | 2011-07-11 00:00 | UNCLASSIFIED | Consulate Sao Paulo

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 02 SAO PAULO 000971

    SIPDIS

    STATE  IIP/R/MR; WHA/PD

    E.O. 12958: N/A
    TAGS: PGOV KPAO BR
    SUBJECT:  Sao Paulo journalists discuss corruption scandal
    in Brazil

    ¶1. Summary:  At the end of July/early August, IO Sao Paulo
    held a series of individual meetings with prominent
    journalists to discuss the corruption scandal unfolding in
    Brazil. Various journalists commented that they believe
    President Lula da Silva (Lula) may not have been aware of
    the corruption but that they believed that Chief of Staff
    Jose Dirceu was. They mentioned several rumors regarding the
    source of the money that businessman Marcos Valerio de Sousa
    "loaned to members of the government and political party
    and confessed to have no idea of how the scandal would
    eventually end. End Summary.

    ¶2. Over a series of days, from July 14 - August 3, IO met
    separately with eight journalists to gather their opinions
    on the ongoing government corruption scandal in Brazil.  The
    journalists are all prominent commentators and anchors from
    television, radio, print and Internet press. Although the
    journalists had different theories and points of view, the
    discussions painted an interesting picture of the general
    view of the media on the scandal.

    Key Goernment Figures:

    ¶3. Most of the journalists seeed not to believe, or did not
    want to believe, that President Lula knew of corruption in
    the government and the Worker's Party (PT). All of them
    however, were certain that Dirceu was aware of and involved
    in a scheme to pay members of congress to support government
    policy. They also stated that all parties rely on
    unregistered funds to support their election campaigns.
    Many posited that the PT, always in the role of opposition
    until Lula's election, was not prepared to govern.  They
    suggested that the party did not know how to lobby for votes
    and support and so resorted to purchasing it. Some referred
    to the communist roots of the PT and suggested that this
    same modus operandi of controlling policy through
    centralization of power led the PT to try to govern through
    the monthly payments (mensalao).  Dirceu was described as an
    "apparatchik" and someone in whom Lula mistakenly put too
    much trust.  When asked about Finance Minister Antonio
    Palocci, most journalists thought that he was not involved
    in the scheme. Others thought that the government did not
    want attention focused on him and brought up the fact that
    when Lula was running for office, Palocci replaced Celso
    Daniel, the mayor of St.Andre, as Lula's campaign
    coordinator. (Note: Celso Daniel was murdered in what was
    judged by police to be a robbery attempt.  Rumors have
    persisted that Daniel was in fact murdered because he was
    investigating corruption in the PT election campaign).

    Follow the Money:

    ¶4. This was the phrase used by several journalists to
    describe their methods of investigating the scandal.  All of
    the journalists commented that the press is completely free
    to investigate and that their media outlets are aggressively
    pursuing the case.  One journalist mentioned that the press
    receives all of the information that the Congressional
    Investigative Committee (CPI) receives at the same time that
    the CPI receives it and that they rely upon this information
    and follow up on it.  One journalist commented that he
    believes this is why the government did not want a CPI. Many
    media outlets have sent additional staff from Sao Paulo to
    Brasilia to help report on the scandal.  One journalist
    suggested that the question is not only to whom did Marcos
    Valerio de Sousa (Valerio) give the money, but also from
    where/whom, did Valerio get the money.  Journalists had
    differing theories on the origin of the money.  One believed
    that the PT had money from unregistered donations that they
    transferred to overseas accounts.  He suspected that for
    some reason they could not access these accounts and so had
    to borrow from Valerio.  Others believed that the PT gave
    lucrative contracts to Valerio and other publicity companies
    paying much more than they were worth, with the
    understanding that they would then be able to "borrow" this
    money and not repay it.  Another suggested that the money
    might have come from state owned companies.  A prominent
    anchorman whose name was among those whose telephones the
    businessman Daniel Dantas is accused of having illegally
    tapped in the Kroll scandal, says that he believes that
    Dantas actually provided the money to Valerio to give to the
    party.

    Where will it all end?

    ¶5. The journalists confessed they had no idea where the
    scandal would end.  At the time of speaking they doubted
    that it would end in the impeachment of the President.  One
    journalist posited that unless something is found directly
    implicating the President, for example a check written to
    him, the President would not be impeached.  Another
    journalist mentioned that there were rumors that Federal
    Police raided the Sao Paulo luxury department store, Daslu,
    because the store had a receipt for a purchase by Lula's
    wife that was made with Valerio's credit card. The
    journalist asked, if this is the case, was the raid to
    uncover this evidence or to cover it up? Some predicted the
    demise of the PT party.  Many commented that Lula helped the
    PT to win rather than the other way around. Some predicted
    the PT party would divide between the more liberal elements
    and the more conservative.  Others thought that Lula might
    begin to court the more leftist members of his party.

    ¶6. As for the upcoming elections, all of the journalists
    still believed Lula to be a strong contender although many
    pointed out that polls taken now cannot reliably predict how
    the electorate will feel next year.  They also pointed out
    that the opposition would use the scandal during the
    election campaign to attack Lula in a way they are not doing
    now.  Some suggested that it suits the opposition to have a
    "lame duck" president in office, rather than impeaching him.
    Another theme was the fear that a populist candidate in the
    mold of Severino Calvacanti might take advantage of the
    opportunity and run and win (a la Venezuela's Chavez).  More
    than one journalist mentioned the Rio politician Anthony
    Garotinho as one such possible candidate. The journalists
    who suggested this possibility thought that it was remote,
    but definitely the worst-case scenario.

    7.While many thought that this was a good opportunity to
    shine a light on corrupt practices in the Brazilian
    government, few had much hope that this scandal would result
    in concrete reforms to the political system.

    ¶8.  Comment:  These conversations took place several weeks
    ago and time is proving many of the speculations to have
    some basis in fact. Since the conversations, there have been
    revelations that the PT may have an offshore account and
    Dantas's name has also been mentioned in connection with the
    scandal.  Duda Mendonca, who is the businessman who created
    an offshore account (for the PT?), is married to one of the
    owners of the department store, Daslu.  End comment.

    WOLFE

`