April 3, 2017 / 3:36 PM / 4 months ago

Brazil's Temer faces a perfect storm in April

4 Min Read

BRASILIA, April 3 (Reuters) - Two landmark corruption trials and the first hurdle for a crucial pension reform mean that April could make or break Brazilian President Michel Temer's presidency, or bring it to an abrupt end.

A Supreme Court judge is due to lift the seal on plea bargain testimony that could lead to the dismissal of five ministers. Temer's reform of Brazil's social security system - key to his plans to restore fiscal discipline - also faces a first vote in committee by mid-April.

But it is a case before the Supreme Electoral Tribunal (TSE), opening on Tuesday, that could do most damage by annulling the 2014 election of impeached ex-president Dilma Rousseff - and her running mate Temer - for illegal campaign funding.

It is the first time the court will rule on a sitting president. A decision to annul the ticket would end Temer's presidency and require Congress to elect a successor within 30 days.

The TSE judge tasked with studying the case, Herman Benjamin, is expected to recommend in a 1,086-page report submitted last week that the court invalidate the election.

If a majority of the seven-member tribunal agrees, Temer, a constitutional lawyer, has said he has plenty of tools for appeal, including taking the case to the overburdened Supreme Court.

Transparency Minister Torquato Jardim believes time is on Temer's side because the appeals process is so slow the case will drag on until Temer's mandate expires at the end of 2018.

"In practical terms, this means that President Temer will not leave office until January 1, 2019," Jardim, a lawyer and a friend of the president, told Reuters.

The TSE has scheduled four sessions this week to hear the case but any judge can ask to study Benjamin's report, postponing the process for weeks if not months.

"The problem is the president will be sub judice, and that implies a loss of political power," said Jardim.

Bribes

The publication of plea bargain testimony by 77 employees of the Odebrecht engineering conglomerate this month will deliver another bombshell for Temer's scandal-plagued coalition.

It is expected to name hundreds of politicians who took bribes, including Temer's chief of staff and Congressional leaders of his PMDB party. Temer has vowed to suspend ministers who are charged and dismiss them if indicted.

Temer himself is not being investigated in the investigation, codenamed Operation Car Wash. However, the testimonies may add to evidence in the TSE case.

Folha de S.Paulo newspaper reported on Sunday a federal prosecutor will seek the annulment of the Rousseff-Temer ticket following testimony that Odebrecht illegally paid 112 million reais ($36 million) to the campaign, almost half of it in bribes to obtain favorable tax legislation.

The uncertainty could jeopardize the pension reform on which Temer's success depends. If Temer finds himself weakened, he may be forced to make more concessions on the bill, which has triggered street protests.

A senior Temer aide, who asked not to be named, said the scandal was holding back Brazil's recovery from its worst recession on record. While inflation has fallen to the lowest rate in three years, investment is yet to recover.

"The next month will be tumultuous because politics and economics will get caught up in the same storm," the aide said, adding that Temer was keen to press ahead with privatizations and the auction of oil and gas rights.

The government has been encouraged by the muted protests against its planned reforms, the aide said: "The risk is not in the streets but in the TSE ... Temer hopes to put that behind him so he can get on with the economic agenda." (Editing by Daniel Flynn and Bernadette Baum)

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