Brazil Daily

Rio Governor suspended in coronavirus corruption probe

Another crisis in Rio de Janeiro, as the governor gets suspended from office. Mercosur-EU trade deal at risk. And the first Brazilian carbon-neutral meat product line

Today, another major political crisis in Rio de Janeiro. The risks for the Mercosur-EU trade deal. And the first Brazilian carbon-neutral meat product line.

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? Court suspends Rio governor for suspected corruption  

Early this morning, Brazil’s Superior Court of Justice — the country’s second-highest judicial body — has temporarily stripped Rio de Janeiro Governor Wilson Witzel of his office. [restricted]Prosecutors accuse Mr. Witzel of heading a corruption scheme to embezzle funds earmarked for the state’s coronavirus efforts, involving the receipt of kickbacks from contractors and laundering money through a law firm belonging to his wife, Helena Witzel. The corruption scheme is suspected of siphoning around BRL 1 billion (USD 180 million) from pandemic-related procurement processes.

  • Also today, the Federal Police launched an operation to carry out several search and seizure warrants — also targeting Lieutenant Governor Cláudio Castro and the speaker of Rio de Janeiro’s State Congress, André Ceciliano. Multiple politicians have been subject to arrest warrants, including Rio’s former Economic Development Secretary Lucas Tristão and Pastor Everaldo, chairman of Mr. Witzel’s Social Christian Party.
  • Mr. Witzel was initially targeted by investigators in May, when federal marshals held a search and seizure operation at the Laranjeiras Palace, the official residence of the governor.
  • Last month, former Rio Health Secretary Edmar Santos was arrested as part of the same probe, and signed a plea deal agreement with investigators.

Why it matters. Mr. Witzel already faces impeachment proceedings — and today’s decision could damage his political situation beyond repair.

Rio history. All living former Rio de Janeiro governors have been arrested at some point, highlighting just how ingrained corruption is in the state’s public life.

Rapid rise, rapid fall. Wilson Witzel came to politics as a completely unknown gubernatorial candidate in 2018. Just days before the election, he was polling at a mere 4 percent — but he leapfrogged all candidates to pull off an upset thanks to attaching his name to Jair Bolsonaro in the final televised debate. But soon after taking office, Mr. Witzel became a bitter rival of the Bolsonaros, as he hoped to run for the presidency himself in 2022.

  • Mr. Witzel and the presidential clan have traded accusations of tampering with investigations. The Bolsonaros say the governor used local police to target Senator Flávio Bolsonaro (accused of money laundering), while Mr. Witzel says the president is using the Federal Police to persecute his political foes.
  • Today’s decision is not without controversy. It was issued by a single justice, instead of a panel of judges. Moreover, it was penned by Justice Benedito Gonçalves, who was briefly under investigation due to alleged links to corrupt construction firm OAS.
  • Political scientist Ricardo Ismael, a professor at Rio’s Pontifical Catholic University, believes the governor is fighting on too many fronts. “He has neither the political support nor the popular support he had when he was elected,” he told reporter José Roberto Castro.

Who is Pastor Everaldo? More than just a party chairman, Pastor Everaldo (one of the operation’s targets) is a relevant political figure. He is a preacher at the Assembly of God church, one of the leading Evangelical segments in Brazil. Pastor Everaldo ran for president in 2014 but won less than 1 percent of votes. He was accused of getting kickbacks to use his candidacy to support center-right candidate Aécio Neves.

  • In 2016, the preacher performed a baptism ceremony at the Jordan River for Jair Bolsonaro. The event marked the identification of the then-congressman with Evangelical voters — a constituency that became key to his successful presidential bid.

UPDATE: “I want to voice my outrage. These search and seizure operations are ‘search and get disappointed’ stunts. They haven’t found [anything against me]. Federal prosecutors are specializing in destabilizing state administrations with shallow investigations — and show the political use of the Federal Prosecution Office,” said Mr. Witzel.

Resignation of EU trade chief a blow to Mercosur deal

Phil Hogan resigned as the European Union trade commissioner, after he was accused of breaching Covid-19 guidelines during a trip to his home country Ireland.

Why it matters. Mr. Hogan was the main advocate for the long-awaited free trade agreement between the EU and Mercosur — the trade alliance made up of Brazil, Argentina, Uruguay, and Paraguay — which has taken over 20 years of negotiations.

Trade. Announced in June 2019, the deal is set to create one of the biggest free-trade zones in the world — and could generate an extra USD 87.5 billion for Brazil’s GDP over the next 15 years. Among its main points, the deal would allow Mercosur countries to ship 99,000 tons of beef annually to the EU.

Yes, but … European countries with strong agricultural lobbies — such as France — have opposed the deal, saying South American agribusiness is reliant on deforestation. Mr. Hogan, however, has rejected this argument, saying critics exploit environmental concerns to favor their own trading interests.

Risks. With Mr. Hogan stepping down, many say that his replacement should reopen negotiations with Mercosur. Ends Europe reports that “Climate Action Network (CAN) Europe said the European Commission could now ‘put on ice’ the Mercosur deal, which would liberalise trade in commodities linked to deforestation, particularly after German Chancellor Angela Merkel recently expressed concern around ratifying it in its current form.”

  • “Instead of rewarding climate disruptors, the EU needs to make it much harder for non-EU actors to cut corners so they can outcompete EU industry and sell their carbon-heavy products in the EU,” said Nick Meynen, a policy officer at the European Environmental Bureau (EEB).

Brazil’s first carbon-neutral meat?

On Thursday, the Agriculture Ministry launched Brazil’s first carbon-neutral certification for meat products. This is a BRL 10-million (USD 1.8 million) project developed by sector giant Marfrig and the state-owned Brazilian Agricultural Research Corporation (Embrapa). In order to obtain the certification, producers must plant trees on their pastures.

  • Studies suggest that around 200 trees per hectare would be enough to offset methane emissions by 11 adult bovines over one year. In Brazil, cattle herd density is 1.2 heads per hectare. Certification would be issued and verified by independent auditors.

Why it matters. The initiative comes as Brazil’s agriculture faces a severe image crisis due to growing international concerns around the industry’s links to Amazon deforestation. 

  • Back in July, Europe’s Nordea Asset Management dropped JBS — the world’s biggest meat-processing firm — from its portfolio.
  • Embrapa researchers hope that the certification will be adopted by companies as a way to add value to Brazil’s meat products — especially to rebrand them in key markets such as the U.S. and Europe. 

What else you need to know today

  • Sanitation. After Congress passed new rules for the basic sanitation sector, the National Water Agency (ANA) has begun drafting a regulatory framework of its own. The agency plans to submit proposals to public debate in H1 2021, electing three priorities: governance of local regulators, calculating compensation for assets (in cases of contract terminations), and the adaptation of binding agreements to the sector’s new rules.
  • Oil and gas. With the government’s timetable of privatizations disrupted by the pandemic, Petrobras sees the sale of its remaining 37.5-percent share in fuel distribution company BR Distribuidora as the main money-making deal to fulfill its divestment plan. The company hopes to raise over BRL 9.2 billion (USD 1.7 billion).
  • Amazon fires. Without finding any culprits, the Federal Police ended its investigation into coordinated efforts to ignite fires in the Amazon rainforest. Last year, several fires erupted in forest areas, attracting global attention and criticism. Vice President Hamilton Mourão played down the destruction of Amazon vegetation yesterday, saying that the roughly 24,000 fires in the region today is “a needle in a haystack” compared to the size of the Amazon. There are fears the fire crisis may scupper the Mercosur-EU trade deal (see above).
  • Profits. Brazilian bank Bradesco was the Latin American company to post the highest profits in H1 2020 — with net profits reaching USD 1.257 billion. Another bank, Itaú, came second, with USD 1.246 billion.
  • Violence/racism. According to the Violence Atlas, an annual report by the Brazilian Public Security Forum, black and multiracial individuals are the victims of three out of four murders in the country. Murder rates among these ethnic groups rose 11.5 percent over the past decade. Meanwhile, the murder rate among the rest of the population went down 12.9 percent.[/restricted]

By Gustavo Ribeiro

An award-winning journalist, Gustavo has extensive experience covering Brazilian politics and international affairs. He has been featured across Brazilian and French media outlets and founded The Brazilian Report in 2017. He holds a master’s degree in Political Science and Latin American studies from Panthéon-Sorbonne University in Paris.