April 12, 2017 / 3:50 PM / 4 months ago

Brazil's Temer urges business as usual after massive bribery probe

BRASILIA (Reuters) - Brazil's President Michel Temer urged lawmakers on Wednesday to push ahead with business as usual, a day after a Supreme Court justice ordered corruption probes into 98 politicians, including leading legislators and a third of his cabinet.

Temer avoided commenting on the unprecedented wave of investigations triggered by plea bargain testimony from executives at engineering group Odebrecht, but he made clear the government was committed to implementing its ambitious reform agenda, which includes an overhaul of Brazil's creaking pension system.

"We can never paralyse the government," Temer said at an event in the capital Brasilia. "If we aren't careful, it will seem Brazil's institutions don't work, which is not the case."

The investigation of eight government ministers, the heads of both chambers of Congress and dozens of senior lawmakers is the greatest challenge to date for Temer, an unpopular president struggling to stabilise Brazil's debt and end a deep recession.

The president has said he will suspend any ministers charged with corruption, but it may take months before prosecutors bring charges, given the stack of new cases landing on their desks.

That may give Temer enough time to pass reforms.

According to analysts at political consultancy Eurasia Group, the probes are likely to delay rather than derail Temer's pension overhaul, a cornerstone of the programme he is pushing through Congress to shore up government accounts.

Finance Minister Henrique Meirelles told Reuters in a phone interview on Wednesday that he continues to expect the reform to be approved in the first half of the year and that even if it were to slip to August it would not be a "huge drama."

Brazil's benchmark Bovespa stock index slipped 0.5 percent on Wednesday morning before paring losses to 0.2 percent, while the local currency was little changed against the U.S. dollar.

Brazil's President Michel Temer looks on during a ceremony at the Planalto Palace, in Brasilia, Brazil April 12, 2017.Ueslei Marcelino

2018 ELECTION

The largest fallout may be experienced during next year's election, with major parties seemingly without many untarnished names to put forward as candidates, increasing the possibility of a successful run by an outsider.

Luiz Inacio Lula da Silva currently leads polls for the 2018 presidential election and it remains to be seen if further investigations into the former president will dent his popularity.

Slideshow (4 Images)

Supreme Court Justice Luiz Edson Fachin on Tuesday passed to lower courts six investigations into the veteran leftist politician based on testimony from former Odebrecht executives.

Lula, speaking at a Workers Party rally in Sao Paulo as the list of politicians under investigation became public late on Tuesday, was upbeat. "In all the polls I'm in front," he told the crowd to huge applause.

After more than three years of mounting corruption probes into political kickbacks for contracts at state-run companies, police and prosecutors have jailed dozens of business leaders and convinced many to provide evidence against elected allies.

The probes threaten several of Temer's closest confidants, including chief of staff Eliseu Padilha, who has played a key role in pushing unpopular austerity measures through Congress.

Temer's ministers of foreign affairs, trade and agriculture also are under investigation, as well as former presidents Fernando Henrique Cardoso and Dilma Rousseff, in addition to Lula. All of those under investigation have denied wrongdoing.

Fachin also opened four investigations into the payment of bribes to foreign politicians, opening further avenues for the broadening investigation to pursue. The names of the countries remained under seal.

Reporting by Silvio Cascione and Ricardo Brito; Writing and additional reporting by Brad Haynes; Editing by Daniel Flynn and Andrea Ricci

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