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Brazil's top prosecutor charged President Temer with Corruption

Prosecutor's case based on secret recording of Michel Temer. It looks like Temer has sufficient support in Congress to block the trial, Bloomberg's Bruce Douglas says. -Watch en large video


Petroleumworld 06 27 2017

Brazil's Michel Temer was charged with corruption by the chief prosecutor on Monday evening, in an unprecedented development that may put the embattled president of Latin America's largest economy on trial.

Rodrigo Janot has charged Temer with alleged passive corruption and stated there are indications of other crimes that need to be investigated, according to documents filed at the Supreme Court. The highly-anticipated 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, but if the president is eventually found guilty he would be stripped of office and could be jailed.

The prosecutor's charges are based partly on a secret recording of a conversation between Temer and Joesley Batista, the former CEO of the meat-packing giant JBS. The document sent to the Supreme Court states that Temer received 500,000 reais ($151,000) between April and March 2017 from Batista via an intermediary. Temer's lawyer, Antonio Mariz, told Bloomberg that he had not yet had time to analyze the report. The presidential palace declined to comment. The president has repeatedly denied wrongdoing.

Since he took office in May last year, Temer's market-friendly administration has been dogged by scandal, accusations of illegitimacy and low levels of popularity. Last month's explosive allegations of criminality destabilized yet further his government and prompted, briefly, a sell-off of Brazilian assets. But the president has vowed to stay in office and the decision of his main political ally, the PSDB, to continue to back his government has strengthened his chances of finishing his mandate.

An exchange traded fund that tracks Brazilian equities, The NEXT FUNDS Ibovespa Linked Exchange Traded Fund, rose 1.8 percent in Tokyo trading after news broke.

How to Try a President in Brazil - a Step by Step Guide

Temer appears to have enough legislative support to survive a vote in Congress, according to Marcio Coimbra, a political scientist and consultant. "If there was an alternative with a minimum of consensus, Temer would already have gone," he said.

Still the process of voting on whether to put the president on trial is likely to complicate the outlook for his reform agenda and weigh on investor sentiment just as Brazil is struggling to emerge from its worst recession on record.

"There could be some noise in the market tomorrow," said Andre Perfeito, chief economist of brokerage Gradual Cctvm. "Long-term future rates could rise."

The charges against Temer come as Brazil braces for a possible conviction in the trial of former president Luiz Inacio Lula da Silva. Lula is being prosecuted in five separate criminal cases, on charges ranging from corruption to influence-trafficking.

Story by Simone Preissler Iglesias and Mario Sergio Lima from Bloomberg.

06 26 2017

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