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Won't resign, Brazilian leader says

Temer denies report that he backed paying off ex-lawmaker

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Photographs by ANDRE PENNER / AP

A worker monitors screens at a Sao Paulo brokerage as Brazil’s markets and currency reacted Thursday to the latest scandal surrounding the country’s president.

RIO DE JANEIRO -- Brazilian President Michel Temer on Thursday rejected calls for his resignation, saying he will fight allegations that he endorsed the paying of hush money to an ex-lawmaker jailed for corruption.

Temer spoke in a national address after Globo newspaper reported Wednesday night that Temer was recorded saying he supports payments to former Lower House Speaker Eduardo Cunha. The incendiary accusation was the latest development in a scandal that has had Latin America's largest nation on edge with its stock market and currency plunging, and rumors circulating that Temer would step down.

"At no time did I authorize the paying of anyone," Temer said, raising his voice and pounding his index finger against the lectern. "I did not buy anybody's silence."

"I will not resign," he said.

Protests were planned in several cities and opposition politicians took to Twitter and news channels to call for Temer to be impeached, saying his government no longer had legitimacy.

"I can't see how Temer survives this," said David Fleischer, a political science professor at the University of Brasilia. "There are just too many people against him now."

The scandal deepened at dawn Thursday as police searched the Rio de Janeiro home and Brasilia office of Sen. Aecio Neves, who nearly won the presidency in 2014 and planned to run again next year until he was suspended from office indefinitely by the Supreme Federal Tribunal.

Neves is being investigated in several corruption cases related to an investigation into kickbacks to politicians. He has denied wrongdoing.

Within 90 minutes of opening, Brazil's main Ibovespa stock index dropped 10 percent and trading was stopped for 30 minutes. Brazil's currency, the real, lost 8 percent of its value against the U.S. dollar in the first half of Thursday. Both chambers of Congress canceled sessions and Temer's office canceled his planned activities.

Late Wednesday, Globo reported that Neves had been recorded asking JBS meatpacking company executive Joesley Batista for $700,000 to pay for his defense in the investigation.

Globo also reported that Batista had recorded Temer endorsing a bribe to silence Cunha. In a statement late Wednesday, the president's office said Temer "did not participate or authorize any attempt to keep Cunha from reaching a plea bargain with Justice [officials]."

If confirmed, the allegations could prove devastating for Temer, whose administration has lurched from one crisis to another since he took office just over a year ago.

Cunha led the impeachment fight that removed Dilma Rousseff from the presidency last year and put Temer, then the vice president, into power. Cunha was later was sentenced to 15 years in prison for corruption.

The statement from Temer's office confirmed that the president did meet with Batista in March. According to the Globo report, Batista secretly recorded the conversations with Temer and Neves and gave them to justice department officials as part of plea bargain negotiations.

The report said that when Temer was told Cunha was being paid to keep silent, the president responded: "You have to keep that up, all right?"

Globo did not release the recordings or say how they were obtained.

JBS representatives did not respond to emails seeking comment.

Temer and Cunha are members of the same party and were previously allies. However, they appear to have had a falling out during a growing investigation into corruption involving the state oil giant Petrobras. Since beginning three years ago, the investigation into billions of dollars in kickbacks has put several top businessmen and politicians in jail.

Many believe that Cunha, who was widely viewed as Brazil's most powerful politician before being ensnared in several corruption cases, could provide damaging testimony about dozens of others if he reaches a plea bargain with investigators.

Soon after Wednesday's report, both the Senate and Chamber of Deputies stopped sessions that included work on legislation that Temer's administration is pushing in hopes of pulling Latin America's largest economy out of its worst recession in decades.

"This climate isn't one in which to work," Rodrigo Maia, president of the lower chamber, told Globo.

Globo's reports are the latest in numerous scandals that have plagued Temer, whose approval ratings are hovering around 10 percent. In April, it came to light that eight of his Cabinet ministers were being investigated in cases related to bribery or accepting campaign donations from Brazilian constructor Odebrecht, one of the central companies in the kickback scheme at Petrobras.

The Eurasia risk consultancy said the new allegation threatens Temer.

If the allegations are proved true, "President Temer is unlikely to finish his term," Eurasia wrote, adding that at the very least the matter will delay major overhauls Temer is proposing.

Information for this article was contributed by Sarah DiLorenzo of The Associated Press.

Business on 05/19/2017

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