This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 BRASILIA 003382 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON BR
SUBJECT:  BRAZIL CORRUPTION SCANDAL UPDATE, WEEKS OF 19-29 
DECEMBER 2005 
 
REF.: BRASILIA 03286 AND PREVIOUS 
 
¶1. (U) Introduction: A controversial decision to call an extraordinary session of Brazil's congress during the traditional holiday recess facilitated the continued investigation of Brazil's interlocking political scandals, now approaching their seven month in the headlines (ref). Prime developments follow below. 

CPI REPORT CONFIRMS BRIBE SCHEME --------------------------------- 

¶2. (U) On December 21, the rapporteur of the Post Service CPI (the lead congressional committee investigating Brazil's illegal election finance/bribery scandals), Deputy Osmar Serraglio, released a preliminary report confirming the existence of the vote-buying scheme in the Brazilian Congress. The 411-page document concludes that PT moneyman Marcos Valerio was favored by the government in public contracts, and, in return, used the money from these public contracts to finance the party-switching and vote-buying schemes that the PT party and GOB used to shore up its congressional base. Serraglio publicly stated that he is convinced that a corruption system was implemented in the Congress and presented a list of payments regularly made by Valerio as evidence to support his claims. However, members of the governing coalition criticized his report: the Minister of Institutional Relations, Jacques Wagner, and the President of the Chamber of Deputies, Aldo Rebelo, continued to insist that the scheme's existence had not been proven. President Lula da Silva also stated that there is no proof that the vote-buying scheme existed. In response, the President of the Postal Service CPI, Senator Delcidio Amaral, said that the President should read the committee's report. 

CONGRESS CALLED INTO SPECIAL SESSION: PLENARY REMAINS EMPTY --------------------------------------------- -------------- 

¶3. (U) The Brazilian congressional recess period begun on December 16 and will last until February 14, but for a cost of almost 100 million reais (approximately 40 million dollars), both houses called their congressmen into special session. The purpose of the "extraordinary convocation" was to allow the functioning of the House Ethics Committee, the Postal Service CPI, the technical committees, and the Joint Budget Committee. Only after January 13 will the plenary start voting on pending bills and impeachment processes. According to congressional rules, deputies and senators will receive two extra salaries during the period of special sessions; however, those who miss sessions forfeit their pay, and those who miss a third or more of the sessions are liable to loss of mandate. Nonetheless, during the first two weeks of the special session, few congressmen worked and, for the first time since 1999, the government will start the year without approving the annual budget. In addition, the Ethics Committee decided to go on recess until January 9. Salaries have not been forfeited. 

CPI INVESTIGATES LIST OF 700 PEOPLE INVOLVED IN THE VOTE- BUYING SCHEME --------------------------------------------- ------------- 

¶4. (U) On December 28, Postal Service CPI rapporteur Osmar Serraglio announced that the committee is investigating a new list with 700 names of current and former congressional aides that established telephone contacts with Marcos Valerio or withdrew money from his accounts in the past 5 years. According to Serraglio, the CPI will not release the list, as currently there is no evidence that listed were involved in the corruption scheme. However, Serraglio said that other congressmen are likely to be implicated in the vote-buying scheme, and their cases will be forwarded to the Ethics Committee. 

BROTHER OF FORMER PT PRESIDENT ACQUITTED OF CORRUPTION CHARGES --------------------------------------------- --------- 

¶5. (U) On December 20, the Legislative Assembly of the State of Ceara decided to fully absolve State Deputy Jose Guimaraes (PT) of corruption accusations. Guimaraes is the brother of former PT president Jose Genoino -- who was forced to step down because of the corruption scandal -- and was himself accused of receiving illegal funds after his aide was arrested by the police in a Sao Paulo airport hiding 100 thousand dollars in his underwear. In addition, Guimaraes was cited as one of the beneficiaries of Marcos Valerio's illegal campaign financing scheme. Guimaraes stated that he requested money from former PT treasurer Delubio Soares and was not aware that its source was illegal. The Assembly's Ethics Committee recommended Guimaraes' impeachment, but the plenary contradicted its verdict and decided to fully absolve him. 
CHICOLA