Brazil President's Party Secretly Got $3 Million From Cuba, Magazine Says

October 31, 2005
Brazil President's Party Secretly Got $3 Million From Cuba, Magazine Says
By LARRY ROHTER

RIO DE JANEIRO, Oct. 31 - During Luiz Inácio Lula da Silva's successful
presidential campaign in 2002, his Workers' Party received up to $3
million in illegal campaign contributions from the government of Cuba,
according to the cover story in the current issue of Brazil's leading
weekly newsmagazine.

The report, which both the governing party and the Cuban government have
denied, has reignited the wide-ranging corruption scandal that has
paralyzed President da Silva's government for nearly six months. After a
month of muted complaints that conveyed a sense that the worst was over,
opposition leaders have reacted with threats of a new, politically
exhausting investigation and even impeachment proceedings.

"This is a serious occurrence in every respect," Senator Tasso
Jereisatti, a leader of the center-left Brazilian Social Democratic
Party, said in an interview with the O Estado de São Paulo newspaper,
noting that Brazilian law forbids campaign donations from foreign
sources. "If it is proven, the president is going to have no alternative
- he will not have the conditions to be able to govern, he'll have to
give up his job."

The report in Veja magazine did not say how the money, said to be cash
in American dollars, was transported from Cuba to Brazil. But it quoted
two party functionaries, both former aides to Antonio Palocci, who was a
senior member of Mr. da Silva's campaign team and is now the minister of
finance, as saying the money had been delivered by a Cuban diplomat,
hidden in cases of Johnny Walker whiskey and flown to Mr. da Silva's
campaign headquarters.

Vladimir Poleto, an economist, who identified himself as a courier for
one shipment of money, said in the magazine account, "I took a plane
from Brasilia bound for São Paulo with three boxes of liquor," adding,
"Afterwards, I learned that there was money in one of the boxes."

Mr. da Silva, who has maintained all along that he was unaware that a
multimillion-dollar slush fund was being used to buy the support of
members of Congress and to pay his media adviser's bills off the books,
has not yet commented directly on the accusation. But the president of
the Workers' Party, Ricardo Berzoini, dismissed the Veja report as false
and politically motivated.

"It's completely baseless," he said. "Veja is acting like a front of
attack on the government and not as a journalistic publication."

The Cuban government, which funneled money to selected guerrilla groups
and left-wing parties in Latin America through the 1980's but which now
says it a moribund economy has led it to abandon the practice, also
denied the report in emphatic terms.

In a statement, the Cuban Embassy in Brasilia described the Veja article
as part of "an orchestrated campaign of lies" motivated by the
"aggressive plans of imperialism against Cuba and against Lula."

Veja is Brazil's most widely read publication, with a circulation of
over 1.2 million copies weekly. The magazine published the first story
detailing a corruption scheme in Mr. da Silva's administration in May,
and has followed up with numerous other ground-breaking articles that
have subsequently proven to be accurate.

In March, before the current scandal broke, Veja published a report
saying that Workers' Party members had discussed a $5 million donation
with representatives of the Revolutionary Armed Forces of Colombia, a
guerrilla group that earns money from drug trafficking and kidnapping.
That report was also vehemently denied, but a congressional
investigation later confirmed the existence of intelligence documents
indicating those contacts had occurred.

Relations between Fidel Castro and Mr. da Silva and the Workers' Party
have always been cordial. The president's closest aide, José Dirceu de
Oliveira e Silva, who was president of the party during the 2002
campaign, was exiled for several years decades ago in Cuba, where he
received military and intelligence training. And on one visit, an
admiring Mr. da Silva told the Cuban dictator, "Thank you Fidel Castro,
thank you for existing."

Initially, the corruption scandal, the worst in modern Brazilian
history, left Mr. da Silva, who ran on a government platform and will be
up for re-election in less than a year, very much on the defensive. Not
only has Mr. Dirceu resigned, but the president, secretary general and
treasurer of the Workers' Party have also been forced to step down.

But since the election last month of a member of the Communist Party of
Brazil, Aldo Rabelo, a da Silva ally, as president of the lower house of
Congress, the tide seemed to have shifted somewhat.

Mr. da Silva's standing in the polls has stopped falling, and he and his
staff and supporters have stepped up their criticism of the three
congressional investigations looking into corruption, calling the probes
partisan witch-hunts meant to destabilize Latin America's largest nation.

"By trying to criminalize the Workers' Party and President Lula, the
opposition could lead the country to a very negative climate," said
Jaques Wagner, Mr. da Silva's chief political operative. "This climate
of raising permanent suspicions about the party and President Lula
himself is not good for Brazilian democracy."

http://www.nytimes.com/2005/10/31/international/01brazilcnd.html