Fiscal probe for Brazil’s Rousseff poses impeachment threat

The biggest threat to Brazilian president Dilma Rousseff’s hold on office may come not from a corruption scandal that has ensnared the country’s business and political elite but from a less-heralded probe into accounting practices led by a computer science graduate turned lawyer.

Julio Marcelo de Oliveira, a prosecutor at Brazil’s federal accounts court, known as the TCU, says Ms Rousseff broke the nation’s fiscal responsibility law by delaying repayments to Brazilian lenders who funded social programmes such as unemployment insurance.

The delay resulted in the nation’s fiscal account appearing to be healthier than it was.

Re-election bid

The practice, known as “backpedalling”, was intended to show spending wasn’t as high as it was and bolster Ms Rousseff’s re-election bid.

The TCU is Brazil’s highest fiscal accounting court, in charge of reviewing public finances. The Brazilian constitution calls for the impeachment and removal from office of a president who breaches the fiscal responsibility law.

Mr Oliviera claims the government dragged its feet in repaying some 40 billion reais in social programme funding from state-run lenders in 2012 and 2013. Though other Brazilian governments had delayed payments in the past, it was never done to this magnitude, he said.

The government has denied any irregularities, arguing that it followed the law in its accounting practices last year.

It acknowledged it delayed repaying the state lenders due to limited cash flow, just as other administrations had done in the past without breaching the law. It is paying those arrears, reducing its savings this year and forcing authorities to slash key fiscal targets.

The accusations have emboldened Ms Rousseff’s opponents to call for her impeachment in Congress.

The “backpedalling” is considered the main argument in an expected rejection of her handling of the public finances by the TCU in its review of the government’s 2014 accounts.

Effect of ruling

The TCU’s ruling is not judicially binding, but may help Congress decide whether she violated fiscal rules, paving the way for the country’s first effort to oust a sitting president since 1992. The TCU is expected to rule in late August.

“A TCU ruling makes an impeachment request inevitable,” said Carlos Sampaio, leader of the main opposition party, PSDB, in the Lower House of Congress. “Nothing could be better for the country than to see Rousseff step down.”

The PSDB is also challenging Ms Rousseff's re-election with the country's electoral tribunal, accusing her of funding her campaign using money from a multi-billion dollar corruption scandal at state-run oil giant Petrobras. – (Reuters)