Video Sullies Party's Clean Image in Brazil

By Henry Chu

March 21, 2004 12 AM PT

Times Staff Writer

RIO DE JANEIRO — A secret videotape, a colorful gambling boss nicknamed Charlie Waterfall and gleeful political rivals have combined to engulf Brazil’s ruling Workers’ Party in a corruption scandal that threatens to dent the popularity of President Luiz Inacio Lula da Silva and further retard the economic recovery of Latin America’s biggest country.

Along with another brewing corruption inquiry, the latest crisis to hit Brazilian politics already has proved embarrassing for a party that made its name as a champion of squeaky-clean government.

This nation’s chattering classes have been in an uproar since a 2-year-old videotape surfaced last month implicating a senior Workers’ Party official in a scheme to collect campaign contributions from a numbers-game kingpin in exchange for political favors.

The official, Waldomiro Diniz, was caught on tape offering Carlos Augusto Ramos the chance to influence an upcoming lottery contract bid in return for campaign money for two Workers’ Party candidates, as well as some cash for his own pocket. At the time, in 2002, Diniz was the chief of Rio de Janeiro’s state-run lottery and Ramos, who also goes by the nickname Carlos Cachoeira (Charlie Waterfall), headed a popular but illegal numbers racket.

Since the videotape’s existence was revealed by a Brazilian news magazine, the government has scrambled to limit fallout, dismissing Diniz from his post as a top aide to the president’s chief of staff, Jose Dirceu. But the imbroglio continues to dominate headlines.

Workers’ Party officials noted that the alleged bribery scheme predates Lula’s presidency, but they promised to investigate. Lula, a former lathe operator fond of highlighting his humble origins, has taken to invoking his mother in defending his integrity and that of his party.

“I am the son of a woman who died illiterate at 64, who told me: ‘My son, the only thing you should never lose is the right to walk with your head held high and to look your fellow man in the eye,’ ” Lula said during a recent visit to a factory. “This is the biggest legacy I’ve received from my mother.”

Still, the scandal is a blow for a party that has staked out the high moral ground in politics and has been quick to criticize rivals for unprincipled behavior.

“They have a tradition as the ethical party,” said Walder de Goes, an analyst with the Brazilian Institute of Political Studies in Brasilia, the capital. “They’ve lost [some] symbolic power.”

De Goes said Lula’s considerable personal popularity and the party’s ratings were likely to take a tumble in an upcoming poll. Brazil’s stock market, too, faltered after news of the corruption allegations broke, although it has rallied somewhat; and the currency, the real, lost ground against the dollar last month.

Diniz and Ramos were indicted Feb. 27 on corruption charges that could draw prison terms of several years. The videotape, apparently made by Ramos with a hidden camera, shows the two men chatting across a table and discussing the favors-for-contributions deal. At one point, Diniz whispers into Ramos’ ear and scribbles down the names of the beneficiaries of the contributions, then rips up the sheet before leaving.

It is not clear who leaked the video to Epoca, the magazine that broke the story.

Although Diniz and Ramos are at the center of the scandal, Workers’ Party leaders are eager to keep the mud from splattering Dirceu, who was responsible for bringing Diniz into the presidential palace as his principal liaison with the National Congress.

Dirceu, a founding member of the party, is a former radical, Cuban-trained guerrilla and a political survivor who once had plastic surgery in order to slip back into Brazil after being banished by the country’s 1964 to 1985 military dictatorship. (He later had his original features restored when the government declared an amnesty.) As Lula’s right-hand man, Dirceu is widely considered to wield power second only to that of the president and is regarded as a wily tactician.

Before the damning videotape of his aide surfaced, Dirceu had been brushed by another corruption scandal -- a tale of intrigue involving the murder of a mayor in the state of Sao Paulo who was a member of the Workers’ Party.

At the time of Celso Daniel’s death in January 2002, party officials spoke ominously of radical death squads trying to undermine Lula’s presidential candidacy. Daniel was an official in Lula’s election campaign, in charge of drawing up the party’s manifesto. He was the second Workers’ Party mayor to be killed within four months.

But investigators say that Daniel may have been kidnapped, shot and dumped on a dirt road because of his involvement in a scheme to fund the party with kickbacks from municipal contracts. Some say Daniel was killed because he tried to prevent middlemen from siphoning money.

Daniel’s brother has said that one of the mayor’s aides spoke of personally delivering suitcases of cash to the then-leader of the national Workers’ Party -- Dirceu.

The Daniel case has not aroused as much media attention as the current scandal because of the shroud of confidentiality surrounding the investigation of Daniel’s death.

“The inquiry is secret, so Brazilian journalists cannot have access to the process,” De Goes said. “So we have no information so far about this.”

Initially, the clamor over the Diniz affair appeared to throw the government into disarray; the Jornal do Brasil newspaper likened Lula’s administration to a “boxer that took a blow and couldn’t recover his senses.”

But the government is fighting back, rejecting calls for a congressional inquiry into the allegations and trying to drag the spotlight back onto its agenda of social reform. Dirceu reportedly has been telephoning leading officials of opposition parties to enlist their support in blocking a congressional investigation.

Such an inquiry, the government says, would paralyze Congress when lawmakers should focus on creating jobs, alleviating poverty and solving other problems rather than scoring political points. Congressional investigations here have indeed tended to squeeze legislation down to a slow drip.

Supporters of an inquiry argue that only a full-fledged congressional investigation would get to the bottom of the incident.

Whether the government and the Workers’ Party can fully restore their credibility and reputation for rectitude is another matter, analysts say. More allegations, especially about any suspicious dealings during Lula’s tenure as president, could irreparably tarnish the party’s image.

“What the [Workers’ Party] needs is to lose the pretension of being the owner of political purity and go on to treat these matters with its head high but with its feet on the ground,” columnist Merval Pereira wrote recently in the national daily O Globo. “There will always be corruption, in whatever government, and it wouldn’t be normal if nothing rotten appeared in Lula’s government, as dreamers in the party boast.

“What should be preserved is the honest conduct of the government as an institution.... It doesn’t have to be the end of the world.”