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Brazil’s Top Court Allows Probe Into Allegations Against Bolsonaro

Brazil’s Top Court Allows Probe Into Allegations Against Bolsonaro

(Bloomberg) -- Brazil’s Supreme Court gave the green light for a probe into allegations that Jair Bolsonaro tried to interfere with police investigations, adding to the president’s difficulties as the wheels come off Latin America’s biggest economy and his cabinet threatens to implode.

Brazilian bonds dropped after Monday’s court decision, which presents Bolsonaro with his deepest political crisis to date. The president could face criminal charges and even potential removal from office in the longer-term if found guilty of wrongdoing.

Brazil’s Top Court Allows Probe Into Allegations Against Bolsonaro

The dramatic development adds to the sense that Bolsonaro is fighting on all fronts. Earlier this month he fired his health minister, who refused to bow to demands to ease social distancing policies in favor of reopening the economy. Tensions with the economy minister are already spilling into the open amid cabinet differences over efforts to bring Brazil out of its coronavirus-induced malaise.

Bolsonaro’s credentials as an anti-graft crusader helped him sweep to power in 2018, but that reputation was dealt a blow by the unexpected resignation on Friday of Justice Minister Sergio Moro, who departed accusing the president of having fired the federal police chief without cause and implying that he had done so for political reasons. Shortly after, the federal prosecutor’s office presented a request for an investigation to the Supreme Court.

Implicating Family

The federal police are conducting a number of probes that could potentially implicate members of Bolsonaro’s family, including financial crimes and social media attacks, according to multiple reports in Brazilian media. The president and his sons have denied any wrongdoing.

The president may be subject to charges of obstruction of justice, coercion, corruption, and identity fraud if allegations that he tried to influence police investigations prove true, according to the general prosecutor. If the investigation reveals that Moro’s accusations were false, the former judge could face charges for slander.

The case marks a further deterioration of Bolsonaro’s standing during a rollercoaster time in office. Moro is a national hero in the eyes of many Brazilians for his relentless pursuit of corrupt officials in his former career: A poll on Saturday found that his exit was seen as negative for the country by 67% of respondents, while 49% said they expect the remainder of Bolsonaro’s presidency to be bad or “terrible.” Bolsonaro’s disapproval rating is at an all-time high of 42%.

The new head of the federal police was named in the official gazette early on Tuesday as Alexandre Ramagem, who leads the national intelligence agency. Ramagem is close to the president’s sons, according to Folha de S.Paulo newspaper. Andre Mendonca was named justice minister.

Brazil’s Top Court Allows Probe Into Allegations Against Bolsonaro

Brazilian government bonds came under pressure on Tuesday after the Supreme Court decision, with government debt due 2045 declining for a seventh day, its longest losing streak since October. The real has lost almost 30% of its value this year, the most among the world’s main currencies.

Damaging Split

Even as the need to shore up the economy moves center stage, cabinet feuding over how to go about it threatens more instability. Bolsonaro is under pressure to boost spending even at the risk of a damaging split with Economy Minister Paulo Guedes that could push Guedes out of government, taking most of his team with him.

Analysts surveyed by the central bank cut their outlook for the Brazilian economy for the 1th straight week. They now see it shrinking 3.3% in 2020, still well below the 5% contraction forecast by the World Bank and the International Monetary Fund.

Bolsonaro has been widely criticized and clashed with state governors over his dismissive attitude to the pandemic that has already killed some 4,600 people in Brazil, in marked contrast to countries including neighbor Argentina, which enacted a strict lockdown.

While presidential elections are not due until 2022, municipal voting scheduled for October this year will offer an insight into how the public judges Bolsonaro’s handling of the crisis and its aftermath.

The Supreme Court, by allowing the investigation into a sitting president to begin, had to determine that the alleged crimes were conducted within the exercise of his function as president. The first step of the process will involve taking an official statement from Moro.

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