Cabinet Crisis Rattles Bolsonaro as Key Pension Bill Awaited

(Bloomberg) -- Brazil’s President Jair Bolsonaro is suffering his first cabinet crisis over a campaign financing scandal that’s jolting his government just as he prepares to send his flagship bill to Congress.

Gustavo Bebianno, secretary-general of the presidency, has come under pressure to step down amid reports the PSL party he presided and Bolsonaro belongs to may have misused campaign funds in last year’s election. The president told TV Record on Wednesday night that he ordered a police investigation into the case that triggered a rift between his family, friends and allies, including a tweet from his son Carlos calling Bebianno a liar.

The scandal, the second involving one of Bolsonaro’s sons since he took office on Jan. 1, comes at an inopportune time. The administration is about to send to Congress a proposal to cut pension benefits that investors say could make or break both the country’s economic health and Bolsonaro’s political future. The government needs every vote from the PSL, which has come to rival the opposition PT party as the largest in the lower house, according to the Chamber’s website.

If Bebianno is involved in irregularities, he must go "back to his origins," Bolsonaro told TV Record after returning from the hospital where he underwent intestinal surgery.

Last month, the president had similar words for another one of his sons, Flavio, who was in the media limelight over suspicious bank transactions discovered by a government financial watchdog. At that point, Bolsonaro told Bloomberg that if his son made a mistake, "then as father I’m sorry, but he’ll pay the price for that."

To contact the reporter on this story: Raymond Colitt in Brasilia at rcolitt@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Matthew Malinowski

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