The stock market on Monday plunged, the US dollar spiked and a digital frenzy swept Brazil. Another record-breaking day for COVID-19 fatalities, or one more assault on civility by the nation’s provocateur-in-chief, Brazilian President Jair Bolsonaro?
None of the above. What has Brazilians in a lather is a new variant of a more familiar affliction — Lulapalooza.
Until this week, the much admired and widely loathed — pick your flag — former Brazilian president Luiz Inacio Lula da Silva was damaged goods, convicted of corruption and banned from electoral politics for the foreseeable future.
Illustration: June Hsu
Credit his redemption to Brazilian Supreme Court Justice Luiz Edson Fachin, entrusted with the spoils of “Car Wash,” the epochal graft case which over the past seven years had locked up dozens of crooks in suits and their political enablers, not least the former Workers’ Party icon, Da Silva.
Having reviewed Lula’s court cases (two convictions, two pending cases), Fachin on Monday voided the sentences on jurisdictional grounds, so gifting Lula and his orphaned followers with the right to run for office again.
Thus, in a 46-page decision, one judge roiled the country’s judiciary, mobilized political ambulance chasers, inflamed already fevered partisan passions and jump-started next year’s presidential race.
Still unclear is how Brazilians stand to gain from this decision amid the worst public health crisis in a century, a prostrate economy and a widening fiscal sinkhole. Brazil’s already battered real is down 11 percent on the year.
WILLING HOSTAGE
The problem is not just one of polarization; after all, the country’s partisans have been flailing at one another for the better part of a toxic decade.
Nor is it even that Lula’s redemption perpetuates Brazil’s Stockholm syndrome, which has left the country’s most organized political party, the Workers’ Party, 40 years on, a willing hostage to a beloved leader who is 75 and has no evident succession plan.
In his statement to reporters at a union hall on Wednesday, Lula skirted the question of a possible run for president, but Brazilians would be forgiven for mistaking his fulminations — such as: “This country has no government” — for a stump speech. Playing the martyr would play well among discontents, yet Lula’s return is also a potential boost to the struggling Bolsonaro, whose right-wing exhortations feed on a reliable leftist foil.
The bigger risk is that repeated legal maneuvering from the high court — once a bulwark against legal capriciousness, but increasingly a practitioner — have deepened distrust of governing institutions and undermined the rules that keep the country from running aground.
It is also a reminder, as Carnegie Endowment for International Peace distinguished fellow Moises Naim has said, that institutions are really just agreements among governing groups and endure only as long as the ruling consensus does.
In Brazil, what is at stake is the salutary consensus that the rule of law mattered, and not even the powerful and pedigreed got a pass. That conviction drove a generation of law-keepers, prosecutors, auditors and judges to pursue a once untouchable gallery of cheats and rogues.
POLITICAL DYNASTY
Federal University of Santa Catarina political scientist Luciano Da Ros caught a glimpse of the challenge in 2016 while conducting field research in Maranhao, a northeastern state controlled by a retrograde political dynasty.
There, a group of young judges joined efforts to pierce the bubble of impunity.
“This was still a political fiefdom, where no one was brought to justice,” he said. “What they helped reveal was the extent of corruption in Brazil.”
That same contrarian spirit fueled Car Wash, the anti-graft movement that took down a ring of elected crooks and their operators who raided state oil giant Petroleo Brasileiro SA for profit and politics, with repercussions throughout Brazil and across Latin America.
Brazilians, fed up with everything, hit the streets in 2013 and cheered the cleanup as a foundational national reset.
“It wasn’t all an illusion. Car Wash coincided with a series of institutional wins, including the strengthening of oversight, auditing and coordinating with international investigators,” Da Ros said.
In time, the corruption-busters “gave into heterodox methods, and so planted the seeds of Car Wash’s own demise,” Da Ros added.
Perhaps the swelling of high-mindedness into hubris was inevitable. Former Brazilian federal judge Sergio Moro was the symbol of Car Wash at its best and worst.
THUMB ON SCALE
The judge who convicted the country’s most powerful moguls and politicians also had an agenda; a trove of hacked phone messages suggested he was not above coaching prosecutors or releasing an ill-gotten wiretap to convict Lula and put his thumb on the electoral scale.
Any doubts about his extracurricular ambitions ended in 2018, when Moro became Bolsonaro’s Brazilian minister of justice and public security — until his new boss allegedly put his own thumb on the legal scales, driving Moro to quit.
Moro’s deserved comeuppance confirmed his boosters’ conviction that Lula had been a victim, not a culprit, and that Car Wash was little more than a witch hunt. (They ignore the two subsequent appeals courts that upheld Lula’s convictions.)
What is troubling are the consequences of such conspiratorial logic for Brazil and for the civilizing pact for justice the country’s political class seems so eager to ditch.
If Lula receives a reprieve, why not indulge the dozens of other big shots Car Wash put behind bars — 174 convictions in Moro’s court alone — and void the 209 plea deals of those caught up in 79 task force operations since 2014?
“So there was no assault on Petrobras’ coffers, no payola or fixed contracts? Everybody walks?” asks Sao Paulo author and political scientist Bolivar Lamounier.
Fachin’s ruling was cagily nuanced, in the vexatious way that only Brazilian lawyers could love.
He overturned Lula’s convictions not on grounds that he was innocent or had been railroaded, but rather that he was tried by the wrong court.
The case is to be remanded to a court in Brasilia.
Fachin might even have sought to help Moro by shelving claims that Moro had acted in bad faith through his collusion with the prosecutors.
‘SAVE YOUR FINGERS’
In sparing Moro while sacrificing Lula’s convictions, Fachin might ultimately have been trying to salvage the wider legacy of Car Wash, by preempting an avalanche of copycat claims by other corruption convicts that they too were victims of a hanging judge.
“The logic is give up the rings to save your fingers,” said Michael Mohallem, a constitutional law specialist at the Getulio Vargas Foundation in Rio de Janeiro.
Yet Fachin is increasingly isolated in his defense of Car Wash, which has lost traction in society, is under open attack in the ethically challenge legislature and has drawn sharp rebuke from other Supreme Court justices.
Thwarting Fachin, a five-judge panel of the high bench is expected to rule soon on whether Moro showed bias in his Car Wash rulings. The smart money is on another win for Lula and company.
Fachin might already be too late.
Da Ros said that two little publicized initiatives in Congress belie Brazil’s vaunted anti-corruption convictions.
One is a proposal to soften the law against administrative improbity, a bill sponsored by Lula’s Workers’ Party with full-throated support from the right.
The other is a proposed overhaul (read: defanging) of Brazil’s headline money-laundering law, care of a commission of jurists, many of whom have defended corruption suspects, and where the Brazilian Council for Financial Activities Control, the country’s headline financial investigations authority, has no seat.
“Car Wash, in my view, has already been neutered, and many of the conditions that permitted it to prosper — public mobilization, autonomous agencies, effective laws — have been rolled back to a place worse than where things stood in 2014, at the outset,” said Matthew Taylor, a Brazil expert at American University.
In a telling coda, the Car Wash task force was officially shut down on Feb. 1.
Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America.
This column does not necessarily reflect the opinion of the editorial board, or Bloomberg LP and its owners.
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