Brazil’s Controlled Purge: The Impeachment of Fernando Collor

The issue of corruption has
captured the attention of citi-
zens around the globe.’ In
Italy and Brazil, the battle against
this ancient scourge seems to have
assumed a newly effective form. In
Italy, many politicians and business
leaders have seen their careers and
reputations shattered. In Brazil, a
president was impeached and faces
criminal prosecution on corruption
charges, and a warrant has been
issued to arrest his closest aide.
Nevertheless, the difference
between the two cases is obvious. In
Italy, the entire political and busi-
ness oligarchy is in crisis. In Brazil,
the oligarchy managed to fix the
blame on two people: Fernando Col-
lor de Mello, a small-time politician
catapulted onto the national scene
by the country’s major economic
powers, and the businessman Paulo
Cesar Farias, the president’s chief
legal advisor and campaign treasur-
er. The oligarchy has emerged
unscathed. The congressional inves-
tigation into President Collor and
P.C. Farias implicated some of
Brazil’s most important business
people, but no formal charges have
been laid against them. Although
The oligarchy has
emerged
unscathed. The
investigation into
President Collor
and P.C. Farias
implicated some of
Brazil’s most
important business
people, but no for-
mal charges have
been laid against
them.
Theotonio dos Santos is a visiting professor at Universidade Federal Fluminense-Niter6i, Rio de Janeiro. He is the author of The Political Economy of Brazil, forthcoming from Westview Press. Translated from the Portuguese by Phillip Berryman.
popular mobilization was a crucial
factor in the president’s impeach-
ment, the fact that Collor is still free
and P.C. Farias is a fugitive at large
makes a mockery of that display of
public outrage. The only person
behind bars is the U.S. mechanic
William Black, who is serving a sen-
tence in the United States for falsify-
ing documents for Farias’ Miami-
based air leasing company.
Corruption is nothing new in Brazil
or Latin America. In the 1950s, Car-
los Lacerda led a broad morality cam-
paign against President Getulio Var-
gas, who had been elected by a wide
margin in 1950. Lacerda charged that
the Vargas government was mired in
a “sea of slime.” The campaign cul-
minated in calls to impeach the presi-
dent. Backed by the U.S. government
and U.S. business interests as well as
a portion of the Brazilian armed
forces, Lacerda was preparing a coup
to overthrow Vargas. The plan was
foiled, however, when Vargas sud-
denly committed suicide in August, 1954. In the political testament that
he left behind, Vargas blamed inter-
national capital and its local represen-
tatives for his fall. The political
upheaval sparked by Vargas’ death
and his final testament partially
deflated Lacerda’s morality cam-
paign. It took on new life, however, in the figure of Junio Quadros.
Quadros was elected president in
1961 by pledging to bring morality to
the government and struggle against
VOL XXVII, No 3 Nov/DEC 1993 17REPORT ON CORRUPTION
the oligarchies-despite his extensive commitments to
those very forces. When Quadros suddenly resigned
after only seven months in office, Vice-President Jolo
Goulart-his political rival and heir to the Vargas
legacy-assumed power. Goulart found himself the
object of a vicious campaign accusing him of corrup-
tion and subversion. Under the anti-corruption banner,
the military-with Lacerda’s support-ousted Goulart
in a 1964 coup, inaugurating a dictatorship that lasted
26 years.
Fernando Collor, the first directly elected presi-
dent after the years of military rule, ran as an
anti-corruption candidate. As governor of his
home state of Alagoas, Collor fired highly paid gov-
ernment employees and promised a government of
public morality. It was his well-
publicized campaign against
“maharajahs” in government that
gave him the credentials to run for
president. His enormously expen-
sive, modern advertising campaign
cast him as a superman-a lone
hero in an American Western bat-
tling all sorts of corrupt individuals.
His statement-“Anyone in my
government who steals goes to
jail”-became famous.
It seems incredible that a party-
less politician with no clear com-
mitments to the oligarchy-except
to some wealthy relatives and TV
Globo, the national television net-
work-could become president of a
country with 150 million inhabi-
tants and about 90 million voters.
Collor’s election was a legacy of
the dictatorship that had outlawed
political parties, but it was also to
some extent a repeat of the Janio
Quadros episode. Brazilians have
not been able to create solid party
structures, and are still seeking a
president who as a political outsider
can stand up to the powerful and
the corrupt. Thus, they reason, the
fewer ties to organized social forces
a president has, the stronger he will
be. Perhaps Collor’s victory was the
expression of the last flicker of
hope in such a solution.
But who was Fernando Collor de
Mello? A wealthy party-going
womanizer, with a cultivated play-
boy image, he was a man who led a
fast and easy life. Persistent rumors circulated-later
confirmed by his younger brother Pedro–that during
his youth in Brasilia, he experimented with cocaine
and LSD. 2 The son of a senator of the old National
Democratic Union-the party of Carlos Lacerda-
Collor understood how powerful a vote-getter moral-
istic demagoguery could be. His uncle Lindolfo Collor
was a cabinet minister in the first revolutionary Var-
gas government in 1930, but broke with Vargas two
years later. Lindolfo then turned to Mussolini’s fas-
cism for ideological inspiration, which led him to the
Brazilian fascist movement, known as integralism.
Fernando also venerated Mussolini, and was reputed
to be as hot-tempered and prone to violence as his
father, who once killed a senator in the midst of a ses-
sion of Congress.
Collor’s presidency
was a family affair, with
political and family
matters-ranging from
the routine to the
scandalous-thorough-
ly intertwined
throughout all levels
of government.
None of this gave his campaign
sponsors pause. At first, they appeared
not to have thought his candidacy
would go far, and aspired to negotiate
a spot for him as vice-presidential
candidate on the ticket of a more
established political party. That politi-
cal formula was actually suggested to
Mario Covas, the Brazilian Party of
Social Democracy (PSDB) presiden-
tial candidate. Covas ruled it out,
however, perhaps because he regarded
Collor’s support as weak-at that
point he had only a 5% rating in the
polls. As Collor moved into first place
in opinion surveys, he began to create
his own power clique. In the second-
round run-off, he faced Luis Inicio da
Silva (“Lula”), the labor leader and
candidate for the leftist Workers Party
(PT). Taking advantage of the panic
among the business oligarchy at the
prospect of a socialist president, Col-
lor’s campaign treasurer, P.C. Farias,
acquired enormous contributions
totaling $100 million, far exceeding
what the campaign required. It is not
unusual in Brazil for candidates to
pocket such excesses themselves;
what made that episode different was
its scale. It later became known that
Collor and P.C. Farias squandered $25
million dollars of “campaign left-
overs” on genuine maharajah-like
spending sprees.
The newly elected Collor formed a
cabinet composed of unknown person-
alities and some conservative politi-
cians. The public was led to believe
18NACLA REPORT ON THE AMERICAS NACIA REPORT ON THE AMERICAS 18REPORT ON CORRUPTION
that he would be the country’s savior. They even went
along with the president’s ill-fated attempt to curb
inflation by freezing $115 billion of the $150 billion
in the country’s bank accounts on his first day of
office. During the president’s first two years in office,
at least 13 different cases of alleged corruption arose,
forcing Collor to remove many top officials. Then, he
decided to form a new government made up of distin-
guished citizens and conservative politicians. The
media claimed that with the bandits in the president’s
entourage out of the way, the new team would resolve
everything. But inflation, after a period of decline,
increased once again, and wages continued to lose
purchasing power day by day.
Collor’s presidency was a family affair, with politi-
cal and family matters-ranging from the routine to
the scandalous-thoroughly inter-
twined throughout all levels of gov-
ernment. On the routine side, his
brother-in-law Marcos Coimbra was
one of the mainstays of his adminis-
tration, and his sister Ana Luiza de
Mello was continually under fire for
meddling in the government. Moving
toward the scandalous, his wife
Rosane has been accused of embez-
zling funds from the large state chari-
ty she oversaw. The Supreme Court
has now launched an investigation
into her activities. Even Collor’s
mother Leda Collor de Mello joined
the fray. Moving things from the
scandalous to the ridiculous, she
pleaded in the press with her son not
to risk his life by flying jets without a
pilot’s license and driving Ferraris at
high speed. The country was under
the aegis of the “Republic of
Alagoas” to the disgust of many in
the establishment. The oligarchy and
the conservative middle classes were
horrified at the monster they had cre-
ated.
Finally the dam of impunity built
by Collor over two years with such
audacious presumption began to
wash away under the pressure of
those who found their interests
harmed by his brutal assaults on both
private and public assets. As is usual
in these kinds of cases, attacks began
from the side. Allegations of corrup-
tion dogged P.C. Farias and other
low-level officials throughout the
spring of 1992.
Then the bomb of domestic strife exploded. In an
exclusive interview in the news weekly Veja in May,
Fernando’s brother Pedro accused the president of
using P.C. Farias as a “front man” for illicit kickbacks
and influence-peddling schemes that netted millions of
dollars. These accusations resulted in an investigation
by a 22-member congressional committee. It seems
that Pedro was provoked when his control over the
Collor de Mello family media empire in Alagoas was
threatened by a rival media group headed by Farias.
Fernando’s attempts to seduce his brother’s wife Tere-
sa also aroused Pedro’s wrath. Pedro began by attack-
ing Farias, but gradually took aim at the president
himself.
The public was hesitant at first to turn against their
president. Polls in late June indicated 67% of Brazil-
ians wanted Collor to remain in
office. But new revelations began to
tarnish the president himself. His
brother went on the offensive, talk-
ing to every media outlet that asked.
Pedro asserted that the president
was the ring leader and P.C. Farias
simply his henchman. Although
Collor claimed that he had severed
his ties with Farias in 1990, the
Brazilian magazine Isto E reported
that Collor’s personal secretary rou-
tinely paid the family’s household
and personal expenses out of a
checking account fed by Farias.
Collor’s unwillingness to take spe-
cific measures against P.C. Farias
was a sign to many that he too was
guilty.
The congressional inquiry became
a Pandora’s box, continually
unearthing shocking new evidence.
Congressmen scrutinized more than
30,000 checks drawn on accounts
linked to Farias which revealed a
host of fiscal subterfuges by Farias
and financial links between Farias
and Collor. Congressional testimony
and these checks revealed that P.C.
Farias had set up in each of the main
state agencies a group of representa-
tives who skimmed millions through
fixed bidding practices on govern-
ment contracts. In addition, it
became known that Farias had
extorted millions more from Brazil’s
main business people-both national
and multinational-no doubt in
exchange for his services within the
VOL XXVII, No 3 Nov/DEc 1993 19 VOL XXVlI, No 3 Nov/DEc 1993 19REPORT ON CORRUPTION
presidential circle. 3 A network of
bank accounts registered under false Ultim
names was also discovered.
The congressional investigation state suL
turned up countless examples of the oliga
greed that had virtually no limits. It
discovered that Collor and his the priva
cohorts had set up a caixinhas, a
“kitty” in which to collect off-the- are more
books funds. In small, closed meet- than the
ings, they set the goal of collecting
two billion dollars. According to transf( gossip in Brasilia, they held a party
one year later to celebrate their first commit
billion. New evidence emerging this knov June from investigations by police
and Kroll Associates, the interna- “corru
tional accounting firm, suggests that
in this way Farias amassed about
$1.4 billion.
More serious yet were P.C. Farias’ possible ties to
drug traffickers. Farias did favors for politicians of all
stripes with a fleet of planes that periodically flew out
of the country on a route very close to that used for
drug contraband. Pedro Collor said a Miami banker
had told him that he had serious misgivings about the
source of P.C. Farias’s wealth. The banker speculated
that such a large amount of cash could only come
from drug trafficking. 4 Suspicions were further
increased when the Collors bought a $4 million apart-
ment through the services of Guy de Longchamps, a
man with ties to international drug trafficking. Subse-
quently, a figure in Argentine organized crime gave a
detailed interview to Isto E accusing P.C. Farias of
being directly involved in drug trafficking. This
avenue of inquiry was immediately suspended and
forgotten.
.C. Farias went on the offensive and threatened
to bring a lot of people down with him if these
charges were pursued. 5 The president too began
to fight back. He went on television several times to
deny any wrongdoing, and to insist he was the victim
of special interests trying to thwart his economic
reforms. His words failed to convince the Brazilian
public of his innocence. The leaders of three opposi-
tion parties that normally have little to do with one
another-Lula (PT), Tasso Jeireissati (PSDB), and
Orestes Qu6rcia (PMDB)-came together to call for
the president’s impeachment.
Struggling for his political life, Collor called on
Brazilians to show their support by wearing green and
yellow-the colors of the national flag-at a mass
demonstration. Few heeded his call. Instead, thou-
sands of Brazilians wearing mourning black marched
ately,
)sidies to
irchy and
te sector
harmful
irregular
Mrs and
missions,
vn as
ption.”
through the streets. Pro-impeachment
demonstrations involving hundreds of
thousands of protesters were held in a
number of cities, in an uncanny
replay of the 1983 “Direct Elections
Now” campaign. Many of the demon-
strators were students, quickly
dubbed “painted faces” for the color-
ful paint they applied to their faces.
The television networks–earlier hes-
itant to impugn Collor-now zestful-
ly covered the protests. The vast
majority of Congress and governors
also cast their lot against the presi-
dent.
Collor had, by then, lost the uncon-
ditional support of the Globo TV net-
work which had brought him to power.
The oligarchy, now aware of the enor-
mity of the mistake it had made, was
looking for an out. The only possible route was
impeachment. But who was to succeed the president?
Members of the oligarchy were loath to see Collor’s
vice-president, Itamar Franco, come to power. Franco,
a former PMDB senator from Minas Gerais state, lost
his bid for the governorship of his home state in 1986.
He was a consistent foe of the military dictatorship,
while Collor had collaborated with it. He had also led
a congressional committee investigating corruption in
the Sarney government in the late 1980s.6 Collor
selected Itamar as his running mate because he needed
an honest, established politician from a populous state
to round out his ticket. This partnership was awkward
and full of political and personal frictions from the
start. Itamar was renowned for taking nationalistic
stands. He opposed Collor’s neoliberal market
reforms, including privatizing state industries. He had
also opposed Collor’s first economic plan in which
private savings were frozen.
The armed forces, on the other hand, were inclined
to support Franco as a suitable replacement. Collor
had angered the military by destroying the National
Information Service, closing nuclear research sites,
signing the agreement committing Brazil to the
nuclear non-proliferation treaty, and drastically reduc-
ing the military budget. The armed forces did not
favor dismantling the state, and feared that the exces-
sive opening of the national market to foreign compe-
tition might sink the nation’s industry and advanced
technological research apparatus.
Franco’s support among the armed forces was per-
haps the most decisive factor impeding efforts to
depose the vice-president along with Collor. The
loose-cannon governor of Bahia, Antonio Carlos Mag-
alhdes, a right-wing populist and faithful servant of
20NACLA REPORT ON THE AMERICAS NACLA REPORT ON THE AMERICAS 20REPORT ON CORRUPTION
Globo TV, and Globo’s president Roberto Marinho
led a behind-the-scenes campaign to drop Itamar. At
the opposite end of the political spectrum, the far-left
flank of the PT called for general elections, inadver-
tently supporting the agenda of the oligarchy, which
wanted to pass over Franco.
This maneuvering occurred as a pageant of civic
spirit unfolded on the streets, broadcast nationwide on
all the TV channels. The Congress professed its fideli-
ty to the voice from the streets, and prepared to
impeach the president. Collor played his last card by
resigning before the Senate reached a verdict. But
under popular pressure, the Senate decided to go
ahead with the trial, convicting Collor by 76 to 3 on
charges of official misconduct. By then, the Attorney
General had brought criminal charges against Collor
for “passive corruption” and “criminal association.”
The nation’s elites were united in their abomination of
the felon. By the date of the impeachment vote, Collor
faced solid opposition from Congress, Brazil’s major
business groups, the major media, and from 23 of 26
state governors.
Vice-President Itamar Franco was named acting
president for the remaining two years of Collor’s term.
Policymakers were initially elated and triumphant.
They gloated that they had dutifully obeyed the wish-
es of the citizenry. Seizing advantage of the
postLve mag1e t Liad acquIre
of the impeachment vote,
gress decided to move up
date of the plebiscite c
Brazil’s system of gover-
nance. Brazilians, however,
thwarted their ambitions,
voting overwhelmingly
against weakening the pres-
idency by changing to a
parliamentary system.
he Brazilian elite is
unhappy with the Ita-
mar Franco govern-
ment, which is at odds with
it over economic policy.
That may be why the legal
proceedings against ex-
President Collor for crimi-
nal activity are moving so
slowly. It may also partly
explain why P.C. Farias has
been treated so gently, and
has even managed to go
into hiding and perhaps flee
the country when he should
be in jail by now.
Brazilians are still waiting for justice to be done.
Calls for public morality did not prevent Paulo
Maluf-a true symbol of the corruption of the dicta-
torship era-from winning the mayor’s race in Sdo
Paulo in November. Not even the revelations of
corruption that surfaced during his mayoral campaign
have harmed the presidential prospects of this author-
itarian former governor of Sdo Paulo and leader of
the right-wing Democratic Social Party. Maluf’s con-
stituency is made up of the very same conservative
sectors that tried to overthrow Vargas and that sup-
ported the overthrow of Goulart in the name of public
morality. Maluf’s past has been forgotten, and he is
being presented as an honest and moderate politician.
He is now running second behind Lula in polls asking
people who they would prefer as their next president.
It would seem that more important issues are at
stake. Yes, the truly corrupt must be punished. Corrup-
tion, however, is embedded in a much broader and
more complex political process. Corruption is just one
facet of the general control of the state by private inter-
ests. Ultimately, state subsidies to the private sector or
oligarchical interests are more harmful than the irregu-
lar transfers and commissions, known as “corruption.”
The next general election in October, 1994 will be
the most sweeping in Brazil’s history. The president, two-thirds of the Senate, the Chamber of
, Lhe governors of all 2
s, and deputies in the state
semblies all come up for
election. Naturally, the elite
is worried. All the dissatis-
faction that has been
building up over the many
years of struggle is being
channeled into this coming
contest. Brazilians will
decide between a more
collectivist, social-oriented
policy and a conservative,
private-oriented one. Infla-
tion will be a central con-
cern; so too will the ques-
tion of the degree of
Brazil’s integration in the
world economy and the
orientation towards the
internal market. The Col-
lor episode will surely
weigh on the minds of
Brazilians when they vote.
Corruption will no doubt
be important-but it will
not be the only issue, nor
even the main one. 0
Brazil’s Controlled Purge: The Impeachment of Fernando Collor
1. During the 1980s, corruption expanded prodigiously due to
increased financial speculation. Commissions on financial activity
rose a great deal, and the money available for that purpose
expanded enormously. At the same time, the burgeoning drug
trade gave rise to illegal profits along with a vast number of
businesses linked to laundering drug money.
2. After describing his brother’s wild youth in Brasilia, Pedro Collor
said, “I think these crises of violence were caused by taking hard
drugs. I see no other explanation. From a certain age, more or
less between 18 and 20, Fernando became known around town
as a violent person.” He describes how his brother tore a bordel-
lo apart, beat up several women, and knocked people around
using his karate training. See Pedro Collor de Mello, Passando a
Limpo: A Trajet6ria de um Farsante (Rio de Janeiro: Editora
Record, 1993), pp. 37-38.
3. “It was a thirsty and gluttonous way of using power,” said
Renan Calheiros, a leader of the “bandits,” the term he himself
coined for the group that robbed the country along with Fer-
nando Collor. “The net result: it brought on hatred, caused
scandal, and affected the very core of the government.” See
interview in Veja, June 24, 1992, p. 7.
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REPORT ON CORRUPTION
4. According to Pedro Collor, the banker said, “As it stands, on the
basis of the volume of cash being handled here, people are
beginning to say that Farias may be involved in drug traffick-
ing,” (Pedro Collor, Passando a Limpo, p. 209). In his chapter on
the Miami connection, Pedro Collor provides incriminating infor-
mation about Farias’ alleged involvement in the drug trade. He
discusses photocopies of about 20 documents that he received
which show Farias’ operation of nine cover enterprises in the
United States, the Caribbean, France, England and Switzerland,
from which he earned a total of $400 million. He also docu-
ments Farias’ close relationship to Andres Gomez-Mena and
Guy de Longchamps, both connected to international drug traf-
ficking (pp. 214-215). Moreover, in October, the Brazilian press
reported that Pablo Escobar and P.C. Farias had a meeting in
1991 in Brazil. The Brazilian federal police may now seriously
investigate the connection between P.C. Farias and international
drug trafficking.
5. In his first statement to the congressional investigating commit-
tee, Farias cynically threatened to reveal the recipients of money
from his “kitty.” The cover headline of the June 17, 1992 issue
of Isto E was: “P.C. says he won’t go down alone.” Such threats
continued until he went into hiding. His brother, a federal
deputy from Alagoas, threatened to use a secret dossier of P.C.
Farias if people pursued the charges against him.
6. For further analysis of corruption during the dictatorship and the
Sarney government, see Jos6 Carlos de Assis, Os Mandarins da
Repi(blica, Anatomia dos Escindalos da Administra~co Ptblica
(Sao Paulo: Paz e Terra, 1984).