Risks to Brazil’s Temer subside after bungled JBS plea bargain

BRASILIA (Reuters) – The arrest on Sunday of Joesley Batista, a billionaire meatpacker who implicated President Michel Temer in a corruption scandal, has actually improved the Brazilian leader’s prospects of surviving graft allegations and serving out his term through 2018.

But the three-month political crisis triggered by the plea bargain allegations by Batista, formerly chairman of meatpacker JBS SA (JBSS3.SA), has consumed precious time that Temer has to pass legislation to overhaul Brazil’s costly pension system and avoid a fiscal crisis in Latin America’s largest nation.

Temer and his coalition allies in Congress are confident they can block a second corruption charge that Brazil’s top prosecutor, Rodrigo Janot, is expected to file against the president by the end of the week.

A Supreme Court judge on Tuesday authorized a new probe of Temer for suspected corruption involving a decree regulating ports, a day after a separate police probe into Temer’s allies kept pressure on the president.

Yet as long as Temer is in office, any charges against the president must be approved by the lower house of Congress in which he has retained enough backing to avoid trial by the Supreme Court.

“Temer’s political standing in Congress has improved a lot, because the economy is starting to grow again and the pressure of another corruption charge is falling,” said the government’s deputy whip in the lower house, Beto Mansur.

“The prosecutor’s case has been weakened and the next charge will arrive here with little credibility,” he told Reuters.

A new poll by Arko Advice consultancy, however, shows that most lawmakers do not expect pension reform to clear Congress until 2018, and passing the unpopular measure in the run-up to next year’s elections may be an uphill struggle.

A proposed overhaul of the pension system, the main contributor to Brazil’s record budget deficit, was headed for approval in the lower house of Congress until accusations against Temer in May derailed his plans.

In a bombshell plea bargain agreement in May, Batista confessed to bribing hundreds of politicians and gave prosecutors a taped conversation of the president. The recording appeared to show Temer condoning hush money payments to silence a witness in a sprawling corruption scandal.

Brazil’s billionaire businessman Joesley Batista leaves the Federal Police headquarters in Brasilia, Brazil, September 11, 2017. REUTERS/Ueslei Marcelino

Just two weeks ago, however,…

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