Brazil's Rousseff hit by explosive new accusations

Brazil's political drama took several new twists as a senator accused President Dilma Rousseff of offering hush money to contain a corruption scandal, and her predecessor considered a return to government to help save their careers.

Prosecutors said a senator charged in a huge graft investigation centered on state oil company Petrobras had accused Rousseff of sending a powerful cabinet minister to try to buy his silence.

The senator, Delcidio Amaral of the ruling Workers' Party (PT), told investigators in statements given as part of a plea bargain that Education Minister Aloizio Mercadante, Rousseff's former chief of staff, contacted him via an aide to urge him not to testify.

Amaral, the former party leader in the Senate, said the minister indicated the message came from Rousseff herself -- an accusation the leftist leader angrily denied.

The president "vehemently and indignantly repudiates the attempt to associate her name with the personal initiative of Minister Aloizio Mercadante," her office said in a statement.

As the long-running scandal swirled, administration sources said former president Luiz Inacio Lula da Silva -- who is himself facing charges -- was on the verge of taking a cabinet post in Rousseff's administration to try to save the crisis-hit government.

The move, which would be hugely divisive, would amount to a risky bet that the aura around Lula's administration (2003-2011), a period of watershed prosperity in Brazil, still outshines the economic and political mess the ailing South American giant has descended into under Rousseff.

For Lula, it would also have the added bonus of protecting him from prosecution in ordinary court on charges tied to the Petrobras scandal.

Cabinet ministers can only be tried before the Supreme Court in Brazil.

But both leftists will have to be prepared for the likely backlash, at a time when their political stars are waning.

Rousseff is facing an impeachment drive, a deep recession and mass protests, while her mentor's legacy is threatened not only by the charges against him but also by perceptions that his entire administration was underpinned by graft.

Lula arrived in Brasilia late Tuesday, where he met with the president for more than four hours to discuss options. Talks were expected to continue Wednesday, O Globo said on its website.

"There are two possibilities for Lula in the government: chief of staff or cabinet secretary," a source in Rousseff's administration told AFP, denying the move was aimed at protecting Lula from arrest.

"The goal is to help the president confront the impeachment process... (and) not to escape justice," the source said.

- Hush-money allegation -

The anti-corruption probe now appears to have the president squarely in its sights.

Amaral made his explosive accusations while he was in custody, himself accused of pressuring a former Petrobras director not to talk to investigators.

The senator gave the authorities recordings of conversations in which Mercadante, the cabinet minister, urged him to "keep calm" and warned he could bear "monumental responsibility in destabilizing the government."

In his confession, Amaral said Mercadante told him via his aide "that financial issues, and specifically paying for lawyers, could be resolved, probably through companies linked to the PT."

Mercadante denied the accusations.

Prosecutors have used such plea deals throughout the investigation to implicate a steadily expanding Who's Who politicians and business executives in the spiraling scandal.

"These revelations are going to cost the government dearly, as Senator Amaral was always a key figure in the government," Ivar Hartmann, a political analyst at the Getulio Vargas Foundation in Rio de Janeiro, told AFP.

"The way out of the crisis sought by the PT, with Lula's eventual participation in the government, is now even more difficult."

Rousseff is increasingly on the ropes as Congress gears up to relaunch impeachment proceedings over allegations she fudged the government's books to increase public spending during her 2014 re-election campaign.

On Sunday, between one million and three million Brazilians called for her departure in nationwide protests.

Lula, a former labor leader and a hero to the poor and working class, also looks increasingly cornered.

He is charged with accepting a luxury apartment as a bribe from a company accused in the Petrobras scheme -- and prosecutors say their suspicions don't stop there.

They have indicated they suspect Lula of possibly playing a more central role in the entire scheme, in which construction companies conspired with Petrobras executives to overbill the oil giant to the tune of $2 billion, some of which was paid out as bribes to politicians and parties.

Rousseff was chairman at Petrobras during much of the period in question, but does not face charges so far.

Lula vigorously denies the accusations (Other OTC: UBGXF - news) .
Source: AFP