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LatinNews Daily - 6 October 2015

Brazil: Government attempts to delay TCU verdict

Development: On 5 October the Brazilian government's attorney, Luiz Inácio Adams, filed a request against Augusto Nardes, the leading judge in the case in the federal court of accounts (TCU) that is due to issue a ruling tomorrow (7 October) on whether the government led by President Dilma Rousseff engaged in illegal accounting measures to balance its books in 2014.

Significance: If the request is accepted, the TCU’s ruling could be postponed yet again, which might diminish momentum in support of impeachment proceedings against President Rousseff, just as the government seeks to shore up its support in the federal congress on the back of a new cabinet reshuffle. But even if the TCU rules against the government, the validity of the ruling could be put in doubt. Adams also asserts that the whole process has been compromised because of public declarations made by Nardes prior to the judgment, asserting that the Rousseff administration had committed fiscal irregularities.

  • According to Nardes’s report, the government committed 15 irregularities in its 2014 budget accounts, including using money from federal banks to pay for social programmes, considered an irregular credit transaction. Critics say these irregular accounting measures were used in order to give the appearance that the government was sticking to its budget surplus targets, ahead of Rousseff’s re-election bid in October last year. If the TCU rules against the government, Rousseff could be accused of ‘fiscal irresponsibility’, an impeachable charge. The government has defended its actions by claiming that previous federal administrations have used similar accounting measures and had their accounts approved by the TCU.
  • Several times in the past month, Nardes has stated that he would recommend his TCU peers to reject the 2014 government accounts, saying that in his view, “the public accounts were compromised, with serious irregularities in fiscal management”. Adams argues that these declarations undermine the case. Under Brazilian law, acting magistrates are barred from expressing their opinions prior to the issuing of a verdict, which must then be ratified by congress.
  • Nardes has rejected the accusations by Adams, claiming that he had only repeated what was already contained in his preliminary report on the case released in June. Nardes added that his comments were made after the TCU had postponed its ruling in early September in order to allow the government more time to respond to some of the technical findings in his report.
  • The TCU president, Aroldo Cedraz, has rejected the notion that the TCU might have to throw out the case, saying that there was a precedent whereby members of the court had made public declarations after preliminary reports had been issued. He also said it was strange that the government was only now contesting the capacity of Nardes to lead the case.

Looking Ahead: The government has vowed to go to the supreme court (STF) to contest the legality of the TCU’s verdict, if it goes ahead. Although some jurists suggest that it is unlikely that the STF would accept the government’s argument, the appeal would buy the executive crucial time to rebuild support in congress.

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