Published: Fri, May 19, 2017
Economy | By Annette Adams

Brazil crisis deepens with probe of president, top senator

Brazil crisis deepens with probe of president, top senator

The news sparked calls for Temer's impeachment, halted debate on controversial neoliberal reforms and raised serious questions about the ability of the government to survive until the 2018 presidential election.

"With allegations as serious as these, President Michel Temer should consider resigning out of respect to the extraordinary efforts and recent achievements of Brazil's historical fight against corruption", said Transparency International Chair José Ugaz.

Temer has been in office for just over a year.

The country's main Ibovespa stock index dropped 10 percent within 90 minutes of opening and trading was stopped for 30 minutes.

Brazil's currency, the real, which had been making gains against the United States dollar over the past year plummeted by more than six per cent on Thursday on media reports that the country's president was embroiled in yet another alleged corruption scandal.

The scandal deepened at dawn Thursday as police searched the Rio de Janeiro home and Brasilia office of Sen.

Temer's office denied anything illegal took place in a written statement late Wednesday.

The recordings also implicate senator and former presidential candidate Aecio Neves, who reportedly asked Batista for almost $600,000 to pay for his defense in the Car Wash Corruption Probe.

The hush money allegations left Temer teetering barely a year after he took power in controversial circumstances, replacing his impeached predecessor, leftist president Dilma Rousseff.

Temer admits to meeting Batista but says hush money was never discussed.

The recordings were allegedly made by Joesley Batista, the owner of JBS - Brazil's largest producer and exporter of meat.

It is possible Cunha, who is serving a 15-year prison sentence, could reach a plea deal with authorities for a lesser sentence if he turns over information. According to the Globo report, Batista secretly recorded the conversation with Temer and gave it to justice officials as part of plea bargain negotiations.

"We need to see what the Supreme Court says and whether it accepts this tape as evidence", a presidential aide said.

The Supreme Federal Tribunal has opened an investigation into the accusation against Temer and lifted the seal on the recording.

Rousseff was impeached a year ago for breaking budgetary laws, but she and her supporters have accused Temer, her vice president, of orchestrating her ouster as part of a soft "coup" meant to halt the Car Wash investigation.

JBS representatives did not respond to an email sent by The Associated Press late Wednesday seeking comment.

Temer is deeply unpopular but has been able to rely on a dominant alliance between his centre-right PMDB party and the PSDB Social Democrats, along with a coalition of smaller parties.

"This climate isn't one in which to work", Rodrigo Maia, president of the lower chamber, told Globo News.

The scandal has engulfed Brazilian politics, with a third of Mr Temer's cabinet under investigation for alleged corruption.

The current allegations is not new territory for Temer, who is also accused of illegally financing his campaign during the 2014 elections.

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