28 October 2014 | 14:19

Rousseff must fight graft to placate angry Brazil

Having won re-election, Brazilian President Dilma Rousseff must now deliver on her pledge to crack down on corruption or be dogged by the scandals that nearly derailed her campaign, AFP reports.

Along with economic woes, corruption was the central issue in a campaign rocked by allegations that the incumbent knew about embezzlement at state oil giant Petrobras, which she once chaired.

Rousseff, 66, fiercely denied the report -- published by conservative news magazine Veja just days before the run-off election -- and insisted she would clamp down on graft in her second mandate.

"I shall make tackling corruption a strict commitment, strengthening supervisory institutions and modifying existing legislation to ensure it does not occur with impunity," she said in her victory speech Sunday.

The Petrobras scandal erupted in the middle of the election campaign with the arrest of the firm's former refineries director on money-laundering charges.

Paulo Roberto Costa, who was appointed under Rousseff's predecessor and mentor, Luiz Inacio Lula da Silva, turned state's witness after his arrest.

He then alleged that dozens of politicians, mainly Rousseff allies, had received some $4.5 billion in sweeteners on contracts.

The claims battered Rousseff's campaign for weeks.

But it was a Veja's 11th-hour report, citing leaked testimony from a shady currency dealer accused in the case, that appeared to be on the verge of changing the outcome of the election.

Rousseff angrily denied the allegations and threatened to sue the magazine.

In the end, she held on to win a narrow victory over center-right challenger Aecio Neves.

But the issue could continue to haunt her, analysts say.

"If what they are saying were to be proven, then that would deal a serious blow to Dilma's second administration to the point where she might even have to stand down," said Gil Castelo Branco, founder of Brazilian transparency watchdog Open Accounts.

History of graft

This is not the first time the ruling Workers' Party (PT) has been embroiled in corruption allegations.

Still fresh in voters' minds is the "mensalao" or "monthly allowance" controversy which dogged Lula's two terms from 2003 to 2011.

Under the scheme, members of Congress received cash payments to back legislation proposed by the ruling party.

Several PT members were tried over the scandal and some were jailed, including Lula's former chief of staff Jose Dirceu -- who was replaced by Rousseff.

"On that occasion, the PT treasurer Delubio Soares was sentenced," said Castelo Branco.

"Now, new treasurer Joao Vaccari stands accused over Petrobras. So it's getting ever more difficult to deny what they knew."

On the campaign trail, Rousseff pledged tougher punishments for those illegally benefiting from public sector positions, even seizing their assets.

Messy politics

Brazil's fragmented Congress -- which will have no fewer than 28 parties next term -- is part of the problem, analysts say.

Doing business in Brasilia will only get harder for the PT next term.

The opposition strengthened its ranks in the elections while the ruling party lost seats, though it remains the largest party in Congress.

The PT and its coalition allies will still be in the majority in both houses but form a broad, if not outright motley church.

"There is a climate of radicalism in the air, Rousseff's campaign divided the country. And the Petrobras scandal means we are sailing through choppy waters," opposition lawmaker Mendonca Filho told the newspaper Folha de Sao Paulo.

Gridlock in the legislature has only fueled corruption as the administration seeks to line up small parties behind it to pass legislation by offering a quid pro quo.

Neves had floated a proposal to simply get rid of parties obtaining less than five percent of the vote.

"There are parties that strike deals with smaller parties, offering them management jobs or director's posts so they won't blow the whistle on them," said the director of Transparency Brazil, Claudio Abramo.

Rousseff has herself suggested ending corporate financing for political campaigns.

But some observers fear that could open the door to more dirty money and prefer simply to limit donations.

In short, the main parties agree on the need for political reform but not on the method of achieving it nor the scope -- all of which serves the interests of those who prefer the status quo.