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New Charges Weaken Collor as Congress Completes Corruption Probe

August 22, 1992

RIO DE JANEIRO, Brazil (AP) _ New charges of wrongdoing further weakened the position of President Fernando Collor de Mello on Saturday, increasing the likelihood Congress would vote this week to open impeachment hearings.

On Monday, Congress is to reveal findings of a two-month investigation of Collor’s 1989 campaign treasurer, Paulo Cesar Farias. Farias is accused of running an extortion ring that funneled millions of dollars into a bank account linked to the president.

A 22-member congressional panel is expected to approve the report Wednesday.

″We’re a minority,″ said Rep. Roberto Jefferson, a Collor supporter on the panel. ″Losing the vote is a foregone conclusion.″

Approval of the report would set up a vote in the lower house of Congress on whether to start impeachment proceedings. If proceedings began, Collor would be suspended for 180 days and the Senate would vote on whether to remove him from office permanently.

The president apparently still has enough votes in the Senate to fight off impeachment. But the accumulating allegations and street protests appear to have eaten into his political support.

Collor has been trying to forestall impeachment by opening up the federal treasury to pet projects for members of Congress.

Late Friday, panel members charged that Farias and Ana Acioli, a secretary who handles the president’s personal expenses, made huge bank withdrawals two days before Collor took office on March 15, 1990. The day after his inauguration, a surprise bank freeze was declared.

The 15-month freeze, part of an emergency anti-inflation plan, blocked about $115 billion in assets. Account holders were limited to only a $1,000 initial withdrawal and then permitted to take out money in increments.

Rep. Aloisio Mercadante of the opposition Workers Party said Acioli withdrew $63,000 on March 13. Farias reportedly withdrew several hundred thousand dollars that day.

The report was the lead story in Brazil’s major newspapers Saturday.

″If the withdrawals are confirmed, it becomes clear that the very author of the confiscation avoided its devastating effects while the population was left in difficulties,″ Folha de Sao Paulo, the country’s most widely read newspaper, said in its lead editorial.

Collor’s allies at first denied Mercadante’s account. Later, the government said the story was true but that the money was taken out to help pay for the inauguration.

″This money was used ... to pay for clothes for family members, for the party given for his friends, for plane tickets for those who couldn’t otherwise afford to attend,″ Jefferson said.

But even some of Collor’s firmest supporters did not hide their distress at the revelations.

The freeze threw the economy into a deep recession and caused hardship for millions of Brazilians. At least two people committed suicide after learning their savings had been taken.

″It’s the end of the world,″ said Sen. Alexandre Costa of the pro- government Liberal Front Party after hearing Mercadante’s charges.

Investigators had already uncovered several million dollars deposited in Acioli’s accounts from ″ghosts″ - people using fake names and taxpayer identity numbers - linked to Farias.

Collor says the deposits came from a $5 million loan he took out in Uruguay in 1989.

On Friday, more than 25,000 students marched through Rio chanting ″Collor in Jail″ and ″Your Hour Has Come.″

Update hourly