Brazilian President Temer Officially Charged With Corruption

Just over a month after O Globo newspaper first brought the world's attention to the fact that Brazil's President Michel Temer was 'allegedly' involved in "hush money" payments, then vehemently denied by him; and just a week after the police confirmed it had evidence that Temer received bribes, O Globo, reports citing court documents, that President Michel Temer was formally charged with corruption by Prosecutor-General Rodrigo Janot.

As we noted last week, almost exactly one month after Brazil's stock market crashed, and the Real plunged after the country's never-ending political drama made a triumphal return following accusations that president Michel Temer had encouraged a "hush money" bribe to former House Speaker Eduardo Cunha in return for not getting dragged into the Carwash scandal, Brazil’s federal police force said it has found evidence that the embattled president received bribes to help businesses, Brazil's O Globo reported.

Then earlier today, Brazil’s federal police confirmed it had found evidence that President Michel Temer allegedly committed three crimes, according to local media reports. As Bloomberg reports,

 

Federal police sent full report to the Supreme Court regarding allegations gathered through plea bargains from executives at meat-packer JBS.

 

In the report, police found evidence of corruption, obstruction of justice and failure to report a crime.

 

Police also said there was no evidence of tampering with the audio of the meeting of Temer and the then-head of JBS, Joesley Batista, secretly recorded by the latter.

While Temer has repeatedly denied the accusation, Bloomberg reports that the accusations are based on JBS's Joesley Batista's plea bargain.

Brazil’s Temer was officially charged with corruption by the chief prosecutor on Monday evening, in a highly-anticipated development that may put the embattled president of Latin America’s largest economy on trial.

Rodrigo Janot charged Temer in a case in which the president was accused of corruption and obstruction of justice, according to documents filed at the Supreme Court. The charges need to be approved by two-thirds of Brazil’s chamber of deputies to proceed. It is not yet clear how long that process will take. The president has repeatedly denied wrongdoing.

As a reminder, trying a President in Brazil is not an easy feat:

Step One - Supreme Court

The prosecutor’s case is delivered to the Supreme Court which notifies the speaker of the lower house of Congress, Rodrigo Maia.

 

Step Two - House Speaker
Maia must formally notify Temer of the charges against him. From that moment on, the president’s lawyers have ten lower house sessions to present their defense. At the same time, Maia sends the paperwork to the Chamber’s Constitution and Justice Committee, which must then appoint a sponsor for the case.

 

Step Three - Constitution and Justice Committee, or CCJ
After Temer presents his defense, the committee has five sessions to discuss the charges. The sponsor then presents a final report with his recommendation on the case that the whole 66-member committee must vote on.

 

Step Four - Plenary
Regardless of the outcome of the committee hearing, the report goes to a vote in a plenary session of the lower house. The report can be read the very next day after the hearing or on a date of the speaker’s choosing.
At least two-thirds of lawmakers, or 342 legislators, need to agree for a trial to go ahead at the Supreme Court.
Each lawmaker must cast his or her vote aloud via microphone.

 

Step Five - Supreme Court
If approved by the lower house, a trial will take place at the Supreme Court. Temer would be obliged to stand down as president for 180 days while the court case goes ahead. If the trial lasts for longer than that, Temer would return to office while the case continues.
If convicted, Temer would be stripped of office and his political rights. He may also be imprisoned.
The house speaker would become president for 30 days before Congress votes for a new head of state via an indirect election.

Contacted by Bloomberg, Presidential Palace wasn’t immediately available to comment.

For now, no markets are open to see if this is affecting anything for now, we will be monitoring the IBOVESPA funds in Japan once they open for any reaction.