Graft threat to Brazil's president

There could be more embarrassing revelations for Congress

By Stephen Cviic in Sao Paulo

The Brazilian president, Fernando Henrique Cardoso, is facing a potentially damaging crisis in his government following allegations that senior officials were involved in one of the country's biggest corruption scandals.

The scandal involving the theft of more than $90m from a courthouse building project first came to light last year.

The whiff of scandal is coming close to Cardoso

But in recent days, the Brazilian press has published documents and extracts from phone conversations suggesting that some of the president's closest advisors were involved.

This is an extremely delicate moment for President Cardoso.

No one is accusing him of any personal corruption. But the whiff of scandal is coming uncomfortably close.

Judge on the run

In 1999, a congressional enquiry revealed that a senior Sao Paulo judge, Nicolau Dos Santos, had helped to steal more than $90m from a courthouse construction project.

The building in question is still unfinished. Most of the money is missing, and the judge is on the run from the police. But the affair will not go away.

The Sao Paulo judge was close to former Cardoso aide

In June, the senate expelled one of its members who was believed to have been involved in the fraud.

Then last week, a former advisor to President Cardoso acknowledged in a newspaper interview that he and Judge Dos Santos had a close working relationship.

Hastily, the president put out a statement saying that he had not approved any of the funds for the building project.

Tapped phonecalls

But on Thursday, Brazil's leading newspaper, the Folha de São Paulo, published just such a document with the president's signature on it.

The latest revelations have come from a weekly magazine - hours of tapped telephone conversations in which Judge Dos Santos spoke of his efforts to obtain money via another senior official.

No one has resigned over the affair - yet.

But it's highly likely that the Brazilian media have more embarrassing revelations up their sleeve.