Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point

In Depth

On Air

Low Graphics

Friday, April 30, 1999 Published at 06:42 GMT 07:42 UK

Business: The Economy

Former Brazil bank chief to testify

The former bank chief now willing to testify

By Sao Paulo correspondent Sephen Cviic

The former president of the Brazilian Central Bank, Francisco Lopes, says he is now willing to appear before a Congressional committee investigating the alleged sale of inside information to private banks.

On Monday Mr Lopes was arrested after refusing to testify under oath. He was later given bail.

In a statement made through his lawyers, Mr Lopes said he reserved the right to remain silent depending what questions were put to him.

The Congressional inquiry into the Brazilian Central Bank scandal is ploughing on relentlessly, as signs grow that Brazil's economy is now recovering.

Right to silence

Several witnesses have been heard this week and many senators think they can smell blood.

One senator said that two of the witnesses, an economist and a private consultant, had contradicted each other regarding the level of their contacts at the time of the currency devaluation in January.

What this scandal boils down to is the allegation that Central Bank officials were giving private banks advance warning of changes to exchange rate and interest rate policy.

The man at the centre of the storm is Francisco Lopes, who was sacked in February after only three weeks as Central Bank president.

Following his dramatic refusal to testify on Monday, Mr Lopes obtained a legal ruling guaranteeing him the right to silence if faced by a potentially incriminating question.

Thus forearmed, he says he is willing to testify if called.

Analysts are divided on how serious this scandal is likely to prove for President Fernando Cardoso's government.

Encouraging economy

Some say the inquiry is running out of steam and for the time being financial markets seem more interested in the fact that Brazil is emerging from its economic crisis.

On the other hand, the Congressional inquiry is taking up a good deal of legislative time and President Cardoso is having little success in pushing ahead with his plans to reform the state.

Flagging on a lack of fresh revelations, Brazil's inquiry into a currency scandal involving the Central Bank took a back seat Thursday to encouraging economic news in the country's financial markets.

Concerns that the headline-grabbing probe could taint current members of the government have weighed on markets this week after Lopes's arrest.

But worries over the inquiry were put aside after the Central Bank cut interest rates for the fourth time in two months in another sign that Latin America's biggest economy is on the path to recovery.

President Cardoso, in a speech Thursday, said Brazil was overcoming its problems faster than expected.

He said the government remained committed to a policy of fiscal austerity and declining interest rates.

Inflation, Brazil's traditional spoiler, continued an unexpected slowdown Thursday with the private Getulio Vargas foundation IGP-M index showing inflation down to 0.7% in April from 2.8% in March.

The domestic currency, the real, closed at its strongest level to the dollar in two weeks as rising foreign investment in fixed-income and stock funds sent dollars into the country.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

The Economy Contents

Relevant Stories

08 Mar 99 | The Economy
Brazil's billion dollar bonanza

02 Feb 99 | The Economy
Real steady despite resignation

In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree