Brazil's new government buffeted by pension fund scandal
By Anthony Boadle
BRASILIA, Sept 6 (Reuters) - The government of Brazil's new President Michel Temer scrambled on Tuesday to distance itself from a multibillion-dollar corruption scandal that broke less than a week after he took office, involving fraud in the country's largest pension funds.
With the country already reeling from a sprawling bribery and kickback scandal at state oil company Petrobras, the new corruption case could hamper the conservative Temer's efforts to restore credibility and turn the page on the leftist government of impeached President Dilma Rousseff.
Police on Monday arrested five people linked to fraudulent investments made by four huge pension funds of state-run companies. The investigation snared dozens of businessmen and fund managers suspected of involvement in a fraud scheme valued at around 8 billion reais ($2.5 billion), including the chief executive of the world's biggest beef exporter.
The coveted appointments of directors to the funds' boards were made by political parties and the probe is expected to spread to Brazil's political establishment, where some 50 politicians are already under investigation in the Petrobras scandal.
Temer's office said the appointments were made during the 13 years of Workers Party rule that ended with Rousseff's removal from office last week, and the "irregularities" uncovered by the police had nothing to do with the current administration.
"The Workers Party appointed the pension fund directors from the moment it took office in 2003 and they were closely linked to the unions," said a Temer aide who asked not to be named.
"The Workers Party was responsible for the big loss suffered, ironically, by the workers of the state companies who were saving for their retirement," the aide said. "This has not even scratched the image of the new government."
Temer's government will press for a thorough investigation as it pushes through proposed legislation that will depoliticize the appointment to directors of state companies, he said. Continuación...