UPDATE 3-Brazil's new government loses key minister to scandal

lunes 23 de mayo de 2016 19:07 GYT

(Recasts for Juca stepping down to return to Senate, adds comments, market reaction)

By Silvio Cascione and Maria Carolina Marcello

BRASILIA May 23 (Reuters) - Brazil's interim government was rocked on Monday by the loss of one of its key figures, Planning Minister Romero Juca, who stepped aside amid accusations he had conspired to obstruct the country's biggest-ever corruption investigation.

Interim President Michel Temer was counting on Juca, a close confidant and experienced senator, to steer a budget bill through Congress to avoid a government shutdown next month.

However, a recording of his conversation with a suspect in the investigation threatened to stain the new, center-right administration, already unsettled by a series of policy reversals during its first week in office.

The scandal weakened Brazil's currency on fears of further instability less than two weeks after President Dilma Rousseff was suspended to stand trial in the Senate for allegedly breaking fiscal laws, leaving former Vice President Temer to lead the country.

"Starting from tomorrow, I will step aside," Juca, appointed by Temer after Rousseff's suspension, told reporters in Brasilia. He denied any wrongdoing and insisted that his recorded comments had been distorted and taken out of context.

In the recording, made before Rousseff was put on trial and published by newspaper Folha de S. Paulo on Monday, Juca told a friend he agreed on the need for a "national pact" to limit the graft probe rattling the political establishment.

Asked for help by his ally, ex-senator Sergio Machado under investigation in the probe, Juca replied: "The government has to be changed in order to stop this bleeding," Folha reported, adding that the conversations were taped "secretly."   Continuación...