Rousseff denies Lula's interference with her administration

Former president Dilma Rousseff denied any influence peddling by former president Luiz Inácio Lula da Silva in connection with the purchase of Swedish Gripen fighters and a provisional decree (MP) to favor the automotive industry. Rousseff testified to a Federal Court in Brasília by video conference on Thursday afternoon (June 22), as a defense witness for Lula.

Lula and his son, Luis Cláudio Lula da Silva, were indicted by the Prosecution Service on charges of influence peddling, money laundering, and criminal conspiracy. According to prosecutors, Lula lobbied in Rousseff's administration to ensure the purchase of fighter jets by the Brazilian Air Force (FAB) and extended the duration of tax incentives for the automotive industry.

The decree revolved around the taxation of the profits of Brazilian multinational companies abroad, replacing the so-called Transition Tax Regime. According to the Federal Prosecution Service, both Caoa automaker and Odebrecht construction company lobbied to influence the terms of the decree because they have business abroad. During the discussion of the decree in Congress, several provisions that were unrelated to the original bill were added to the draft. Rousseff sanctioned the draft with line-item vetoes on these provisions. According to her, that angered Eduardo Cunha, then speaker of the Chamber of Deputies, who started to table bills that undermined the government's austerity policy. “It took a lot of cunning to get by in the political milieu,” she said.

Asked why she did not veto the benefits for the vehicle industry after all, Rousseff said she consulted with the government's expert advisors and concluded the measure would not hurt tax revenue and could help the economy recover.

“The reason I did not veto it was it [the incentives] was the least complicated thing to do and could even be positive for Brazil and the government, because it would benefit the automotive industry, impacting other sectors including steel, rubber, oil and gas, car sales, and others,” she said.

Swedish fighter jets

In addition to Dilma Roussef, the court heard Bengt Janér, Brazil's representative of Saab, the manufacturer of the Gripen fighter jets. He explained his connections with two other defendants, lobbyists Mauro Marcondes and Cristina Mautoni who, according to the prosecution, illegally prevailed on the government to secure the purchase of the aircraft, by allegedly paying $750,000 to Luís Cláudio Lula da Silva, a businessman who is the son of former president Lula. These payments are being investigated, and both Lula and his son denied the allegations.

Janér said he hired Marcondes because he was close to Lula, and Saab was seeking a liaison with the former president after being “cut off” by the Ministry of Defense. “He was in contact [with Lula], and in our view, he was the closest liaison that could bypass the Ministry of Defense,” he said. “But I've never heard him suggest anything illegal like kickbacks,” he went on.

The $5.4 billion deal to buy 36 new aircraft was signed by the Brazilian government during Rousseff's administration, but the process had been going on since the administrations of her two predecessors, Lula and Fernando Henrique Cardoso. It is expected that the 36 Gripen NG fighters will be delivered to the Brazilian Air Force between 2019 and 2024.

Translated by Mayra Borges