[QODLink]
Archive
Brazilian finance minister resigns

The Brazilian finance minister and architect of the government's market-friendly economic policies has resigned amid a corruption scandal.

Last Modified: 27 Mar 2006 23:00 GMT
The accusations against Palocci (L) remain unproven

The Brazilian finance minister and architect of the government's market-friendly economic policies has resigned amid a corruption scandal.

Antonio Palocci, stepped down on Monday and was replaced by Guido Mantega, president of Brazil's national development bank BNDES.

The finance ministry said: "Minister Antonio Palocci decided to ask the president of the republic to be relieved of his duties. The minister is forwarding a letter to President Lula explaining his reasons."

Palocci resigned as campaigning heats up for a presidential election in October in Latin America's biggest country. Luiz Inacio Lula da Silva, the president, is widely expected to run for a second term.

Lula's closest confidant, Palocci is the most important figure to fall victim to a corruption scandal that rocked the government last year but had appeared to have fizzled out.

Kickbacks

The trained physician has since last August defended himself against allegations he took kickbacks from contractors when he was mayor of Ribeirao Preto, a city in Sao Paulo state, in the mid-90s.

"Minister Antonio Palocci decided to ask the president of the republic to be relieved of his duties. The minister is forwarding a letter to President Lula explaining his reasons"

Finance Ministry statement

The allegations, which he has denied and have not been proven, were part of a wider scandal over illegal campaign funding and vote-buying by the ruling Workers' party.

The issue flared up again two weeks ago when a house caretaker said he repeatedly saw Palocci at a villa in Brasilia suspected of being used by Palocci's former aides to divide up the proceeds of extortion and to meet prostitutes.

Pressure mounted on the government after a senior official in the Caixa Economica Federal, a state-owned bank, was found to have illegally disclosed the caretaker's bank record in an apparent attempt to discredit him.

Market scare

Speculation that Palocci's demise was imminent had spooked the markets on Monday but the business community appeared confident that the new minister would not bring big changes.

Francois Dossa, president of Societe Generale do Brasil, said: "I think his departure was inevitable. But I'm not worried by the decision. I don't think this will cause stress for the economy."

"The economy is very strong. $120 billion in exports is more powerful than politics."

Mantega, an economist and former university professor, is also a close confidant of Lula but has criticised Palocci for being too conservative on monetary and fiscal policy.

Source:
Reuters
Topics in this article
People
Featured on Al Jazeera
More than one-quarter of Gaza's population has been displaced, causing a humanitarian crisis.
Ministers and MPs caught on camera sleeping through important speeches have sparked criticism that they are not working.
Muslim charities claim discrimination after major UK banks began closing their accounts.
Italy struggles to deal with growing flood of migrants willing to risk their lives to reach the nearest European shores.
Featured
Assam officials upset that WWII-era Stillwell Road won't be used in transnational highway linking four Asian nations.
Informal health centres are treating thousands of Syrian refugees in Turkey, easing the pressure on local hospitals.
Indonesian and Malaysian authorities are keeping a close eye on local supporters of the hard-line Middle East group.
Wastewater ponds dot the landscape in US states that produce gas; environmentalists say they’re a growing threat.
China President Xi Jinping's Mongolia visit brings accords in the areas of culture, energy, mining and infrastructure.
join our mailing list