Brazilian Court Rejects Rousseff Administration Accounts

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – In yet another blow to President Dilma Rousseff’s Administration, Federal Accounts Court (TCU) judges unanimously recommended that Brazil’s Congress reject government budget accounts for 2014. The TCU’s recommendation could open up the way for charges of lack of compliance with the Fiscal Responsibility Law and the possibility of impeachment proceedings against the President.

According to the TCU, the government manipulated its accounts by obtaining money from state-owned banks to pay for social programs while not registering them as expenditures. The administration’s objective, according to the TCU, was to disguise payments and reduce government deficit.

“The non-calculation of payments of subsidies, the unrecorded debts and the absence of primary expenditure in the calculation of fiscal results created an unrealistic condition…allowing for the improper implementation of other expenses,” said TCU Judge Augusto Nardes in his analysis of the accounts.

According to TCU judges the recommendation to reject the budget accounts was based on two issues. The first was the delay by the government to pay state-owned banks Caixa Economica Federal and Banco do Brasil for expenditures with social programs, such as Minha Casa Minha Vida (My Home, My Life). According to the TCU this would constitute a loan by the federal government, which was not incorporated into the accounts. The other issue was the five decrees signed by Rousseff involving credit to the government without (the required) prior authorization by Congress.

Government officials were quick to respond to the recommendation, stating that ‘there was no legal reason for the rejection of the accounts’. In a statement released after the recommendation announcement the government said it was erroneous to ‘penalize administrative actions which sought to maintain social programs important for the Brazilian population such as Bolsa Familia (social welfare program to maintain children in school) and Minha Casa, Minha Vida’.

Congressional opposition leaders also weighed in after the announcement stating that the decision provided legal grounds for the start of impeachment proceedings against the President. “When you see the Federal Accounts Court rejecting unanimously the President’s accounts, the government has ended and now the discussion goes to the next stage, which is impeachment,” said Rubens Bueno of the PPS (Popular Socialist Party/former Brazilian Communist Party) according to Agencia Brasil.

“The historic decision by the TCU shows in an unequivocal manner that the government of President Dilma Rousseff committed successive illegalities to win the elections,” said PSDB party president former Presidential contender, Aecio Neves, who lost to Rousseff during the 2014 Presidential elections.

The TCU is linked to the Legislative Branch in Brazil and every year recommends whether or not Congress should approve the Administration’s accounts. This is the second time in history the TCU has recommended a rejection of the accounts. The only other time this occurred was in 1937 under the dictatorship of Getulio Vargas. Brazil’s Congress has, however, the option of not accepting the recommendation and approving Rousseff’s accounts for 2014.

Rousseff is expected to meet with her newly created cabinet on Thursday to map out plans to convince Congressional representatives from government-allied parties not to accept the recommendations made by the TCU. Last week Rousseff re-shuffled her ministries, changing cabinet members and extinguishing ministries and jobs in an attempt to please allied parties. With the move, the Administration hopes that Congressional representatives in theory loyal to the Rousseff Administration will come to the government’s rescue and reject the TCU’s advice.