No crime in Dilma's pedaladas?

A Brazilian prosecutor has found that the “fiscal pedaling” for which suspended Brazilian president Dilma Rousseff faces impeachment does not represent a crime and has suspended related criminal proceedings.

One would think that this would affect the outcome of the impeachment trial, which is currently underway in the Senate and will likely be finalized in the coming months, perhaps as soon as August. However, the fact of the matter is that it probably won’t, and Rousseff is still likely to be permanently removed from office. This is because the conclusion of the prosecutor in this case is largely irrelevant.

Common crimes versus crimes of responsibility

It is important here to remember the difference between criminal and civil proceedings. That is, there are different types of infractions, with different consequences. When the prosecutor talks about a crime in this context, he is referring about common crime, the type defined by the penal code and that carries prison sentences (in this case, the taking out of illegal loans by the government).

However, this is not at the root of the impeachment. The core issue at hand is civil in nature: the commission of what is known as a “crime of responsibility,” in this case, breaching the Fiscal Responsibility Law. Whether or not the manner in which this occurred also constitutes a criminal offense is ancillary, at least as far as the impeachment proceedings go. Indeed, the same prosecutor is still evaluating civil proceedings related to the same case and may yet issue fines against those involved.

Rousseff is charged with breaking the Fiscal Responsibility Law by issuing decrees for loans and delaying government payments, using the funds “saved” or “borrowed” in this way to increase government spending in the run-up to a hotly contested election while simultaneously concealing the budget deficit that this was creating (for a comprehensive explanation of the allegations against Rousseff, click here).

In this way, she eked out a victory, all the while claiming that the government’s finances were in much better shape than they actually were. According to Brazilian law, this type of unauthorized increase in government spending, which has fueled inflation and led to the greatest budget deficit in history, qualifies as a “crime of responsibility”. It may not warrant the pressing of criminal charges, but, according to Brazil’s constitution, it is an impeachable offense.

Indeed, the prosecutor acknowledges this. While he stops short of declaring the maneuvers a common crime (he states that they were not illegal loans but rather constitute breach of contract with the entities owed government payments), he refers to them as falling under the umbrella of “administrative improbity.” Further, he states that they were seemingly intended to misrepresent the state of the federal budget to help get Rousseff re-elected, calling them an “abuse of power” and saying they perhaps represented “the unfortunate final step in the transformation of the jeitinho brasileiro (the “little Brazilian way” of bending the rules) into Machiavellian creativity”.

He further notes the serious consequences of the fiscal pedaling: By creating a massive budget deficit and undermining the credibility of the Brazilian government’s financial data, they have led to the downgrading of Brazil’s credit. Indeed, they are part of a greater pattern of systematic unsustainable spending and economic interventions that have created rising inflation and one of the worst recessions in memory, if not ever.

The government now faces ever-increasing interest payments due to the many loans it has and continues to have take out in order to meet its obligations. Brazil has lost its investment grade, which has caused these interest payments to get even higher. In order to remedy the situation, austerity measures will have to be implemented, making the situation even more painful for the population, which counts 11 million unemployed.

Getting fired versus getting arrested

With the presidency as with any other job, the bar for getting fired is much lower than the bar for going to prison. Someone who is guilty of administrative improbity, as the prosecutor has alluded to in the case of Rousseff, does not need to commit a criminal offense as well for their sacking to be justified.

The ultimate decision now lies with the Brazilian Senate, which will weigh this prosecutor’s interpretation against evidence from those bringing the impeachment charges, including auditors from Brazil’s Federal Court of Accounts (TCU), which disagrees with the prosecutor and considers the maneuvers to be illegal credit operations. The Senators are expected to vote in favor of impeachment.

In any case, nothing can change the fact that the Rousseff presidency has been a governing disaster of recklessness, short-sightedness and irresponsibility that has resulted in very real human suffering for millions of Brazilians. She may not have to go to prison for breaking the Fiscal Responsibility Law, but she certainly deserves to lose her job.