Brazil's Finance Minister Antonio Palocci. - REUTERS
BRASILIA, Brazil (Reuters):
BRAZILIAN POLICE began investigating yesterday whether the federal government helped leak the private bank records of a key witness testifying against Finance Minister Antonio Palocci on corruption allegations. The case has taken centre stage in a fierce stand-off between the government of President Luiz Inacio Lula da Silva and the opposition, which accuse each other of mud-slinging before October's general election. Opposition leaders accused the Government of an attempted cover-up.
The witness, Francenildo dos Santos Costa, told a con-gressional committee last week that he saw Palocci at a villa in Brasilia suspected of being used by government officials to divvy up what he and others have said was cash obtained from an extortion ring.
The house, where Costa was the caretaker, also was used by Palocci and some of his former aides to meet with prostitutes, he said.
Palocci, the architect of the Lula administration's market-friendly economic policies, had previously denied that he had ever been to the house.
Shortly after Costa's testimony, a leading news magazine alleged that he had been paid off to testify against Palocci. The magazine, which did not say who might have paid Costa, based its report on bank statements showing that Costa had made unusually large cash deposits recently in his account at the government-owned bank Caixa Economica Federal.
Costa said his biological father had given him the money, a claim his father has confirmed.
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If investigators prove that the Government was involved in leaking Costa's bank records, it could dent Lula's image in the upcoming election campaign, political analysts said.
Some analysts said Palocci could step down at the end of the month, the deadline for public officials to resign their posts to run for office in October's vote.)
