Police arrest former Bolsonaro aide in corruption probe

. Jun 18, 2020
fabricio queiroz Fabrício Queiroz. Photo: Still from SBT

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We’re covering the arrest of Fabrício Queiroz, a close ally to the president, this morning. The Central Bank’s decision to lower interest rates. A new debt renegotiation process. And the latest development in the Trump-Bolsonaro relationship.

🚨 BREAKING: Bolsonaro ally Fabrício Queiroz arrested near São Paulo

Fabrício Queiroz, a retired cop with close ties to the Bolsonaro family, was arrested this morning.

He is a friend of President Jair Bolsonaro&#8217;s and worked as an advisor and driver for Senator Flávio Bolsonaro, during his stint as a Rio state lawmaker. He was being harbored by Senator Bolsonaro&#8217;s lawyer, hiding at his home in Atibaia, a city 90 kilometers from São Paulo.</p> <p><strong>Why it matters. </strong>Mr. Queiroz is a key piece in an investigation around alleged money-laundering schemes headed by Flávio Bolsonaro.</p> <p><strong>The probe. </strong>In 2018, Brazil&#8217;s money laundering enforcement agency found that the former driver made &#8220;<a href="https://brazilian.report/power/2018/12/14/suspicions-bolsonaro-clean-image/">atypical transactions</a>&#8221; in 2016 totaling BRL 1.2 million (USD 230,000). These transactions were made through cash deposits and withdrawals —&nbsp;customary when the intent is to conceal the source and recipient of the funds.</p> <ul><li>Investigators believe Mr. Queiroz helped Flávio Bolsonaro force his staff to surrender part of their paychecks to the lawmaker. This practice is not uncommon in Brazil, being known as a “rachid scheme.”</li><li>Monthly deposits made into the bank account of Mr. Queiroz coincide with the paydays of public servants at the Rio de Janeiro legislative assembly. The former driver made a total of <a href="https://brazilian.report/power/2019/01/18/flavio-bolsonaro-scandal-president/">176 cash withdrawals</a> from his bank account in 2016.</li><li>One of the suspicious financial operations in question involved a BRL 24,000 check to First Lady Michelle Bolsonaro. The president said it was for the payment of a debt.</li><li>Federal prosecutors recently said there is &#8220;<a href="https://oglobo.globo.com/brasil/procurador-aponta-fortes-indicios-de-lavagem-de-dinheiro-em-bens-de-flavio-bolsonaro-1-24481380">strong evidence</a>&#8221; that Flávio Bolsonaro laundered money through suspicious real estate deals.</li></ul> <p><strong>Ticking time bomb?</strong> At least publicly, Mr. Queiroz&#8217;s relationship with the Bolsonaros has been push-and-pull. Early in 2019, the president suggested his son was &#8220;betrayed&#8221; by Mr. Queiroz. But as recently as May 2020, Flávio Bolsonaro defended his former aide&nbsp;— calling him a &#8220;hard-working man who gave his blood for what he believed.&#8221;&nbsp;</p> <ul><li>Political insiders believe that Mr. Queiroz&#8217;s testimony could implode the Bolsonaro administration.</li></ul> <p><strong>Raids.</strong> Police are looking for evidence at a vacant home to the north of Rio de Janeiro that belongs to an aide of Flávio Bolsonaro&#8217;s.</p> <hr class="wp-block-separator"/> <h2>Central Bank lowers interest rate eyeing stimulus</h2> <p>The Brazilian Central Bank&#8217;s Monetary Policy Committee has lowered interest rates to a new all-time low of 2.25 percent a year —&nbsp;the lowest since inflation targets started being used in Brazil, back in 1999.</p> <ul><li>In a statement, the Committee said: “Regarding the global outlook, the Covid-19 pandemic continues to cause a pronounced slowdown in global growth. Against this backdrop, despite the significant provision of fiscal and monetary stimuli in major economies and some moderation in the volatility of financial assets, the environment for emerging economies remains challenging.”</li></ul> <p><strong>Why it matters.</strong> The bank is trying to increase access to credit by lowering interest, as a push to help kickstart the economy. Further cuts in the near-future are not off the table.</p> <p><strong>Yes, but … </strong>Banks have been risk-averse during the crisis, making credit scarce.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2887304" data-url="https://flo.uri.sh/visualisation/2887304/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>New debt-renegotiation program should help 3.5 million taxpayers</h2> <p>The government has launched a <a href="https://brazilian.report/newsletters/brazil-daily/2020/06/09/central-bank-transferwise-bolsa-familia-tax-reform/">new debt renegotiation program</a> for companies and individuals with overdue tax bills. Only taxpayers who prove they are facing economic dire straits caused by the coronavirus will be eligible for the new program —&nbsp;though they will be able to renegotiate debts contracted before the pandemic.</p> <ul><li>For individuals, debt discounts could reach 70 percent. In the case of companies, 50 percent.</li></ul> <p><strong>Why it matters.</strong> The government expects to <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/04/06/covid-19-brazil-2-million-debt-renegotiation-filings/">renegotiate</a> around BRL 56 billion in tax debts —&nbsp;with up to 3.5 million companies and individuals expected to benefit.</p> <p><strong>Not the same.</strong> Representatives of the Economy Ministry said this is not a debt-renegotiation program like others in the past. And that&#8217;s because, for the first time, eligibility will be conditioned to taxpayers&#8217; economic conditions.</p> <p><strong>Loophole. </strong>Debt renegotiation programs have become commonplace in Brazil: no less than 31 federal programs were launched between 2000 and 2017. A 2012 study by economist Nelson Leitão Paes, an auditor of the Federal Revenue Service, shows that only 6 percent of companies that joined the first program, back in 2000, have effectively paid off their debts to the government.</p> <ul><li>Even with the risk of the government simply waiving revenue once more, many experts say the program is necessary due to the pandemic.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>U.S. Trade Representative: no plans for Brazil</h2> <p>U.S. Trade Representative Robert Lighthizer went to the Capitol on Wednesday to brief House and Senate committees on President Donald Trump’s trade agenda for the remainder of 2020. He told members of Congress that the White House has no plans for a free-trade agreement with Latin America&#8217;s biggest economy. &#8220;What we are doing now with Brazil is trying to solve specific problems for the country to open itself up and create jobs for America.&#8221;</p> <ul><li>Earlier this month, 24 Democrats from the U.S. Congressional Committee on Ways and Means voiced their “<a href="https://brazilian.report/power/2020/06/05/us-house-committee-wants-no-business-with-bolsonaro/">strong objections</a>” to any rapprochement with Brazil.</li></ul> <p><strong>Why it matters.</strong> A trade deal with the U.S. has been something of a Holy Grail for the Jair Bolsonaro administration — and a rare occasion in which the interests of the pro-free trade ideals of Economy Minister Paulo Guedes meet those of the Americanophile anti-globalist Foreign Minister Ernesto Araújo.</p> <p><strong>&#8220;I love you&#8221; / &#8220;Nice seeing you&#8221;.</strong> Despite pledging his utmost loyalty to the Trump administration, President Jair Bolsonaro has gotten little in return. Just this week, the U.S. <a href="https://brazilian.report/newsletters/brazil-daily/2020/06/17/donald-trump-bolsonaro-influence-latin-america-idb-latam-aviation/">crushed Brazil&#8217;s intentions</a> of having a Brazilian president of the Inter-American Development Bank.</p> <ul><li>One episode epitomizes the Trump-Bolsonaro relationship: during a meeting at the UN General Assembly, Mr. Bolsonaro <a href="https://blogs.oglobo.globo.com/lauro-jardim/post/bolsonaro-para-trump-i-love-you.html">reportedly</a> told Mr. Trump: &#8220;I love you.&#8221; To which, the U.S. president replied: &#8220;Nice seeing you again.&#8221;</li></ul> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Reopening.</strong> After launching a plan to reopen the economy last week, the state of São Paulo has registered, for the second day in a row, a record number of new daily deaths. On Thursday, 389 casualties were accounted for by state authorities. A rushed reopening could spark a second wave of coronavirus infections —&nbsp;even before the first one is finished. According to the OECD, that could lead to a <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/06/10/second-coronavirus-wave-brazilian-gdp-plunge-oecd/">GDP contraction of 9.1 percent in 2020</a>.</li><li><strong>Probe.</strong> The Supreme Court should finish its trial today on whether its so-called &#8220;<a href="https://brazilian.report/newsletters/brazil-daily/2020/05/28/supreme-court-fake-news-probe-brazil-unemployment-pandemic/">fake news probe</a>&#8221; should move forward. The investigation was opened last year and has been questioned by many legal scholars — even being used once to censor a media outlet. But as justices zero in on allies of President Jair Bolsonaro, outrage from the political establishment seems to have dissipated. Eight of the 11 justices have voted on the case —&nbsp;all in favor of keeping the probe going.</li><li><strong>Aviation.</strong> Latam Airlines, Latin America&#8217;s biggest carrier, has ended its operations in Argentina for an undetermined amount of time. The company has stated that the decision does not affect its operations in other countries. Last month, however, Latam filed <a href="https://brazilian.report/newsletters/brazil-daily/2020/05/26/brazils-covid-19-numbers-only-show-tip-of-the-iceberg/">Chapter 11 bankruptcy protection</a> in the U.S., alongside affiliates in Chile, Peru, Colombia, and Ecuador. In Brazil, the airline announced a <a href="https://brazilian.report/newsletters/brazil-daily/2020/06/17/donald-trump-bolsonaro-influence-latin-america-idb-latam-aviation/">codeshare deal with Azul</a>.</li></ul> <hr class="wp-block-separator"/> <p><em>Corretion: A previous version informed that the police raided a home belonging to President Jair Bolsonaro —&nbsp;but it belongs to an aide of his eldest son&#8217;s.</em>

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