Antonio Palocci - Ministerial Abuse of Power

Ministerial Abuse of Power

A new scandal began to unfold in 2006 after a Parliamentary Inquiry heard two witnesses who claimed that the minister had been to a manor house in Brasília which is suspected of functioning as a hub for fraudulent operations within the government, with the participation of some of his closest aids. Palocci had previously claimed he had never been at the house. Some Congressmen said at the time that he could face criminal charges for lying to a Parliamentary Committee.

The main witness in the case is Francenildo Costa, who was then the groundskeeper of the property. He said the minister had visited the house "on at least ten, twenty occasions" and said he could clearly recognize Palocci as the man he had seen in the meetings of senior PT members and governmental officials at the house.

A few days after Francenildo's deposition, his bank statement (from government-run Caixa Econômica Federal) were suddenly and mysteriously leaked to the press. It seemed to indicate that the groundskeeper had a balance of R$ 38,860 (about US$ 18,000.00) in his account, which would be incompatible with his income. This was immediately linked by Congressmen to Francenildo's motivations for contradicting the Minister, apparently in an attempt to tarnish his credibility as a witness - although, in fact, he had been the second witness to contradict Palocci. The groundskeeper justified the figures by claiming that the money had been deposited by his alleged biological father, a relatively well-off businessman from the state of Piauí, in order to prevent a legal dispute over paternity. The alleged father confirmed he had deposited the money.

With this prompt explanation generally accepted, the focus of attention turned to the fact that the bank statement had been illegally revealed, in breach of Francenildo's fiscal privacy. The opposition and a great part of the media compared the illegal revelation of Francenildo's bank statement to state-orchestrated harassment. The Federal police began an investigation on the case, which soon spiralled into yet another scandal in the Lula administration: a series of officials and directors at the Caixa Econômica Federal (a state bank) confessed to having violated Francenildo's account's confidentiality following superior orders. The chain of command, police found, went up as far as the Ministry of Finance, and the Bank chairman said that he handed the details of the groundskeeper's account to Palocci personally. The Minister denied this, but abruptly resigned on March 27, 2006, being immediately replaced by economist Guido Mantega.