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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Art Baeckel who wrote (21209)	8/2/2000 12:53:55 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

Brazil's Elections, Scandal Seen Overwhelming Key Bills By DIANA ROCHFORD August 1, 2000 Of DOW JONES NEWSWIRES BRASILIA -- The Brazilian Congress is expected to bear little fruit in the next few months as lawmakers return to work Tuesday with a corruption scandal and October municipal elections firmly on their minds. Political agreements on key bills may be thwarted as politicians decide how to deal with a simmering corruption scandal involving a former aide of President Fernando Henrique Cardoso. Elections, too, are expected to be a drain on working time as lawmakers - many of whom are running for mayoral positions across the country - run back and forth to their home regions to electioneer. On its first day back at work, the Senate will set up a committee which is expected to invite former top presidential aide Eduardo Jorge to testify Thursday on corruption charges leveled at him. `Thursday's testimony will be crucial to assess what direction the Eduardo Jorge scandal takes. If congressmen are pleased, they will move on, otherwise it may dominate Congress up to the elections," said a congressional source, speaking on the condition of anonymity. During the July winter recess, Jorge was accused of an improper association with runaway judge Nicolau dos Santos Neto, convicted of embezzling nearly $100 million budgeted to build a still-unfinished courthouse in Sao Paulo. Jorge's closeness to the power structure has led many local observers to suspect Cardoso may be involved in passive corruption in the least. Elections To Steal Time From Congress Tuesday is also expected to be dominated by meetings to draw up a preliminary schedule. With elections on the horizon, lawmakers are expected to come to an agreement to work two to three weeks in August and the first week in September, before breaking up to hit the campaign trail. With the tight schedule, many important bills may find themselves filed until November, especially those needing political bargaining between parties. Among these are a Corporate Governance Bill aimed at stimulating stock market investment and the Tax Reform constitutional amendment. The corporate governance bill still faces opposition from some government coalition parties, traditionally seen supporting large business interests, who argue too many rights would be conferred on minority shareholders. Last Friday, Cardoso met with party leaders to draw up the final draft of the tax reform amendment, ending government opposition, in a bid to get it passed through Congress soon. Still, Pedro Parente, Cardoso's chief of staff, said it was unrealistic to expect the bill to go through both houses of Congress by the end of the year. The main sticking point is a "social contribution" tax which effectively taxes all links of production, leading to double taxation. Though such taxes significantly hamper the competitiveness of Brazilian exports, they are also a major source of income for the federal government. -By Diana Rochford, Dow Jones Newswires; (55 61) 99656883; diana.rochford.dowjones.com