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INSTANT VIEW 1-JBS chairman taped Brazil president discussing hush money -sources

Brazilian President Michel Temer was recorded discussing payments to silence testimony by a potential witness in the country's biggest-ever graft probe, three sources with knowledge of the matter told Reuters on Wednesday, confirming a report in newspaper O Globo.

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Brazilian President Michel Temer was recorded discussing payments to silence testimony by a potential witness in the country's biggest-ever graft probe, three sources with knowledge of the matter told Reuters on Wednesday, confirming a report in newspaper O Globo.

MARKET REACTION:

17 May - 09:42:48 PM RTRS - *TOP NEWS*-Latin America

- Petrobras American Depositary receipts were down 11 percent to $9.15

- Vale ADRs slumped 7 percent to $7.93.

- The Bovespa ETF traded in Tokyo fell 8.54 percent on volume well above the Tokyo trading average

COMMENTARY:

THOMAS FAVARO, CONTROL RISKS

"If confirmed, the recordings would indicate that President Temer was aware of a bribery payment made to former house speaker Eduardo Cunha (currently in jail) in return for his silence, and would raise questions about his underlying motives. ...

"If the recordings are confirmed, Temer would have to defend his mandate in multiple fronts: public pressure for his resignation, an impeachment proceeding in Congress and an investigation by the General Prosecutor's Office (PGR). The development thus substantially increases the risk of an un-scheduled government change in Brazil before the 2018 general elections."

ARKO ADVICE, STRATEGY, PUBLIC AFFAIRS FIRM:

"Since he was already carrying out his duties as president of the republic when taped by the executive, Temer could be investigated for obstruction of justice. Such an authorization depends on a ruling by all the justices of the Supreme Court and could be requested by Brazil's prosecutor general."

"The revelations could mobilize the opposition in favor of Temer's impeachment. One congressman, Alessandro Molon, has already made such a request. Its being accepted depends on the speaker of the house, Rodrigo Maia."

DANILO GENNARI, POLITICAL CONSULTANT WITH DISTRITO GOVERNMENT RELATIONS:

"The allegations make Temer's situation unsustainable. Even if he could stay in power, something that seems improbable at the moment, his ability to govern would be seriously compromised.

"There are three different scenarios for Temer leaving office: impeachment, resignation or the Electoral court ending his mandate.

"Impeachment is a long process, and it's still early to talk about resignation.

"It's different in the electoral court. There was an agreement to save Temer's mandate to keep governability. After these new allegations, it seems implausible Electoral court judges will keep backing him."

 

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)

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