Embattled Brazilian President Michel Temer has said he will fight allegations that he endorsed the paying of hush money to an ex-politician jailed for corruption.
According to a May 17 report from O Globo, the president was caught on tape asking the chairman of Brazil's JBS meat-packing company, Joesley Batista, to buy the silence of Eduardo Cunha, the former president of the lower house who has been in prison since November 2016.
Federal police officers, carrying seized items, leave the building where Brazilian Sen. He has denied wrongdoing.
The scandal comes at a crucial time for Brazil, which is mired in its worst recession in decades, the economy having shrunk almost 8 percent in the last two years with more than 14 million people unemployed.
Traders aren't convinced. Brazil's stock market fell by 10% in early trading this morning, wiping out nearly all of the year's gains in a matter of minutes. Brazil's currency, the real, lost 8 percent of its value against the US dollar.
On Thursday, police searched Neves' Rio de Janeiro home and Brasilia office. Neves, who almost won the presidency in 2014 and planned to run again next year, has denied wrongdoing.
The situation of Brazilian President Michel Temer became delicate on Thursday following a newspaper report that he is accused of taking bribes and endorsing bribes to silence a witness in a corruption case. Instead, the veteran center-right politician - who took over past year with a promise to restore Brazil's stability after the impeachment of leftist president Dilma Rousseff - came out swinging.
Cunha led the impeachment fight that removed Dilma Rousseff from the presidency previous year and put Temer, then the vice president, into power. Cunha has been imprisoned on a 15-year sentence for corruption.
Batista used a hidden device to record an alleged discussion with Temer about hush money the executive was paying to Cunha, according to the newspaper. To the revelation of a scheme to keep the judges from pressuring Batista, Temer asks "are you holding both of them back?", which Batista confirms before the president says the equivalent of "excellent, excellent".
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"He did not participate or authorize any attempt to keep Cunha from reaching a plea bargain with Justice (officials)", the statement said.
JBS representatives did not respond to an email sent by The Associated Press late Wednesday seeking comment.
At the same time, a massive corruption scandal involving the state oil company Petrobras was unfolding. Senior politicians can be investigated and tried only by Brazil's highest court. Both chambers of Congress cancelled sessions and Mr Temer's office axed his planned activities.
Globo's report had an immediate impact. Two small allied parties pulled their support for his agenda in Congress and one Cabinet minister resigned amid talk that others might follow.
The Eurasia risk consultancy said the new allegation could be a big problem for Temer.
If the allegations are proven true, "President Temer is unlikely to finish his term", Eurasia wrote, adding that at the very least the matter will delay major reforms Temer is proposing. Aecio Neves, at Planalto presidential palace in Brasilia, Brazil.
The protests materialised hours after Brazil's Supreme Court authorised an investigation into allegations Temer encouraged the payment of bribes to a former top lawmaker convicted earlier this year of graft. They are preparing for protests against President Michel Temer.
Temer highlighted signs this week that Brazil's two-year recession is coming to an end and claimed that "optimism was returning" thanks to a program of austerity reforms that he is trying to pass in Congress.
Temer is also a subject of other investigations, including one into how his joint party ticket with Rousseff (he first came to power as vice-president) was funded, which could void the results of the 2014 election.
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