A version of this article was first published by Theglobalist.com on March 23, 2016 under the heading: Brazil's and South Africa's Watergate Moment - What happens when judges fight corrupt political leaders. Updated on March 29, 2016.
Brazil and South Africa have a great deal in common – flagging economies, falling exchange rates and public bonds nearing junk status – all fueled by mounting allegations of corruption. As if that weren’t bad enough, the ruling parties have also engaged in major confrontations with the rule of law, in a desperate and entirely self-serving effort to preserve the impunity of their national leaders.
In Brasilia, President Dilma Rousseff, who faces impeachment charges for budget mismanagement, is fighting for her political life. She has announced that she will not leave office, but her support is declining with the latest blow being the resignation of a cabinet minister.
She is also striving to protect her mentor (and predecessor), the former president, Lula da Silva, and an icon of Brazil’s social reform movement. In South Africa, President Jacob Zuma is also fighting for his political survival.
In both countries, former key political allies of these two leaders have just broken ranks and gone public to denounce them. Most seriously, both leaders have been challenged in recent days by top judges.
The judiciary is key - A guide from U.S. history
The core of democratic and accountable government rests in the independence of the judiciary from political manipulation and the enforcement of laws that ensure that no politician is immune from prosecution. The cases in Brazil and South Africa may serve as key tests and, perhaps, as precedent-setters for other emerging market countries.
U.S. history provides a guide. On the evening of Saturday, October 20, 1973, President Richard Nixon demanded that Attorney-General Elliot Richardson fire Special Prosecutor Archibald Cox who was investigating the “Watergate” scandal.
Richardson refused, as did his deputy, William Ruckelshaus, leaving it to then Solicitor General Robert Bork to oust Cox.
Bork did as instructed. Even so, the so-called “Saturday Night Massacre” turned out to be the beginning of the end for Nixon in his battle of wills against the U.S. justice system. Mighty as a U.S. President is at home and abroad, in August 1974 Nixon resigned his office.
The U.S. democratic system had been challenged, but was found to be intact.
No better in Russia, Turkey and Malaysia
But the current crisis isn’t just about conditions in Brazil and South Africa. The situation there isn’t fundamentally different from situations in Russia, Turkey and Malaysia. All are leading emerging market economies.
And in all of these countries, national political leaders make current economic difficulties much worse by scheming to use their positions of power to give them immunity from prosecution.
These leaders are determined to intimidate and manipulate the judiciary and the media. What distinguishes Brazil and South Africa from the others right now is that the national political leaders may actually soon lose their jobs.
Economic costs of corruption scandals
This hijacking of the legal system is bad enough. But the economic costs of the corruption crises, which are substantial, make everything much worse.
The economic costs of the corruption crises are substantial. The International Monetary Fund projects that Brazil’s economy will decline by 3.5% this year, while it forecasts just 0.7% growth in South Africa – these predictions may prove to be optimistic.
In Brazil, government plans for essential structural reforms and fiscal measures have been set aside as virtually all policy-making has been paralyzed by the mounting number of arrests and investigations into prominent politicians who allegedly took illicit payments from Petrobras, the vast state-controlled company. At the end of last year the internationally respected economist, Joaquim Levy, felt bound to resign as the nation’s finance minister and promptly quit Brazil for a senior job at the World Bank in Washington DC..
In South Africa, the economic policy consequences of the corruption crisis are different, yet just as grave. In December, Zuma fired a respected finance minister and replaced him with a little known member of parliament, producing loud domestic media protests and forceful negative financial market reactions. Zuma then announced his third finance minister in five days, appointing former minister and revenue commissioner Pravin Gordhan. Now, the plot thickens.
In recent days a letter has been leaked to the South African press suggesting that Gordhan is being investigated by the elite branch of the police for alleged irregularities in tax revenue service and that the police may prosecute him for obstructing justice. . The news comes as a team from the Moody’s rating agency is in the country to determine whether South Africa’s bond rating should be reduced to junk status.
Former Friends Add Flames to the Fires
And, then on March 16, deputy finance minister Mcebisi Jonas issued a public statement where he warned against “state capture” and revealed that he had been offered the post of finance minister last December by members of the Gupta family (three brothers with sprawling business interests that are said to be friends of President Zuma and who employ his son, Duduzane Zuma, in their enterprises).
Now the media and opposition politicians are calling for investigations and for action by the executive committee of the African National Congress party, which so far is refusing to force Zuma's ouster. But the country's independent Public Prosecutor, the courageous Thuli Madonsela has announced that she will launch an investigation, which in time could seal Zuma's fate.
While Jonas’s statements were doing direct damage to Zuma, over in Brazil the former leader in the Senate of Rousseff’s Peoples Working Party, Senator Delcidio do Amaral, announced that he had agreed to a plea bargain with public prosecutors and that Rousseff's successful presidential campaigns in 2010 were illegally financed. His public statements just fuel the flames of the crisis and heighten the stakes in a mounting clash between the nation's political leaders and the judiciary.
The Judges Act
On March 10, prosecutors announced that they would be arresting Lula on charges of corruption and money laundering. Soon thereafter Lula had a telephone conversation with President Rousseff where they stressed that judges and the media were determined to grab political power. On March 16, the President appointed Lula as cabinet chief of staff – a position that would give him immunity from regular prosecution (as a government official he can only be investigated by the Supreme Court, an act that is extremely rare).
But, just as Richard Nixon had his Judge Sirica, who was determined to ferret out every scrap of evidence in the early days of Watergate, so Rousseff and Lula confront Judge Moro, who not only issued an injunction to prevent Lula getting political immunity, but released a wire-tapped transcript of the Rousseff-Lula telephone call. Roussef’sassociates rushed to have Moro’s decision overturned, but for the time being they have been defeated by the intervention of Supreme Court Judge Gilmar Mendes who suggested that Lula’s appointment might be viewed as obstruction of justice and, “It would be plausible to conclude that the appointment and subsequent swearing-in could constitute fraud of the constitution.”
His decision could be overruled at a full hearing of the Supreme Court, which because of holidays may not happen until March 30. Meanwhile, vast public demonstrations are being seen in Brazil calling for justice and end to corruption.
Public demonstrations against Zuma are also being seen in South Africa, but so far, to use Watergate parlance, there is ‘no smoking gun’ connecting him to bribe-taking from the Guptas. It is clear, however, from most decisions that Zuma has few friends left at the helm of the nation’s judiciary. On March 15, the Supreme Court announced that the Zuma government acted unlawfully last June when it failed to arrest Sudanese President Al-Bashir who was in South Africa at an African National Congress summit and who is wanted for crimes against humanity by the International Criminal Court.
Then, on March 18, the Constitutional Court ruled that Zuma and his government colleagues acted illegally when they called police to Parliament in February to end criticisms from opposition politicians and Justice Mbuyiseli Madlanga stressed that the decision goes to the heart of preserving democracy. He underscored this point in words that can be related to South Africa's overall corruption swamp that democracy was "hard-won" and had come at a huge cost to many — "a cost that included arrest, detention, torture and — above all — death at the hands of the apartheid regime."
Judges in two very different countries are prominently standing up for the rule of law. They are confronting charismatic national political leaders. The crimes of corruption so often lead to major economic costs and to public distrust of all branches of government. In South Africa and Brazil the public is demanding justice today and they may just get it.