RPT-Brazil's sports minister under pressure to quit

Tue Oct 18, 2011 1:37pm EDT

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* Scandal could affect preparations for big sports events

* Indications grow of faulty govt sports contracts

* Orlando Silva to testify in Congress on Tuesday

By Raymond Colitt

BRASILIA, Oct 18 (Reuters) - Brazil's sports minister came under growing pressure to resign on Tuesday as more evidence emerged of wrongdoing at his ministry in a corruption scandal that raises doubts about preparations for the next World Cup.

Orlando Silva is accused of arranging up to 40 million reais ($23 million) in kickbacks from government contracts to benefit himself and the Communist Party, which is part of President Dilma Rousseff's government.

The influential news magazine Veja reported during the weekend that Silva headed a scheme dating back to 2004 in which 20 percent kickbacks were charged on public contracts, including sports projects for needy children.

Despite Silva's emphatic denials of wrongdoing, he looked increasingly vulnerable on Tuesday as details emerged of sloppy bookkeeping and favoritism in the Sports Ministry's contracts with non-governmental organizations, or NGOs.

Silva was due to testify on the matter in Congress later on Tuesday.

A government watchdog, known by its Portuguese acronym CGU, says 59 contracts signed by the Sports Ministry between 2006 and 2011 did not comply with regulations, according to local media reports. It has demanded that contractors return 24.5 million reais.

"The minister must leave," the Estado de Sao Paulo newspaper said in an editorial.

The newspaper said remaining in office would undermine Silva's authority and create more turmoil for Rousseff, who has already lost five ministers to ethics scandals this year.

The scandals, which had appeared to be abating before the Veja report on Silva, have exposed deep rifts in the disparate ruling coalition and delayed Rousseff's legislative agenda.

The scandal is particularly embarrassing for Brazil as it hopes to use the 2014 World Cup and the 2016 Olympics later to showcase its emergence as an economic power.

HALF-HEARTED BACKING

The construction of stadiums and airport terminals for the events has been delayed and Silva's departure could throw preparations into further disarray.

Even if Silva is not directly linked to corruption, he may ultimately be held accountable for poor oversight.

"Silva's arguments will be put to the test in coming days," Folha de Sao Paulo newspaper said in an editorial on Tuesday.

"But at the head of a portfolio full of suspect deals, his political vulnerability is evident," Folha said.

Rousseff, on a weeklong tour of Africa, has only given half-hearted support to Silva, who was deputy sports minister under her predecessor, Luiz Inacio Lula da Silva. She said he was innocent until proven guilty but also acknowledged shortcomings in the oversight of contracts with NGOs.

"It looks increasingly difficult for him to hang on to his job," said Jose Luciano Dias, a Brasilia-based political consultant.

The man who made the accusations against Silva is a disgruntled former contractor and police officer arrested last year during an investigation into the Communist Party's alleged illegal fund-raising scheme. He says the minister received bundles of cash in the garage of the ministry.

Joao Dias Ferreira, a former Communist Party activist whose Kung Fu association received government funds, says he has audio tapes to prove his allegations.

Silva has rejected the accusations, saying the Veja report was based on false information provided by criminals. He told a news conference on Monday that his predecessor at the ministry, Agnelo Queiroz, had recommended financing Ferreira's outfit.

(Editing by Stuart Grudgings; Editing by Bill Trott)

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