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Brazil congressional ethics committee strips Cunha of his seat

BRASILIA (Reuters) - Brazil’s congressional ethics committee voted to strip suspended Speaker Eduardo Cunha of his seat on Tuesday for allegedly lying about undeclared Swiss bank accounts, the latest in a series of political earthquakes to rock Latin America’s largest country.

Brazil's President of the Chamber of Deputies Eduardo Cunha gestures during his defense in an ethics committee of the lower house, in Brasilia, Brazil, May 19, 2016. REUTERS/Adriano Machado/Files

Cunha insisted on his innocence and vowed to appeal the decision to another congressional committee. To remove him from office, a majority of the lower house of Congress still needs to affirm the decision.

If he loses his seat, Cunha, the architect of suspended President Dilma Rousseff’s impeachment, will also lose the partial immunity enjoyed by elected politicians. He could then be arrested and prosecuted by lower courts in several corruption cases brought against him.

Cunha has warned that if he is arrested he will take other politicians down with him, signaling a danger for interim President Michel Temer that a Cunha plea bargain could implicate more members of his government and ruling PMDB party in corruption.

Cunha is the only sitting Brazilian lawmaker to face trial in the massive bribery investigation focused on state oil company Petrobras, in which he was indicted for receiving a $5 million bribe related to contracts for two drillships.

The ethics committee voted to eject him from Congress for lying about holding bank accounts in Switzerland with his wife, who has also been indicted by prosecutors for receiving bribe money from a Petrobras purchase of an oil field in Benin.

Federal prosecutors who are unraveling the Petrobras kickbacks scheme ordered the freezing of Cunha’s assets.

The fall of Cunha, one of Brazil’s most divisive public figures, adds to sweeping political upheaval in Brazil as it struggles with its biggest graft scandal ever, the impeachment of Rousseff and the worst economic recession in decades.

The powerful speaker’s downfall was in the cards since the Supreme Court suspended him in May for using his position to obstruct the ethics committee hearings for months on end.

A wily backroom dealmaker, Cunha and his supporters have used every rule in the book to delay proceedings against him. Tuesday’s tight 11-9 decision in the 21-member committee hinged on the vote of a little-known evangelical congresswoman and former bible studies teacher known as Aunt Eron.

As an evangelical Christian, Cunha mustered strong support from the religious right in Congress. But as bribery accusations mounted, allies began to abandon him in recent weeks.

Cunha denied he had accounts in Switzerland, saying they were trust funds that he did not control, even though Swiss prosecutors had linked him to the bank accounts.

His case was not helped by credit card data showing his wife and daughter had spent tens of thousands of dollars in purchases of clothing in luxury shops from Milan to Paris and New York.

Cunha’s departure is not likely to help Rousseff survive her impeachment trial in the Senate, where she is expected to be convicted of breaking budget laws and definitively removed from office in mid-August.

Rousseff was suspended last month and replaced by Temer, her vice president, whose government could have used Cunha’s clout in Congress to pass tough measures needed to plug a growing fiscal deficit and restart economic growth.

However, corruption allegations against members of Temer’s cabinet and leaders of his Brazilian Democratic Movement Party have put the new government on the defensive and forced it to keep a distance from Cunha.

On Monday, the prosecutors in the Petrobras investigation filed a civil lawsuit against Cunha and his wife seeking the return of $5.7 million in alleged graft money. They also called for Cunha to be barred from politics for 10 years.

Reporting by Maria Carolina Marcondes; Writing by Anthony Boadle; Editing by Tom Brown and Andrew Hay