BRASILIA — Brazilian President Michel Temer defied calls for his resignation Thursday, a day after a bombshell report alleged that he had been secretly recorded discussing bribe payments during an investigation into a sprawling corruption probe that has shredded the country’s political class.
Speculation that Temer would step down intensified throughout the day, with Brazil’s highest court ordering an investigation and two members of Temer’s cabinet abruptly quitting. Prominent leaders of Temer’s centrist PMDB party also distanced themselves from him, leaving the unpopular leader looking more and more isolated.
But Temer refused to fold. Speaking on national television, he insisted that he had done nothing wrong and would not step down. “In no moment did I authorize a payment to anyone for their silence,” he said. “I have nothing to hide.”
In a brief statement, Temer said his government had just started pulling Brazil out of its prolonged economic slump, the worst in 80 years. “We cannot throw so much progress into the bin of history,” he said.
But with Temer girding for a fight and the possibility that explosive new allegations could surface at any time, the chances of a return to economic and political stability looked even more remote for South America’s largest nation, which was rocked less than a year ago by the impeachment of the previous president in a different scandal.
Brazil's financial markets plunged Thursday amid concerns that the political crisis would derail economic reforms that Temer had championed to boost the economy. The country’s currency, the real, closed down 8 percent, erasing its gains this year, and the Brazilian stock market fell 9 percent, its worst daily loss in nine years. State-controlled companies lost about 20 percent of their value.
“I don’t see how Temer survives more than a few weeks,” said Brian Winter, a Brazil expert and the editor of the New York-based Americas Quarterly journal, adding that Temer appears to be “in denial,” given the evidence against him and his evaporating political support.
Over the past several years, dozens of former executives and politicians have been arrested in the graft investigation known as Car Wash that has exposed billions in bribes and tarnished nearly every prominent member of Brazil’s establishment.
Through plea bargains, in which defendants provided prosecutors with information in exchange for more-lenient sentences, authorities have been able to trace a major kickback scheme from a Brasilia carwash to the highest echelons of the government.
Temer had managed to mostly avoid being tainted by the probe. But the spotlight fell on him Wednesday, after Brazil’s O Globo reported that Temer had been the target of a police sting operation in which he was allegedly recorded condoning a hush-money payment by a Brazilian business tycoon to the jailed former leader of congress, Eduardo Cuhna, who is serving a 15-year term for negotiating millions in bribes.
Cunha had been one of the country’s most powerful men, and is believed to have compromising information on several top politicians who have not been formally accused.
When the executive told Temer that he was paying the former politician a monthly stipend to keep him quiet, the president allegedly said, “You need to keep that up, okay?” according to the newspaper, citing the recording. The recording was made public by O Globo late Thursday.
Temer has acknowledged meeting with the executive who is the alleged source of the recordings, meatpacking tycoon Joesley Batista. But the president insisted Thursday he hadn’t broken the law and the investigation would exonerate him.
Opposition lawmakers attempted Thursday to open impeachment proceedings against Temer, which may increase pressure on authorities to release the allegedly incriminating tapes.
A new impeachment push would come less than a year after the last president, Dilma Rousseff, was forced out on charges of violating budget laws, bringing Temer to power through a process that many Brazilians view as politicized.
Temer’s ministers of culture and city planning resigned Thursday, but the president was reportedly encouraged to hold onto power by his closest allies and key members of his inner circle.
The news report late Wednesday, however, put in jeopardy the measures that Temer had championed to rescue the ailing economy — and raised questions about how long he could stay in power.
Because he is so unpopular with ordinary Brazilians, Temer’s legitimacy has rested on his ability to unite the country’s three dozen political parties. But with his political base divided, many questioned his ability to govern.
Temer’s opponents may have another route to kick him out of office. Rousseff and Temer are on trial in a case separate from the Car Wash investigation, for allegedly accepting illegal donations as part of their 2014 campaign. They deny the charges. If convicted by the electoral court, the pair could see their victory invalidated, and Temer would have to step down.
“In coming days, you’ll see his remaining friends and allies trying to talk him down,” Winter said. “If they fail, that leaves impeachment or the electoral court. It all ends in the same place.”