Brazilian President Reels From Charges

AS delegates from around the world arrive for the Earth Summit, their host finds himself under a cloud of corruption charges.

The scandal reached full intensity this week after Brazilian President Fernando Collor de Mello's younger brother Pedro told Veja, a leading newsweekly, that the president is a hidden partner in the influence-peddling schemes of his close friend and campaign treasurer, Paulo Cesar Farias. Pedro also says the siblings snorted cocaine and took LSD in their teen years.

The president responded to his brother's charges on national television Tuesday, calling the accusations "insensate and false." But he said he has asked the Justice and Economy Ministries to undertake a "complete investigation" of all allegations. He also said he has asked the courts to open criminal proceedings against Pedro for "moral damages." Earlier, the president said he would testify, if asked to do so. A police inquiry has already begun.

The Earth Summit, which begins June 3 in Rio de Janeiro, is seen here as Brazil's big chance to showcase its purportedly improving environmental, political, and economic behavior. This week's news led one cartoonist to draw Collor receiving his guests with a paper bag over his head. Impeachment prospects

Brazilian congressional leaders Tuesday decided to create their own investigative committee, whose findings could lead to Collor's impeachment.

Many Brazilians believe the investigations will lead nowhere. "Since congressional investigations are very political, the government may have some problems but not to the point of suffering any punishment," says Roberto Freire, a Popular Socialist Party federal deputy and former presidential candidate.

Analysts say impeachment is unlikely, as a full two-thirds of the Chamber of Deputies must approve a trial, and the president has the support of at least one-third of the chamber. Also, few politicians want to see unpopular Vice President Itamar Franco assume the presidency.

Still, congressmen say they have an important role to play. "Some intervention is necessary.... Non-participation would be an unexplainable omission," Deputy Freire says.

The most powerful impact of the brothers' battle, political and financial analysts say, may be on economic policy. Brazil is expected to conclude negotiations next month with foreign private banks to reschedule $41 billion of its foreign debt, but confidence in the country's political and economic situation is considered a key ingredient in the agreement now being forged.

"This is distracting Congress at a moment when the legislation of a fiscal reform package is very important," says Walder de Goes, a political science professor at the University of Brasilia.

Largely in response to growing business uncertainty, government officials last week had said they would try to speed up congressional consideration of a fiscal reform package. The scandal this week drove down stock market prices and volumes, and spurred speculation on the dollar against the cruzeiro.

The threat to the presidency could fuel a new movement to institute a parliamentary system of government; the Chamber of Deputies is considering advancing a plebiscite on this question from September 1993 to April.

Pedro, who until last week headed the Collor de Mello family media empire in the northeastern state of Alagoas, says he made the charges because Mr. Farias was setting up a rival media organization, using illegally generated funds, in secret concert with the president.

Neither the president nor Farias have responded to specific charges, but the Collors' mother, Leda Collor de Mello, removed Pedro May 19 from his position alleging her younger son's "emotional balance is visibly perturbed." The next day, Pedro began psychological tests, hoping to prove his sanity.

Although the scandal resembles the nightly soap operas that have made Brazilian television famous, some observers find the charges believable.

"Everyone knows that [Farias] was the campaign treasurer, that extortion and blackmail were probably involved. People in the market talked about it, and no one said anything [officially]," says a stock market analyst. "The news is nothing new.... The novelty is the prominence, Pedro Collor's courage to put it on the cover of Veja, especially without providing proof."

The previous issue of Veja featured Farias's income tax returns, which put his income at a level apparently too low to support his reportedly lavish lifestyle.

The allegations came in the problematic context of South American politics and Brazilian history itself. Less than two months ago, Peruvian President Alberto Fujimori closed down Congress with the support of the military, claiming rampant corruption as one justification. And in 1954, Brazilian President Getulio Vargas committed suicide amid corruption accusations.

But the Brazilian military, which returned the government to civilian hands in 1985 after 21 years of dictatorship, apparently has no designs on the presidential palace. According to the daily newspaper O Estado de Sao Paulo, top military officials decry the Collor family's difficulties, but believe that neither impeachment or any kind of institutional crisis will come of them. Polls show concern

The public is concerned, however. Eighty-eight percent of Brazilians polled by the daily newspaper Folha de Sao Paulo said Congress should investigate the charges, and 25 percent said the president should resign.

At the very least, Freire and some other politicians hope, the accusations will raise awareness about influence peddling and other corrupt activities. At least 13 different cases of alleged corruption have arisen since Collor took office two years ago, forcing him to remove many top officials.