Collor 'did not profit' from corruption

RIO DE JANEIRO - The former secretary to the Brazilian President, Fernando Collor, jumped to the President's defence yesterday in testimony before Congress and denied that Mr Collor had profited personally from a corruption scandal that threatens the future of his government.

'I have come to prove beyond the shadow of doubt that the president financed his household expenses with his own resources,' the former aide, Claudio Vieira, told a congressional committee investigating influence-peddling charges against some of Mr Collor's closest aides.

Mr Vieira was called to explain the source of large sums of money deposited in the bank account of Ana Acioli, Mr Collor's personal secretary, who later used the funds to pay for the president's household expenses. Congressmen said they suspected the money had come from profits from an alleged influence-peddling scheme reportedly run by Mr Collor's closest aides. Mr Vieira said the money was part of a dollars 5m (pounds 2.63m) loan taken by Mr Collor from a Uruguayan financial institution in 1989 to help pay for his presidential campaign.

The inquiry is investigating allegations of influence peddling and tax evasion against Paulo Cesar Farias, a businessman and close friend of the President. Mr Farias served as treasurer for Mr Collor's 1989 election campaign. But over the course of its inquiry the commission has shifted its attention toward Mr Collor himself, who won election as a youthful outsider pledging to flush corruption and do-nothing bureaucrats out of the Brazilian government.

Calls for Mr Collor's resignation have multiplied as the panel uncovered what would seem to be incontrovertibly damaging evidence against him.

Mr Collor says that since leaving his job as his secretary, Mr Vieira has worked for him privately, handling his business holdings and taking care of the household accounts. The panel says it has found no evidence of deposits into the accounts by Mr Vieira. Rather, according to Central Bank documents supplied to investigators, the accounts were padded by people operating under false names.

Federal police have found that three Brazilian businessmen, whose firms have won huge contracts with the federal government, have paid nearly dollars 6m (pounds 3.12m) to Mr Farias's consulting firm. Mr Collor's current secretary, Ana Acioli, who wrote cheques to cover the President's expenses, initially said that she had had no contact with Mr Farias in recent years. But in testimony , she conceded that on one occasion Mr Farias had deposited money in her personal account.

Some say the inquiry could lead to a motion to impeach the country's first directly elected president in 25 years. The abundance of damaging evidence from bank records dug up by the panel has put Mr Collor in an 'extremely serious' situation, said Jose Dirceu, a member of the panel.

The political crisis was touched off two months ago, when President Collor's younger brother first made allegations of corruption against Mr Farias.