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Collor hints that he may quit office early

BRASILIA (Reuter) - President Fernando Collor de Mello yesterday rejected corruption allegations against him and said he would not step down from office until Congress had approved his economic reform programme.

'I will only consider my mission ended' and 'my programme finished after having (the economic reform) projects approved', he said in a recorded speech on radio and television.

Mr Collor had previously said that he would not retire from the presidency until the last day of his four-year term. The wording could indicate that he might agree to leave office before then.

He denied that Paulo Cesar Farias, his former campaign treasurer and alleged masterminded of a government corruption racket, had gratuitously paid for the modifications to his apartment in his home town of Maceio.

He said that extensive modifications to his home in the Brazilian capital, Brasilia, had been necessary for security reasons after he became president and that he had paid for them himself.

The president has repeatedly rejected calls for his resignation by business and political leaders, who say Mr Collor has lost the authority to run the government.

They say he would do both himself and the country a service if he stepped down now, rather than subject Brazilians to a prolonged impeachment process.

'(Collor) is not showing any common sense in refusing to resign,' said the former vice-president Aureliano Chaves, who has been identified as a political operator for the current vice-president, Itamar Franco, who would become president if Mr Collor resigned or were impeached.

Mr Collor needs the votes of at least one-third of the members of the lower house to block an impeachment proposal, which is scheduled to be delivered to Congress tomorrow.

But increasingly, congressmen who traditionally voted with the government are saying that they will vote in favour of impeachment in a session expected to be held at the end of next month if Mr Collor does not resign by then.

Support for Mr Collor has been dwindling among the country's political elite, and the scandal has shaken up markets in the financial capital, Sao Paulo. Polls taken by Brazilian newspapers indicate that 17 of the powerful state governors support the president's impeachment. Four oppose it and six are undecided.

Mr Franco, while outwardly supporting Mr Collor, is, behind the scenes, putting together a team which could soon be running the country. Little known to the public and often ignored in Mr Collor's government, Mr Franco in the past few weeks has been receiving a multitude of politicians seeking to ingratiate themselves with the man who has become a kind of president-in-waiting.

Mr Franco, 61, has been careful not to appear too anxious to move into Mr Collor's office: he has allowed his spokesman to say he is sure Mr Collor will survive his present trials.

Mr Franco, aware of the concern that his name inspires among banking and business sectors, has also let it be known that he would hold on to the respected Economy Minister, Marcilio Marques Moreira. So as not to give the impression that he was banging on Mr Collor's door, Mr Franco went to his home town of Juiz de Fora at the weekend and is not expected back in Brasilia until the middle of the week.