Brazil's interim government rocked by scandal

Brazil's interim government was shaken by its first major crisis after a leaked recording appeared to show the new planning minister conniving to block a massive corruption scandal that has ensnarled the country's political and business class.

The emerging scandal threatened to roil markets and create further instability in Brazil, just 11 days after the Senate voted to suspend President Dilma Rousseff pending an impeachment trail over alleged accounting irregularities to cover a budget gap.

Planning Minister Romero Juca (pictured), a close ally of Interim President Michel Temer, said he would take a leave of absence on Monday after the newspaper Folha de S. Paulo released a recorded conversation he had with ex-senator and former oil executive Sergio Machado

Juca was Temer's point man to push through a controversial budget proposal through congress meant to restore international confidence and kickstart the economy.

In the conversation, recorded in March before the impeachment vote, Juca told Machado the country needed a "national pact" that appeared to imply he would try to stop a massive corruption probe tied to embezzlement at state-run oil firm Petrobras.

The scandal has resulted in convictions, charges and investigations reaching all levels of government and business. Juca, Temer, ministers and many parliamentarians are under investigation.

"The government has to be changed in order to stop this bleeding," Juca said when asked by Machado for help.

"The easiest solution is to put Michel in," said Machado, who is also under investigation.

Juca then agreed.

"I am talking to the generals, the military commanders. They are fine with this, they said they will guarantee it," Juca later said. He also said he has been working with top judges.

Rousseff's supporters immediately jumped on the leak as proof the opposition seeks to impeach her in part to stop the corruption investigations.

Rousseff, who is not under investigation, has repeatedly described the impeachment proceedings against her as a politically motivated coup. She has argued the accounting tricks she used were not illegal.

"This shows the true reason behind the coup against our democracy and president Rousseff's mandate," tweeted Ricardo Berzoini, a former minister of political relations who lost his post when Rousseff was suspended. "Their objective is to stop the Petrobras probe, to sweep the investigations under the rug."

Juca acknowledged the recording at a brief press conference on Monday but denied any wrongdoing. He said his comments had been taken out of context and that the "bleeding" he referred to had to do with the embattled economy and political paralysis.

However, in the recording there is no mention of the economy.

Juca also said in the conversation that he wanted to get Judge Sergio Moro off the Petrobras probe related to him, Temer's close allies and Senate President Renan Calheiros.

Moro is the federal judge overseeing much the corruption probe. He said at an event on Monday that "the judiciary has demonstrated its independence in relation to the other powers and to any political interferences."

It was not clear how the newspaper obtained the recording or why it released it after the senate vote to advance the impeachment trial.

Newspapers speculated Machado has been negotiating a plea deal and may have recorded the conversation.

The tape is the second leaked recording scandal in as many months, after Temer, who was then vice president, accidently released audio of him practicising his acceptance speech as president, as if Rousseff had then been impeached.

cw/mm/bw (AP, AFP, Reuters)