An adviser to Brazilian President Michel Temer resigned Wednesday amid media reports he accepted illegal payments from construction company Odebrecht SA, another blow to the embattled chief executive as he works to push unpopular economic reforms through Congress.
José Yunes, who until Wednesday was a “special adviser” to Mr. Temer, is among several prominent officials who reportedly were named in a plea bargain deal by a former employee of construction giant Odebrecht. Local news organizations said part of an illicit 10 million real ($3 million) payment to Mr. Temer’s Brazilian Democratic Movement Party was delivered to the office of Mr. Yunes, a lawyer.
In his resignation letter, Mr. Yunes rejected the “ignominious” reports and expressed outrage at having his name dragged through the mud.
Mr. Yunes has denied any wrongdoing, and Mr. Temer’s office declined to comment on the investigation.
The Temer administration was rocked over the weekend by reports the president himself solicited the 10 million reais from Odebrecht, a charge the president strongly denied, saying donations to his party by the builder were all carried out by bank transfer and registered with election officials.
Mr. Yunes’s resignation is a new complication for the president just as he’s had some success getting economic reforms through Congress, said Rafael Cortez, a political science expert at the Tendencias consultancy in São Paulo.
“The political situation for Temer is still very negative,” said Mr. Cortez. “Recent polls show him with little support, which creates concerns among markets” about his ability to get legislation passed.
Brazil’s Senate approved on Tuesday a controversial bill that would cap government spending increases, sparking violent protests in the capital. The measure now awaits Mr. Temer’s signature.
Another reform, one to the country’s insolvent pension system that financial markets see as vital, was just sent to Congress last week and still faces strong resistance from Brazilians.
The spending limit bill “was the first step, but it won’t be enough if it’s not accompanied by the pension reform,” Mr. Cortez said.
Mr. Temer replaced the former president, Dilma Rousseff, whose approval ratings hovered near 10% before she was ousted for violating budget laws, and within months his own government’s approval ratings have sunk just as low. Several cabinet members resigned in the first few weeks after Ms. Rousseff’s ouster amid reports of corruption, and more have gone since, with the most recent quitting in November.
The recent reports are based on the plea bargain agreement with a former Odebrecht official, which was leaked to several Brazilian news organizations. Prosecutors directing the mammoth Operation Car Wash anticorruption investigation, centered on kickbacks at state-controlled oil company Petróleo Brasileiro SA, or Petrobras, signed such agreements with 77 people linked to the builder, including former chief executive officer Marcelo Odebrecht , a person close to the negotiations told The Wall Street Journal earlier this month.
The construction company also signed a leniency agreement with prosecutors regarding its involvement in the graft at Petrobras, people close to the talks said in early December. The company issued a statement admitting to unspecified “improper practices” while promising to fight corruption in all forms in the future.