July 17, 2015 / 3:00 PM / 2 years ago

Brazil's lower house speaker breaks with government

President of the Chamber of Deputies of Brazil Eduardo Cunha is seen at the Chamber of Deputies in Brasilia May 12, 2015. REUTERS/Ueslei Marcelino

BRASILIA (Reuters) - The speaker of Brazil’s lower house of Congress, Eduardo Cunha, broke with the government of President Dilma Rousseff on Friday over corruption allegations, deepening a political crisis in Latin America’s largest economy.

Cunha accused Rousseff’s government and prosecutor general Rodrigo Janot of conspiring to incriminate him in a widening corruption scandal at state-run oil firm Petrobras in which he is being investigated for taking bribes.

“I cannot accept that the government uses its machinery to seek the political persecution of those who turn against it,” Cunha told journalists in Brasilia.

Cunha said he would push to remove his Brazilian Democratic Movement Party, or PMDB, from a governing alliance at a party congress in September.

The PMDB is Brazil’s largest party, and its departure from the governing coalition would deprive Rousseff and her allies of a majority in Congress.

The party said in a statement it respected Cunha’s personal position but that any party decision would only be taken after consulting various party commissions.

The rupture, which has been in the works for months, comes a day after Cunha said he is weighing legal arguments for Rousseff’s impeachment over alleged campaign finance irregularities. Cunha, an evangelical Christian, is seen as a possible presidential candidate in 2018.

Some opposition lawmakers are leading the calls for Rousseff’s impeachment but Cunha, as speaker of the lower house, would be responsible for initiating the process.

His opposition to Rousseff could pose a major obstacle to any government-proposed legislation, complicating her efforts to shore up public finances and avert a credit ratings downgrade.

Brazil’s currency, the real, and the benchmark Bovespa index stock lost about 1 percent after Cunha spoke on Friday.

Cunha’s departure from Rousseff’s coalition was triggered by testimony from lobbyist Julio Camargo, who said Cunha had taken $5 million in bribes. Cunha denied the allegations and said Camargo had been pressured to change his previous testimony.

His relations with Rousseff’s government have never been friendly, even before he became the house speaker, but he often cooperated on key legislation and had opposed earlier calls for impeachment despite the president’s record-low popularity.

Relations have deteriorated further since March, when Cunha’s name appeared on a list along with dozens of other lawmakers under investigation for allegedly receiving bribes originating from funds skimmed off overpriced Petrobras contracts.

Formal charges against lawmakers have not been presented but are expected in coming months.

Cunha said he would challenge the investigation led by federal judge Sergio Moro on the grounds that Moro has heard testimony from money launderers and engineering executives that named politicians. Only the Supreme Court can hear cases involving politicians under Brazilian law.

On Friday, Cunha pledged calm in his role as house speaker and responsibility with fiscal accounts.

“I don’t think I have to set fire to the country because there is a political fight,” Cunha said.

Additional reporting by Silvio Cascione, Guillermo Parra-Bernal, Brad Haynes, Asher Levine and Walter Brandimarte; Writing by Caroline Stauffer Editing by Kieran Murray and W Simon

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