Scandal Puts Pressure on a Brazilian Leader to Step Down

The leader of Brazil’s Senate is under heavy pressure to step down amid a nepotism and corruption scandal that threatens to hamstring the government of President Luiz Inácio Lula da Silva during his final year in office.

The Senate leader, José Sarney, is a former Brazilian president who both supported the military dictatorship and led the nation in its transition to civilian democracy. Now he is considered an important ally for Mr. da Silva, who has plans to pass contentious legislation affecting the oil industry and also pick a candidate to succeed him in next year’s presidential elections.

But Mr. Sarney has been the subject of news reports here saying he abused his status as a senator by giving jobs and favors to friends and family members. The accusations include unduly allowing his grandson to benefit from government contracts, holding an illegal bank account outside of Brazil and allowing a foundation carrying his name to end up with roughly $250,000 in grant money from the state-run oil company, Petrobras.

Mr. Sarney, 79, has refused to resign, denouncing the accusations as false or exaggerated. He has also acted mildly surprised about concerns of nepotism and patronage, saying his conduct was not unusual for a senator.

“I did not favor a grandson or granddaughter,” he said on the Senate floor on Wednesday, his hand trembling as he held a prepared statement. “I am the victim of a systematic and aggressive campaign.”

The accusations against Mr. Sarney have embroiled the Senate in yet another pitched battle over the fate of its leadership. Two years ago, Renan Calheiros, a member of Mr. Sarney’s Brazilian Democratic Movement Party, gave up the post of Senate president after facing a disciplinary inquiry by the Senate Ethics Committee related to income tax fraud and the questionable purchase of a stake in a radio station.

The latest debacle comes at a difficult moment for Mr. da Silva, who has endured scandals in his own Workers’ Party that forced top officials to resign. Despite his high popularity personally, Mr. da Silva relies on an alliance with the Democratic Movement Party to form the government’s slim majority in the Senate.

The Brazilian government is preparing a proposal that would give the national oil company unprecedented control over the development of huge deepwater oil fields that could transform Brazil into a global oil power, according to one person with knowledge of the proposed law. And the president is seeking congressional support for the candidacy of Dilma Rousseff, his chief of staff, whom he chose to succeed him in the 2010 elections.

The debacle could also complicate the Senate’s investigation into possible improprieties at the national oil company, an inquiry that could last up to 180 days. Mr. da Silva was hoping to keep the investigation under control through government allies on the investigative committee. But with the Senate in disarray and amid allegations involving both Mr. Sarney and the oil company, the inquiry “may become a bit less predictable,” said Erasto Almeida, an analyst at Eurasia Group, a political risk consultancy.

The Senate conflict “is paralyzing Congress,” said Alexandre Barros, a political risk analyst here. “It is very difficult to get a big law voted on with all of this going on.”

In many ways, Mr. Sarney, who took over as the Senate president in February, is the last of a generation of politicians who operated under an older system of machine politics in which so-called colonels from powerful families like the Sarneys dispensed favors for loyalty, analysts say. The system allowed agrarian oligarchs to dominate local politics, especially in Brazil’s rural and impoverished north and northeast.

Mr. Sarney and his daughter Roseana served in the Senate together and are former governors of Maranhão, where the Sarney family has vast land holdings and a media conglomerate that controls one of the area’s most important television stations. This year, his daughter became Maranhão’s governor again.

“We are living the last moments of a political culture that he represented,” said Tasso Jereissati, a senator from the opposition Social Democratic Party, who said Mr. Sarney should resign. “All of this is being demolished now.”

Some senators have aggressively defended Mr. Sarney. At a heated session on Monday, Fernando Collor de Mello, a former president who was forced to resign over influence-peddling but is now a senator, threatened to expose corruption involving other senators if they did not back down from criticizing Mr. Sarney.

“They have made Sarney into a monster,” said Romeo Jucá, a senator in Mr. Sarney’s party. “He is not a monster.”

Mr. da Silva has walked a tightrope in recent days, coming to the defense of Mr. Sarney and pressing senators in the Workers’ Party to back him, while distancing himself from any responsibility for Senate ethics.

Late Wednesday, the Senate Ethics Committee voted to table 4 of the 11 allegations against Mr. Sarney.

A strong supporter of the 1964 military coup, Mr. Sarney was the governor of Maranhão in the late 1960s and then became the vice president in 1985 during Brazil’s transition to democracy. After President-elect Tancredo Neves became fatally ill, Mr. Sarney was sworn in as president, serving until 1990. As his term progressed, he became deeply unpopular during a period of rampant inflation. Since then, he has been a senator, also holding the chamber’s president post from 2003 to 2005.