Brazil President Michel Temer believes an investigation into whether he condoned hush money should be shelved after he listened to the recording that triggered a political crisis in Brasilia, a presidential aide told Reuters on Thursday.
According to a report in the newspaper O Globo this week, Temer was caught on tape approving payments to former parliamentary speaker Eduardo Cunha, a witness in a corruption inquiry.
The scandal comes at a crucial time for Brazil, which is mired in its worst recession in decades, the economy having shrunk almost 8 percent in the last two years with more than 14 million people unemployed.
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The obstruction of justice allegations have sparked street protests and calls for his impeachment by Brazilian lawmakers. The regulator is also examining the sale of shares in the company by its controlling shareholders, the report said.
The U.S. dollar surged by 7.9 percent against the Brazilian real, as the country's main stock market plummeted 8.8 percent on Thursday with the aftermath of the secret recordings showing that President Michel Temer approved of pay-off to a convicted politician for his silence. Analysts predicted the Brazilian real would fall sharply against the USA dollar.
Mr Neves is being investigated in several corruption cases related to the "Car Wash" probe into kickbacks to politicians. Temer denies the claim and insists he won't resign, but his allies and adversaries are already considering a future without him. On Thursday, the Supreme Federal Tribunal, the country's highest court, suspended Neves from office indefinitely.
Less than 24 hours after O Globo newspaper's explosive report that Temer had been caught on tape agreeing to bribe the jailed politician, he faced three formal requests for his impeachment. These corruption allegations are only the latest to hit people at the very top of Brazilian politics, if we look at the tenures of the previous two presidents, Luiz Inacio da Silva and Dilma Rousseff. Bills making their way through Congress that would loosen labor laws and shore up the pension system - two measures Temer has said are vital to restoring investor confidence in Brazil - have now stalled. Rousseff and Temer are on trial in a case separate from the Car Wash investigation, for allegedly accepting illegal donations as part of their 2014 campaign. "If Temer doesn't fall, he will lead a walking dead administration". The tapes record Temer expressing his support for the payout of hush money to imprisoned politician Eduardo Cunha, and Neves soliciting 2 million reais (nearly $600,000) to pay for his own defense against corruption charges. "I know what I have done and I know the correctness of my actions", the president stressed. Neves, who almost won the presidency in 2014 and planned to run again next year, has denied wrongdoing.
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It is possible Cunha, who is serving a 15-year prison sentence, could reach a plea deal with authorities for a lesser sentence if he turns over information. Batista has been under investigation for his company's alleged involvement in a corruption scheme aimed at getting special financial favors from the country's state-owned national development bank, BNDES.
FILE - In this May 12, 2016 file photo, Brazil's acting President Michel Temer whispers into the ear of Sen. Rousseff had even appointed Lula as a cabinet minister in order to give him legal immunity from prosecution during the Petrobras scandal, but that was later blocked by a judge.
In Rio, a small group of demonstrators threw bottles and fireworks at military police, who deployed tear gas and stun grenades in response, Globo TV reported.
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Globo's report represents the latest in numerous scandals that have plagued Temer, whose approval ratings are hovering around 10 percent.