💸 Lupi out of the loop

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IN THIS ISSUE

• Another cabinet member bites the dust

• 99 dives back into Brazil’s food delivery red ocean

• Press freedoms improve in Brazil

Scandal forces Lula’s social security minister out of the cabinet

Carlos Lupi on Friday stepped down from his position as social security minister, following a widening scandal at Brazil’s National Social Security Institute (INSS). The Federal Police found that employees and members of private associations linked to political parties siphoned billions of reais from over 4 million retirees and pensioners, some of the poorest Brazilians.

Politics. A poll released Thursday showed that 85% of voters believed Lupi should have been fired — but the government let the crisis fester for 10 days before acting as President Luiz Inácio Lula da Silva, who leads an oft-fractious coalition, was reluctant to provoke Lupi’s Democratic Labor Party (PDT). With centrist allies regularly breaking ranks, the last thing Lula can afford is defections from the left.

• Contributing to Lula’s hesitation to jettison Lupi was pressure from the PDT. The party’s House whip had hinted it might pull out of the cabinet entirely if Lupi were fired.

• In the end, though, Lupi’s position became untenable. He was replaced by his deputy, Wolney Queiroz, also from the PDT — which chose power over ego.

Narratives. While the government has tried to make it clear that the fraud began during the former Jair Bolsonaro administration (2019-2022), that message was clouded by the government going out of its way to stand by Lupi. The president’s chief political negotiator, Institutional Relations Secretary Gleisi Hoffmann, went on the record on Wednesday to argue that Lupi should remain in the cabinet.

👉 Why it matters. The scandal risks leaving a mark on the Lula government, especially since 84% of voters say they are following it. It does not help that one of the associations suspected of wrongdoing is linked to Lula’s brother. The opposition has gathered enough signatures to open a hearings committee to investigate the case in Congress, which would delay how long it takes for the scandal to subside.

Optics. The scheme directly preyed on vulnerable populations, not on abstract public funds. Victims earning pensions equal to the minimum wage were losing up to 6% of their paychecks, while those involved in the scheme pocketed millions and drove around in Ferraris and Rolls-Royces.

Not his first rodeo. Back in 2011, while serving as Brazil’s labor minister, Lupi’s top aides were accused of running an extortion scheme, demanding kickbacks from NGOs seeking contracts with the government. Some of the same figures involved then have surfaced again in the current scandal. 

• I remember it well: I was part of the reporting team that exposed the scheme. The first of several stories published at the time by Veja magazine is cited in the Senate annals of November 2011 (page 518). 

• Corruption allegations forced Lupi out of the cabinet in 2011, just as they have now.

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Didi wants back into the food delivery business

Ride-hailing app 99, controlled by the Chinese giant Didi Chuxing, announced it is relaunching its 99Food delivery service in Brazil, pledging to invest BRL 1 billion (about USD 174.7 million) as it re-enters a market long dominated by homegrown delivery giant iFood.

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