The president of Instituto de Resseguros do Brasil resigns.

Marcos de Barros Lisboa has been appointed president of state reinsurer, Instituto de Resseguros do Brasil (IRB), following the resignation of Luiz Appollonio Neto in the wake of a still-evolving corruption scandal.

Lisboa had been Secretary for Economic Policy at the Finance Ministry until the end of April this year, when he resigned for personal reasons, as well as an assistant professor of mathematics at the Getúlio Vargas Foundation, a Rio de Janeiro-based think tank. Lisboa is also the closest aide of Finance Minister Antonio Palocci, a former medical doctor and Trotskyist, who has maintained an orthodox economic policy, kept inflation and public spending in check, and restored financial markets' confidence in Brazil.

Palocci has emerged strengthened as a result of the ongoing political crisis and intends to press ahead with market friendly reforms including the privatisation of IRB and the opening of the reinsurance market. Private sector re/insurance executives have welcomed the appointment of Lisboa whom they regard as a first-rater. The new members of the IRB administrative board are Eduardo Nakao, Cesar Saad, Vandro Cruz and Francisco Aldenor. The chairman of the administrative board is Murilo Portugal, Executive Secretary at the Finance Ministry, while Lisboa is the vice-chairman of the board.

The corruption scandal erupted in mid-May when the weekly Veja published images of a business executive apparently bribing a postal services manager to win a procurement contract. In early June, the magazine accused Roberto Jefferson, a legislator in the lower house, the Chamber of Deputies, of demanding a monthly R$400,000 ($169,000) kickback from the IRB president at the time, Lidio Duarte. Duarte, who like Jefferson is a member of the Brazilian Labour Party (PTB), was IRB president for 23 years until his resignation and then brief reinstatement in March this year. Duarte at first confirmed the kickback demands in a telephone interview with Veja but later retracted his statement. The scandal has also forced the resignation of President Luiz Inácio Lula da Silva's chief of staff, José Dirceu.

In late-June a parliamentary commission of inquiry revealed a number of irregularities in reinsurance contracts signed by IRB with Furnas and Eletronuclear, respectively the southeast regional and nuclear energy subsidiaries of federally owned power generator Elétrobrás, and with federally-owned airport administrator, Infraero. The PTB party, which is part of the governing coalition led by President Lula da Silva's Workers' Party (PT), controls all three of these companies. The commission found contracts with Eletronuclear to be illegal as, under Brazilian law, nuclear re/insurance does not permit the use of intermediaries. The commission of inquiry concludes that there are indications of “administrative improbity” against Lidio Duarte and the former IRB commercial director, Luiz Eduardo Lucenna, the latter a member of the centre-right Progressive Party (PP).