No one denies that Latin America economies are hurting, with regional growth predicted to reach barely half the global average next year. And there's little quarrel about one big reason for the slump. The absence of clear rules and a reliable legal system discourages investment and effective business management.
So why is Brazil's highest court revising a keystone of the country's penal code, a move that could free thousands of convicted criminals, trigger partisan discord and throw a cloud over the anticorruption drive that has rid public office of freebooters?
The question before Brazil's Supreme Court sounds prosaic: When should a convicted criminal go to prison? Current law says the court may jail any defendant whose conviction is upheld on appeal. It is a reasonable standard for a land where wealthy miscreants deploy clever lawyers to blitz the courts with writs and motions in an effort to keep out of prison indefinitely.
However, that law offends legal formalists who argue that no one should be incarcerated until every possible recourse has been exhausted. They cite the Brazilian constitution, which lawmakers packed with well-intentioned, if sometimes impractical, safeguards after a long period of military fiat.
It might sound like legal hair-splitting were it not for one looming presence: Luiz Inacio Lula da Silva, the former Brazilian president who was convicted twice, in 2017 and on appeal last year, for taking bribes and sentenced to 12 years in jail. He was the biggest catch in the storied Operation Carwash corruption probe of elected officials accused of looting public companies.
Lula's devotees, who are legion, never swallowed that verdict, claiming he was railroaded by a partisan hanging judge. (Hacked text messages between Carwash prosecutors and presiding Judge Sergio Moro seemed to provide evidence that Moro may have played fast and loose with some rules.) One way or another, Lula's loyalists say, he ought to go free. But the worst way to deal with that dispute is for the nation's top court to change the legal ground rules for everyone.
Laws ought not be set in stone, of course, any more than they should be used as weather vanes. Brazil's Supreme Court has changed its position on the same jail-on-second-conviction rule twice in the last decade. If a majority of the judges flip again, which is likely, Lula may be sent home for now (he still faces trial in seven other cases) - along with 4,895 other convicted criminals.
Whatever the legal merits, such inconstancy is troubling for a court of last resort in a country where much of the political class and its corporate enablers were caught raiding public coffers for profit and political glory.
The Supreme Court's tentacles reach in many directions: It serves as a constitutional court, a final court of appeals and a trial court for elected officials with immunity in common courts. Thanks to the minutely detailed and expansive Brazilian constitution, almost any matter, from domestic violence to graft, can land on its docket.
Last year, the court received more than 100,000 cases. The only way to deal with such an impossible mandate is to give discretion to each of the court's 11 justices. Some 95% of cases are typically decided by a single judge (frequently by copying and pasting prior rulings). Rulings by 11 different judges assure widely divergent verdicts.
"Divergence leads to the inability to establish strong jurisprudence, the lack of which will only lead to more cases," says Matthew Taylor, an American University professor who has studied the Brazilian courts. "It's a vicious circle."
The decision on when to send convicts to prison won't directly affect business and investment. The mercurial rule at the top of the judiciary will. Of the many obstacles Brazilian companies face, the constantly shifting rules and laws that beget more laws are among the most harrowing. Brazil issued a total of 5.7 million new tax norms in 2017, compared with 3.3 million in 2003, according to the Brazilian Tax Planning Institute.
No wonder Brazilian companies spend 1,958 hours preparing taxes, more than in any other nation (the world average is 237 hours). "Who's to say that the Supreme Court won't change tax laws a year or two from now?" said Mailson da Nobrega, a former Brazilian finance minister.
Yet judicial overreach appears to suit the current bench, whose headline decisions and oratory are streamed over the web, turning judges into "politicians in robes," says University of Rio de Janeiro political analyst Christian Edward Lynch.
Brazilians don't need celebrities in robes or a court so overtaxed it can't render durable rulings. They need judicial stability, circumspection and a bench that interprets, instead of reinvents, the nation's highest laws. One way to achieve that would be to turn the Supreme Court into a constitutional tribunal, leaving appeals, criminal cases and political trials to lower courts. "Brazil needs to transform the Supreme Court into an invisible bench, where judges rule but don't pontificate," Lynch said.
Brazilian lawmakers, constitutional jurists and society will have to make that call, most likely through a major reform of the judicial system. That's one verdict Brazil's overreaching judges aren't qualified to make.
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Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of "The Last New World: The Conquest of the Amazon Frontier."