Brazil's president denies authorizing payments to silence politician

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.

During the meeting, the report said, Batista recorded himself telling Temer that he was paying money to buy the silence of disgraced ex-speaker of the lower house Eduardo Cunha.

In his statement Thursday, Temer angrily responded to the claim, saying: "I never bought anyone's silence".

"I will not resign", he said.

Despite initial attempts to show Temer was conducting business as usual at the presidential palace on Thursday, the 76-year-old career politician was deeply shaken by the events, according to a person familiar with his thinking who requested not to be named because of the matter's sensitivity.

Also named in the JBS plea bargain is Aecio Neves, the head of the Brazil Social Democratic Party (PSDB), who narrowly lost the last presidential race to Ms. Rousseff and was considered a contender for president in the next election. Three of his ministers have resigned, while eight others have been linked to a massive corruption scandal branded the "Car Wash" case. He has denied any wrongdoing but the Supreme Federal Tribunal has suspended him from office indefinitely.

Brazil's stock market, Bovespa, plunged more than 10% immediately after opening Thursday, wiping out nearly all of its gains for the year. Brazil's currency, the real, lost 8 percent of its value against the US dollar, according to the Central Bank's closing figure.

The newspaper, O Globo, said that Temer also directed the executive to pay a lawmaker to help resolve a problem at a JBS company plant, and that police later filmed the lawmaker receiving $500,000 reais ($213,000) in a suitcase.

If confirmed, the tape could prove devastating for Temer, whose administration has lurched from one crisis to another since he took office just over a year ago.

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With the collaboration of the Batista brothers, police used hidden cameras and tracking chips in bags of cash to record a series of bribes to politicians, according to O Globo.

Cuhna was sentenced to 15 years in prison in March after being found guilty of accepting more than $1.5 million in bribes.

In the recording, Joesley Batista said he was paying Cuhna money to keep silent and Temer said he would have to keep up those payments, the newspaper said. JBS declined to comment immediately.

The crisis leaves Temer, 76, facing two immediate problems.

Rousseff, from the leftist Workers' Party, accused Temer and Cunha, from the center-right PMDB party, of mounting a coup. "He neither participated nor authorised any activity with the objective of preventing testimonies or cooperation with justice officials by the parliamentarian".

Cunha was president of the Chamber of Deputies, the lower house of Brazil's bicameral legislature, in 2003.

Brazilian markets climbed over the past year as investors looked favorably upon the Temer administration's reform program.

Globo's reports are the latest in numerous scandals that have plagued Temer, whose approval ratings are hovering around 10 percent.

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