By: KENNETH MAXWELL 

Folha de S. Paulo - Op-ed section - page A2

Propinas in Brazil have a venerable history. The lucrative and intimate interconnections between the abuse of governmental power, the substantial sums to be made from contracts, and the businessmen who receive those contracts from the state is far from new.

In colonial Minas Gerais, generous propinas were formally incorporated into the costs of the contracts awarded by the government. The governor and judicial officers received additions to their official salaries called a propina, which was the origin of the use of this word to describe this form of payoff in Brazil.

In 1780, for example, the governor of Minas received in addition to his official salary as much as half again from propinas, and these were legal and listed in the official state accounts. The local magistrates and many other officials received similar, if less valuable, salary supplements.

These propinas came from the contractors who had been awarded the principal revenues of the state by a system for tax farming. In effect, the state had privatized the basic function of revenue collection long before the neoliberal decade.

The contracts which involved the collection of taxes on imports and exports into the state, and taxes on production, and on the tolls and duties on goods were held by the most important local businessmen. The abuses of the system were many; reforming it was virtually impossible. Too many people within the system gained from the way it worked; though not of course the people. They were forced to pay their taxes by the contractors who wanted to profit as much as they could form their deals with the authorities. The more taxes they raised above the amount they had promised to the state the more they kept in their own pockets.

It was Joaquim José da Silva Xavier who said it all best. "Os governadores...cada tres anos vinham...e todos iam cheios de dinheiro, que traziam uma machina de creados, e que cada um delles ia a proporção cheio..." Tiradentes was of course speaking about the governors and the creados who came from Lisbon, not those who now live in Brasília.

KENNETH MAXWELL is a weekly op-ed columnist (every Thursday) for Folha de São Paulo, Brazil's leading newspaper.