The dangerous friendships that sank António Costa

António Costa gave a lesson in political ethics on Tuesday. It took only minutes for the Portuguese prime minister to get into the official car and go present his resignation to the president of the Republic as soon as a press release from the Prosecutor’s Office announced that he was going to be investigated by the Supreme Court. Costa indicated that he did not know what he was accused of, but considered that the dignity of his position would be compromised if he did not offer his resignation.

The judicial operation has sent shock waves through Portuguese politics following the arrest of two people from his closest circle, his chief of staff Vítor Escária and his friend Diogo Lacerda Machado for alleged malfeasance, corruption of elected officials, and influence peddling in connection with four energy projects. There are three other people under arrest, while the minister of infrastructure, João Galamba, and the head of the Environment Agency, Nuno Lacasta, have also been named as suspects.

What is striking about Costa is that he has not applied the same rigorous ethics to the people around him. And this relaxed attitude has ended up costing him his position. Alarm bells had gone off almost from the beginning regarding the business dealings of his close friend Diogo Lacerda Machado. The relationship between the two, which began during their days as law students in Lisbon, has been so close that António Costa asked him to be his best man at his wedding. He kept him close by even after he became head of the government.

After being appointed prime minister in 2015, Costa turned to Lacerda Machado to negotiate the reversal of the privatization of TAP airline, then in the hands of a consortium led by David Neeleman, owner of Azul airline. In December of that year, the minister in charge of the airline presented his negotiating team to the owners of TAP: two secretaries of state and Diogo Lacerda. Two years later, the prime minister appointed him airline administrator, when the majority of the capital was already back in public hands.

Costa also put Lacerda in charge of managing the conflict with victims of the collapse of Banco Espírito Santo and the dispute at the Portuguese Investment Bank (BPI) between Angola’s Isabel dos Santos and CaixaBank. This intermediary work was carried out without any type of official appointment or government contract (“too much relaxation,” would lament António Vitorino, the Portuguese socialist who headed the International Organization for Migration) and ended up generating so much controversy that Costa decided to hire his friend for €2,000 a month.

Diogo Lacerda Machado, who never joined the Socialist Party, had worked on António Costa’s team during the latter’s time as justice minister during António Guterres’ term as prime minister. Starting in 2002, he devoted himself to private business as an administrator of firms linked to banking, energy and airlines. When Costa became prime minister, his friend became a constant presence who seemed more at home in the backroom than in public office.

Coveted by investors

In recent years the lawyer devoted himself to his private activity. His closeness to the prime minister and his entourage made him a coveted target for investors in a hurry. In the case that has led him to spend two nights in a police station, Diogo Lacerda was allegedly the person who corrupted António Costa’s chief of staff, Vítor Escária, according to the newspaper Público.

Lacerda was hired in 2021 by the British investment fund Pioneer Point Partners, which together with another American company was seeking the construction of a large digital data storage center known as Start Campus in the southern city of Sines. The project, which provided for an investment of €3.5 billion to build nine buildings powered by renewable energy, achieved classification as an initiative of Potential National Interest in 2022, a year after the signing of Costa’s friend. The lawyer was hired to “take advantage of his close friendship with the prime minister and his proximity to Vítor Escária,” according to sources from the Prosecutor’s Office cited by Expresso.

But the election of Escária as chief of staff also showed Costa’s relaxation with respect to his inner circle. Vítor Escária had to resign in 2017 when he was economic advisor to the prime minister due to Galpgate, a scandal caused by the gifting of trips and tickets paid by the energy company Galp to politicians to attend the 2016 Euro Cup in France. Escária and his wife had been two of the beneficiaries. This did not stop Costa from proposing him as chief of staff in 2020.

Another controversial signing was Miguel Alves as deputy secretary of state, a post he held for 55 days after being accused of wrongdoing during his time as mayor of Caminha. Alves had advanced €300,000 to a businessman with a dubious history to build an exhibition center that does not exist. This was one of the scandals that weighed down the first year of António Costa’s absolute majority. In nine months, 11 secretaries of state left the government, most due to alleged irregularities or conflicts of interest. The prime minister tried to minimize the scandals as an accumulation of “casinhos” (little cases) and sometimes defended these individuals beyond what was considered reasonable by the president of the Republic, as during the scandal involving João Galamba, the minister of infrastructure whom Costa vehemently defended despite the unseemly events experienced in his ministry, which included threats, robberies and involvement by the secret services.

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