June 14 (Bloomberg) -- Brazilian lawmakers, opening a probe of alleged corruption, will hear testimony today from Roberto Jefferson, the Labor Party deputy who says President Luiz Inacio Lula da Silva's government paid bribes for legislative support.

The lower-house ethics committee also may seek testimony from Lula's chief of staff, Jose Dirceu, and top political negotiator, Aldo Rebelo, committee chairman Ricardo Izar said in an interview yesterday. The committee is trying to determine whether Jefferson, who turns 52 today, can prove his claims against other lawmakers and the government, Izar said.

The Bovespa stock index shed 0.6 percent today, to 24,751.98, its seventh decline in eight days. The yield on the government's benchmark bond due 2040 rose to 9.33 percent from 9.29 percent yesterday. It is up from 9.19 percent on June 2. Bond yields move inversely to prices.

``There hasn't been anything that has got as close to Lula as this has,'' said J.D. Butikofer, who manages about $950 million of bonds for Julius Baer & Co. in Zurich and reduced his Brazil holdings earlier this month. ``The question now is will these allegations and the political noise weaken Lula and weaken his agenda of reforms.''

Brazil's currency was little changed ahead of Jefferson's testimony, scheduled for 2:30 p.m. (1:30 New York time) in Brasilia. The real rose for a second day yesterday after Jefferson, whose party is part of the governing coalition, told Folha de S. Paulo newspaper he has no proof for his allegations. It had lost 2.8 percent in the first four days last week after Jefferson made his allegations.

The bond's price fell 0.45 cent on the dollar to 117.15 cents.

No Basis

Lula's Workers' Party said June 11 that Jefferson's declarations had no basis in fact and that the party ``had nothing to do with the payment of monthly allowances or any other illegal or illicit behavior.''

Jefferson's testimony will lead into a broader congressional probe of allegations of government corruption at the state- controlled postal service. A failure to show he has proof for his claims might lead to Jefferson's explusion from Congress for making false allegations, Izar said.

The committee also plans to call Miro Texeira, Lula's former communications minister, and Jose Mucio Monteiro, president of the Labor Party, to testify, Izar said.

Izar said he may also call Workers' Party President Jose Genoino. Dirceu and Rebelo's offices said neither was available to make a comment.

On June 6, Rebelo, at a press conference in Brasilia, said Jefferson told him in March that lawmakers were receiving bribes in exchange for support. Rebelo also said that Jefferson never named the sources of his information or the beneficiaries of the payments. Rebelo also said Jefferson never told him Workers' Party members were involved in the payments.

National Attention

``The market sees this crisis as relatively natural in the workings of Brazilian institutions,'' Nelson Rocha Augusto, president of BB DTVM, a Rio de Janeiro-based unit of state- controlled Banco do Brasil SA that oversees 140 billion reais ($57.1 billion) in assets, said in an interview. ``The crisis is not positive, but the institutions in Brazil work.''

Jefferson has been a representative for the Labor Party since 1983 and was a member of the legislature that helped write the country's 1988 constitution.

Jefferson came to national attention during the 1992 Congressional investigation, impeachment and resignation of former President Fernando Collor de Mello. As a member the congressional committee that investigated Collor's campaign treasurer, Paulo Cesar Farias, Jefferson was one of Collor's defenders. Dirceu, then a Workers' Party deputy, was also on the committee and helped lead politicians seeking Collor's impeachment.

Last month, Veja published allegations Jefferson and his party were linked to an operation that embezzled money from the post office and the state-controlled re-insurance company. The claims in Veja included transcripts of videotapes alleging that Jefferson and his Labor Party controlled the operation. Jefferson has denied the claims.

The allegations prompted Congress to set up a special investigative commission.

To contact the reporter on this story: Katia Cortes in Brasilia at kcortes@bloomberg.net

Last Updated: June 14, 2005 12:00 EDT