Lula Aide Sentenced to Prison in Brazil Graft Trial

Brazil’s Supreme Court sentenced a top aide to former President Luiz Inacio Lula da Silva to prison, the first time the high court has ordered an ex-Cabinet member to jail for corruption since the return of democracy.

Former Cabinet chief Jose Dirceu was sentenced yesterday to almost 11 years for masterminding a scheme to siphon off public funds used to bribe legislators in the first two years of Lula’s 2003-2011 government. Dirceu, a leader of the ruling Workers’ Party who was once considered Lula’s potential successor, was also fined 646,000 reais ($315,000) as part of his conviction on criminal conspiracy and corruption charges.

Putting a former Cabinet member behind bars may reinforce the fight to clean up government in Latin America’s biggest economy, which ranks behind Cuba and Saudi Arabia in Transparency International’s annual ranking of corruption around the world. Graft costs the world’s sixth-largest economy as much as 85 billion reais a year, nearly double what the government spent on roads, ports and airports in 2011, according to estimates by the Sao Paulo Industry Federation.

“It’s a very important message for society, as this sentence contributes to eliminating a widespread perception of impunity,” said Jorge Abrahao, head of Ethos, a Sao Paulo-based group promoting social responsibility and ethics in business, in a telephone interview. “Now we need to build on this moment to strengthen institutions and public policy.”

‘Big Monthly’

Brazil’s media for the past three months has been gripped by the Supreme Court trial, which cast a light on vote-buying practice known as the “mensalao,” or “big monthly allowance,” that lawmakers were allegedly paid to support government legislation.

The case involved dozens of defendants, including lawmakers and Workers’ Party leaders, as well as bankers and publicists whose contracts with the governments helped steer millions of embezzled dollars to allies in Congress.

Dirceu, a former Marxist guerrilla who was exiled in Cuba during Brazil’s 1964-1985 military dictatorship, has vowed to fight the convictions. He’s accused the high court of a political bias, and some of his supporters have suggested they’ll appeal to the Inter-American Court on Human Rights because the conditions for a fair trial in Brazil don’t exist.

No Prison Yet

While yesterday’s sentencing may erode the legacy of Lula, who stepped down in 2011 as Brazil’s most-popular president ever, Dirceu and others won’t go to jail until the court executes its sentence and defense lawyers exhaust all their legal options.

“I won’t believe it until I see it,” said Jose dos Pasos Pereira Silva, a gardener in the capital, where legislators and local officials were caught on videotape in 2009 thanking God in a prayer for the bribes they received from government contractors. “It’s way past the time for the rich and powerful to see a prison from the inside.”

The trial, which was broadcast on television, galvanized public opinion. During one celebratory demonstration outside the Supreme Court, anti-corruption advocates held up banners referring to the popular expression that crooked officials in Brazil aren’t punished but instead regularly cut their corrupt deals in a pizza party. “Did Brazil Change? Did the Pizza Parlor close?” one sign read.

An August Datafolha opinion survey showed 73 percent of those polled said the main defendants in the trial should go to jail, though only 11 percent thought that would happen.

Few Convictions

By law, top officials, including the president, Cabinet members and federal legislators, must be tried in the Supreme Court on criminal charges. Since Brazil’s 1988 constitution, the high court has sentenced only six such officials. None has gone to prison.

A key figure in the trial is Joaquim Barbosa, who rose from janitor in a local court to being appointed by Lula as the first black Supreme Court justice in 2003. Barbosa, who was the lead justice in the case, convinced the majority of his peers that circumstantial evidence was enough to establish that government and party officials paid bribes to influence lawmakers.

President Dilma Rousseff, a Lula protégé who became chief of staff after Dirceu resigned when the mensalao scandal broke in 2005, has tried to distance herself from the corruption that surrounded Lula’s government.

During her first year in office, she accepted the resignations of six ministers amid accusations of graft and influence-peddling. Her toughened stance on corruption has helped boost her approval rating, which stood at 77 percent in September, even as the government struggles to lift economic growth that is forecast to have slowed to 1.5 percent this year.

While the sentencing to jail of former government officials is a “big deal,” many of the underlying causes that led to the crimes remain unresolved, said Alejandro Salas, Latin America director for the Berlin-based Transparency.

These include tougher campaign financing regulation and rules that increase party discipline and make Congress more transparent and accountable. Brazil ranked 73rd out of 183 countries in Transparency’s 2011 Corruption Perception Index.

“Hopefully this case will trigger reform,” Salas said in an interview in Rio de Janeiro before the sentencing. “Sometime you need a big bang event like this for action to happen.”

To contact the reporter on this story: Raymond Colitt in Brasilia at rcolitt@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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