Breaking News

U.S. May Home Prices Rise 0.4% From Previous Month: FHFA
Tweet TWEET

Lula Accused by Felon of Joining Brazil Bribery Scandal

Brazilian President Dilma Rousseff defended her predecessor, Luiz Inacio Lula da Silva, amid fresh allegations that he joined in a cash-for-votes scandal.

“I repudiate all attempts -- and this would not be the first -- to take away the immense respect the Brazilian people have for him,” Rousseff told reporters in Paris after attending an event in the French capital alongside the former president. “It’s regrettable, these attempts to damage president Lula’s image.”

Brazil’s opposition is urging prosecutors to investigate Lula after he was accused of joining in a corruption scheme by a businessman convicted in the case.

Advertising executive Marcos Valerio told prosecutors in September that he transferred funds to aides of Lula on two occasions to pay for the former president’s personal expenses, O Estado de S. Paulo reported today, citing sealed testimony it obtained. One of the payments was for 100,000 reais ($48,139), the newspaper said.

Rousseff was applauded by members of her cabinet while defending Lula, who she called her “friend,” in the presence of French President Francois Hollande. She declined to comment further, saying such questions are better addressed in Brazil and not on a foreign trip. Lula also declined to comment.

Money Laundering

Valerio sought out prosecutors after being convicted in September by the Supreme Court of fraud, corruption and money laundering in a scheme the ruling Workers’ Party used to embezzle public funds to bribe lawmakers from 2003 to 2005. This is the first time Lula has been accused of wrongdoing by any of the dozens of lawmakers, bankers and former Lula aides convicted in the trial known as the “mensalao,” or big monthly payment. Valerio was subsequently sentenced to 40 years in jail.

The Social Democracy Party, Brazil’s biggest opposition party, asked federal prosecutors to open an investigation into Lula’s involvement in the scandal and want Valerio to testify in Congress, Bruno Araujo, leader of the PSDB in the lower house, said in a phone interview.

Brazil’s Supreme Court President Joaquim Barbosa, who was named to the court by Lula, said today that the accusations should be investigated by prosecutors, according to O Globo newspaper’s website.

The public prosecutor's office had no immediate comment and said it would issue a statement later today, according to a press official who declined to be identified because of internal policy.

Fraudulent Loans

Valerio told prosecutors that Lula approved fraudulent loans from Banco BMG SA and Banco Rural SA that the high court said were used to buy votes in Congress, according to O Estado. Lula also negotiated with Miguel Horta, former chief executive officer of Portugal Telecom SGPS SA (PTC), a 7 million reais payment to the PT, O Estado cited Valerio as telling prosecutors.

Paulo Okamotto, head of the Lula Institute, said that it’s up to prosecutors to judge whether the testimony of a convicted felon has any basis. He also denied Valerio’s testimony to prosecutors, as reported by O Estado, that he warned the advertising executive that he could be killed by PT activists if he didn’t keep quiet about what he knows.

“He’s trying not to go to jail for 40 years,” Okamotto told reporters at the same event in Paris. “If I were him I’d be trying to find a way out.”

To contact the reporter on this story: David Biller in Rio de Janeiro at dbiller1@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.