Brazil Court Orders Arrests in 2005 Cash-for-Votes Probe

Brazil’s Supreme Court ordered the arrest of a former cabinet chief, four congressmen and four former congressmen involved in a 2005 bribery scandal, marking the first definitive jail sentences for such high-profile politicians.

Arrest orders were sent to the federal police yesterday for 12 individuals including Jose Dirceu, cabinet chief under former President Luiz Inacio Lula da Silva, and Jose Genoino, a current member of congress and one-time head of Lula’s Workers’ Party. Dirceu and Genoino and nine others on the court’s list have surrendered to authorities since last night.

The court’s decision regarding the scandal that has threatened to undermine Lula’s legacy marks a turning point in Brazil’s biggest corruption case during 28 years of democracy. The cash-for-vote scandal known as “mensalao,” or “big monthly payment” in Portuguese, involved officials allegedly paying lawmakers for votes on key congressional initiatives.

Dirceu and Genoino both declared their innocence after turning themselves in to police and said in separate statements that they considered themselves to be “political prisoners.” Rui Falcao, the current Workers’ Party president, said the court’s decision “didn’t follow constitutional principles.”

“There is no evidence against me,” Dirceu said in an e-mailed statement. “The so-called mensalao trial didn’t follow the Constitution and international agreements regarding individual rights.”

Ex-Treasurer Surrenders

Former party treasurer Delubio Soares turned himself in today, Globo’s G1 website reported, citing his lawyer. The only one of the 12 yet to surrender, Henrique Pizzolato, fled to Italy, O Estado de S. Paulo newspaper reported on its website, citing a letter from the former Banco do Brasil executive that was passed on by his lawyer.

Brazilian prosecutors opened the mensalao probe in 2005 after one of the scheme’s operators went public, and the Supreme Court began its trial in August 2012. The Supreme Court convicted 25 individuals in all.

Neither Lula nor current President Dilma Rousseff have been incriminated or charged in the scandal. Rousseff succeeded Dirceu as Lula’s cabinet chief from 2005-2010.

In an August 2005 address to the nation, Lula apologized to the nation for the scandal, saying he felt betrayed by members of his party and vowed that “all those found responsible will be brought to justice.”

Lula declined to comment on the arrest orders, according to an official at the institute he founded who asked not to be named because he isn’t allowed to discuss the issue publicly.

The world’s second-largest emerging market ranked 69th among 176 countries in Berlin-based Transparency International’s 2012 study of corruption perceptions, worse than Rwanda and Georgia.

Before it's here, it's on the Bloomberg Terminal.