Curious Petition Involving Lula Rattles Brazilian Markets

A curious legal petition involving former President Luiz Inacio Lula da Silva shook up Brazil markets and crashed a court’s website, underscoring fears that a corruption probe could engulf his ruling party.

As news spread that a court in southern Brazil received a request seeking to shield the ex-president from a potential detention in connection with the so-called Carwash scandal, stock markets sold off and a website for the judicial authority crashed under heavy traffic. Tweets by a senator fueled the page visits.

The request for “preventative habeas corpus” was made by Mauricio Ramos Thomaz, who did not act as a legal representative for Lula, according to court spokeswoman Analice Bolzan.

Prosecutors in the southern state of Parana were quick to say that they were not investigating the political leader and mentor to current President Dilma Rousseff as part of their corruption probe. Lula’s institute issued an statement denying it has made such request and asked for it to be disregarded. News of the petition was first reported by Folha de S. Paulo newspaper, saying it was filed on behalf of the former president.

“Anyone can request a habeas corpus in Brazil; it wasn’t from Lula or his lawyers,” Jose Chrispiniano, a spokesman for Instituto Lula, said by telephone from Sao Paulo. “It could have been requested by someone who is sympathetic or from an opponent.”

Legal Petitions

Ramos Thomaz, from Campinas, a city northwest of Sao Paulo, has filed similar petitions in other high-profile court cases in Brazil. In 2012, he filed a habeas corpus request in the case of the congressional payoff scandal known as mensalao.

In an interview Thursday with Globo’s G1 website, Ramos Thomaz, 50, said he is not a lawyer but follows cases habitually and intervenes with petitions when he doesn’t like the direction in which something is headed.

“I accompany cases that I find abnormal,” he told Globo.

Federal Judge Joao Pedro Gebran Neto from the southern-district court denied Ramos Thomaz’ request.

Analysts at Eurasia Group called the event a “hoax,” saying it underscored the former president’s vulnerability following last week’s arrest of the chief executive officer of construction company Odebrecht SA.

‘Real’ Risk

“The former president has well-established connections to Odebrecht, and the recent incarcerations certainly bring the investigations closer to him,” Christopher Garman, an analyst at Eurasia Group, wrote in a note to clients. “The bar to implicate Lula is high, and thus we don’t think it is likely for him to be incriminated legally. Nevertheless, the risk is real.”

Should Lula come under formal investigation and face criminal lawsuits, Garman said, the repercussions could be disastrous for Rousseff’s government.

The Workers Party did not respond to phone and e-mail messages seeking for comment on the petition and the ongoing Carwash investigation. Lula has denied any involvement.

The Brazilian real led world losses and the benchmark equity index fell most in the Americas in the minutes that followed the publication of the report by Folha.

Police investigating allegations that a cartel of builders paid bribes to state-run oil producer Petroleo Brasileiro SA in return for contracts detained Marcelo Odebrecht and Otavio Azevedo on June 19. The judge who issued the warrant for the two, who are CEOs of Odebrecht SA and Andrade Gutierrez SA, said the years of bribes couldn’t have been paid out without their knowledge.

Federal Operation

The detentions were part of a federal operation where authorities acted on warrants for 12 people, as well as 38 search-and-seizure orders. Police on June 22 started taking testimony from people it detained, according to a report from the government news agency, which didn’t specify when Odebrecht and Azevedo would speak.

The pending testimony by the heads of Brazil’s largest construction companies on graft at Petrobras, as the oil producer is known, threatens to drag the ruling Workers’ Party deeper into Brazil’s largest corruption scandal.

Odebrecht SA said in a statement that the executive’s detention was unfair and that the company hadn’t participated in any cartel. Andrade Gutierrez said in an e-mail it did nothing wrong and its executives have no reason to turn state’s witness.

In the weeks leading up to his detention, Odebrecht told Workers’ Party members and lawyers that he wouldn’t go down alone, according to an Epoca magazine story published this weekend, which cites people close to the executive who it doesn’t identify.

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