Financial Times
The move by prosecutors came as the leader of Brazil’s lower house of Congress, Eduardo Cunha, said he was seeking legal advice on whether there were grounds to impeach Dilma Rousseff, Brazil’s president and Mr Lula da Silva’s protégé, over separate allegations of impropriety.
Mr Lula da Silva has been accused of irregularities in his dealings with Odebrecht, the nation’s largest construction conglomerate, in relation to contracts it won for projects in Africa and the Caribbean. He has denied any wrongdoing.
“The prosecutor decided to open a [formal] inquiry before the time limit for doing so expired,” a spokesman for the Federal district public prosecutor’s office said.
The Brazilian real weakened on the news 0.46 per cent against the dollar to R$3.15.
The probe into the left-leaning former president, who ended his two four-year terms in power in 2010 with record approval ratings, is the most serious threat yet to Brazil’s ruling Workers’ party, or PT, which he helped to found.
Época, a weekly magazine, alleged in May that Mr Lula da Silva had improperly used his influence to obtain loans from Brazil’s state development bank BNDES for Odebrecht’s dealings in Cuba and the Dominican Republic, often travelling to meet the countries’ leaders at the company’s expense.
The magazine also accused Mr Lula da Silva of similar influence peddling in Ghana and Angola.
A spokesman at Mr Lula da Silva’s thinktank, Instituto Lula, said on Thursday that it received news of the formal inquiry “with surprise”.
“But we also received the news with tranquillity out of certainty of the honesty and legality of the activities of the Institute and of the ex-president,” the institute said.
Separately, Mr Cunha, a congressman with the PMDB, the PT’s main coalition partner, said Brazil was suffering a “grave” crisis in governability.
Ms Rousseff’s hold over Congress has diminished since elections last year in which the PT performed poorly while her own approval ratings have plummeted.
Her lack of popularity has been fuelled by the Petrobras scandal, in which ruling coalition politicians are alleged to have collaborated with former directors and contractors to extract bribes from the company. She was chairman of the company when much of the alleged activity took place but has denied wrongdoing.
Mr Cunha, who has also been named for investigation in the Petrobras case, said he was considering a request for Ms Rousseff’s impeachment, submitted by civil activist group the Free Brazil Movement, and was consulting legal experts and Congress’s own counsel. “In the next 30 days, I will have a position on that,” he said.
The PMDB would prepare its own candidate for the next presidential elections with the partnership with the PT “practically finished”, he said.
“It’s that story of a marriage in which the couple have already been sleeping in separate houses for some time. But that’s not to say the PMDB does not support governability,” he said.
The ratcheting up of the rhetoric by Mr Cunha comes as markets are closely watching Ms Rousseff’s government to see if it can deliver a fiscal adjustment to restore balance to public finances and prevent Brazil losing its coveted investment grade credit rating.
Economists have been increasing their forecasts for the deepening of a recession in Brazil this year, with Santander on Thursday revising its estimate for a contraction in gross domestic product of 1.9 per cent from 1.5 per cent.
“The fiscal and monetary policy tightening, Brazilian real depreciation, current crisis in the oil sector, political uncertainty, and business confidence at the lowest level of its historical series sustain our expectation of a strong contraction in investments this year,” Santander said.
Last updated: July 16, 2015 9:56 pm
Lula da Silva faces criminal inquiry
Former Brazilian president Luiz Inacio Lula da Silva
The move by prosecutors came as the leader of Brazil’s lower house of Congress, Eduardo Cunha, said he was seeking legal advice on whether there were grounds to impeach Dilma Rousseff, Brazil’s president and Mr Lula da Silva’s protégé, over separate allegations of impropriety.
Mr Lula da Silva has been accused of irregularities in his dealings with Odebrecht, the nation’s largest construction conglomerate, in relation to contracts it won for projects in Africa and the Caribbean. He has denied any wrongdoing.
“The prosecutor decided to open a [formal] inquiry before the time limit for doing so expired,” a spokesman for the Federal district public prosecutor’s office said.
The Brazilian real weakened on the news 0.46 per cent against the dollar to R$3.15.
The probe into the left-leaning former president, who ended his two four-year terms in power in 2010 with record approval ratings, is the most serious threat yet to Brazil’s ruling Workers’ party, or PT, which he helped to found.
Época, a weekly magazine, alleged in May that Mr Lula da Silva had improperly used his influence to obtain loans from Brazil’s state development bank BNDES for Odebrecht’s dealings in Cuba and the Dominican Republic, often travelling to meet the countries’ leaders at the company’s expense.
The magazine also accused Mr Lula da Silva of similar influence peddling in Ghana and Angola.
A spokesman at Mr Lula da Silva’s thinktank, Instituto Lula, said on Thursday that it received news of the formal inquiry “with surprise”.
“But we also received the news with tranquillity out of certainty of the honesty and legality of the activities of the Institute and of the ex-president,” the institute said.
Separately, Mr Cunha, a congressman with the PMDB, the PT’s main coalition partner, said Brazil was suffering a “grave” crisis in governability.
Ms Rousseff’s hold over Congress has diminished since elections last year in which the PT performed poorly while her own approval ratings have plummeted.
Her lack of popularity has been fuelled by the Petrobras scandal, in which ruling coalition politicians are alleged to have collaborated with former directors and contractors to extract bribes from the company. She was chairman of the company when much of the alleged activity took place but has denied wrongdoing.
Mr Cunha, who has also been named for investigation in the Petrobras case, said he was considering a request for Ms Rousseff’s impeachment, submitted by civil activist group the Free Brazil Movement, and was consulting legal experts and Congress’s own counsel. “In the next 30 days, I will have a position on that,” he said.
The PMDB would prepare its own candidate for the next presidential elections with the partnership with the PT “practically finished”, he said.
We . . . received the news with tranquillity out of certainty of the honesty and legality of the activities of the Institute and of the ex-president
- Instituto Lula“It’s that story of a marriage in which the couple have already been sleeping in separate houses for some time. But that’s not to say the PMDB does not support governability,” he said.
The ratcheting up of the rhetoric by Mr Cunha comes as markets are closely watching Ms Rousseff’s government to see if it can deliver a fiscal adjustment to restore balance to public finances and prevent Brazil losing its coveted investment grade credit rating.
Economists have been increasing their forecasts for the deepening of a recession in Brazil this year, with Santander on Thursday revising its estimate for a contraction in gross domestic product of 1.9 per cent from 1.5 per cent.
“The fiscal and monetary policy tightening, Brazilian real depreciation, current crisis in the oil sector, political uncertainty, and business confidence at the lowest level of its historical series sustain our expectation of a strong contraction in investments this year,” Santander said.
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