Analyst: probe could taint image of Brazil’s ex- president

SAO PAULO (AP) — An investigation into allegations of influence peddling by Brazil’s former President Luiz Inacio Lula da Silva could taint his image and weaken the ruling Workers’ Party, analysts said Friday.

The Federal Prosecutor’s Office announced the investigation on Thursday — apparently the first time the popular ex-president has been linked to a criminal investigation.

The Prosecutor’s Office said it’s investigating whether Silva was paid to sway foreign leaders into awarding inflated contracts to the Odebrecht construction firm and push Brazil’s state development bank to give the company well over $1 billion in low-interest loans. Reports of the alleged incidents emerged after he left office.

Under Brazilian law, influence peddling to obtain advantages from a public servant or institution is illegal.

The prosecutor’s office said that Silva’s efforts helped Odebrecht obtain contracts to build infrastructure projects in Panama and Venezuela and that there are “strong indications” that the former president also helped the company get contracts in several other countries.

The Sao Paulo-based Lula Institute has said the former president denies any wrongdoing.

“It is a completely irregular, untimely and unjustified procedure,” the Institute said in a statement. “We will take all the necessary legal measures to correct this arbitrary act.”

Political scientist Rosemary Segurado of Sao Paulo’s Catholic University said the probe could weaken the Worker’s Party and hurt its chances in the 2018 elections. The probe is the first time Silva’s name has emerged in connection with a criminal investigation, she said.

Segurado added that the investigation could worsen the crisis for Silva’s hand-picked successor, President Dilma Rousseff. Her popularity has plunged amid political and economic turbulence, including what prosecutors say is the biggest corruption scheme yet uncovered in Brazil — a sprawling system of kickbacks at state-run oil company Petrobras.

The new probe of Silva is separate from the Petrobras case, and neither he nor Rousseff have been implicated in the scandal that allegedly saw Odebrecht and other major construction and engineering firms pay bribes to oil company executives in exchange for winning inflated contracts.

Prosecutors allege that some of the money was funneled back to the campaign coffers of the Workers’ Party and its allies. More than 50 political figures, including 33 members of Congress, are being investigated in the Petrobras case.

Marcelo Odebrecht, the president of Odebrecht, was taken into custody a month ago in connection with the Petrobras scheme. He faces charges of forming a cartel, money laundering and diversion of public funds.

Political scientist Segurado said the crisis deepened Friday when Eduardo Cunha, the speaker of the lower house Chamber of Deputies, announced he will no longer support Rousseff’s government.

Cunha, whose Brazilian Democratic Movement is the main party in Rousseff’s governing coalition, told reporters the government was pressuring prosecutors to link him to the Petrobras scandal.

His announcement came one day after it was revealed that a defendant who turned state’s evidence said Cunha had taken $5 million in bribes. Cunha has denied that.

Rousseff’s office said the same in a statement, adding it was confident Cunha will remain impartial in his role as lower house speaker. Cunha, however, said Thursday he was studying legal arguments for Rousseff’s possible impeachment for alleged campaign finance irregularities.

Hours after dropping support for Rousseff’s government, Cunha authorized creation of a congressional investigative panel to examine loans created by the government’s state development bank.

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