Global Independent Analytics
Natalia Rezende
Natalia Rezende

Location: Brazil

Specialization: Politics, International relations

Brazil’s Ex-President Lula Forcibly Detained for Corruption Inquiry

Ex-President Lula has been playing a strategic game of emotional appeal using what the party has done during its time in the Executive Branch

The Lava Jato operation is an investigation involving the Office of the General Attorney of the Republic, the Federal Police, the Superior Electoral Court, the Supreme Federal Court, and most of the Federal Justice apparatus.  

The operation began in March of 2014 with a small investigation of an alleged illegal foreign exchange remittance involving the owners of a Brasilia gas station and a black market dollar dealer, Alberto Youssef, which was coordinated by Sergio Moro, a federal judge in the southern city of Curitiba. The Federal Police came across what seemed to be the corrupt association between private companies, state companies, public institutions and political parties. The first part of the operation has finished with the sentencing of the former director of the state oil company, Petrobras, Paulo Costa, for corruption. At the same time, another corruption scandal involving the purchase of the oil refinery Pasadena by the same Petrobras came up. Current President Rousseff, who was the head of the board of the state company, declared she was misled by the Director of International Affairs, Nestor Cerveró.

After many leniency agreements, Youssef and Costa detailed the Brazilian oil company corruption scheme. Money was diverted from Petrobras´ coffers and used for illicit payment involving many political parties and private institutions. With the continuation of the operation, many lobbyists, public works contractors, and Petrobras’ top managers were sentenced by the local court. In May 2015, the Attorney General of the Republic, Janot, presented a list of many of the top political agents – including the President of the House of Deputies Eduardo Cunha (PMDB), and the President of the Federal Senate, Renan Calheiros (PMDB), to be investigated by the judiciary. The Supreme Court authorized the investigation. 

These events bring a lot of political instability. Since then, the relations between Executive and Legislative became harder, and President Rousseff has been facing increasing difficulty in Congress. The major coalitional party, the PMDB, assigns the responsibility for the investigations to the Executive once the main institutions are linked to the Public Ministry; and the name of party leaders are included on the Attorney General of the Republic’s list.

On the 14th stage of the Lava Jato operation, the CEOs of the construction companies Andrade Gutierrez, Odebrecht and OAS were sentenced on charges of corruption, cartel formation, and money laundering; those companies bribed executives of Petrobras. Both Andrade Gutierrez and Odebrecht are currently under investigation for allegedly having illegally financed the presidential campaigns of President Rousseff (2010 and 2014), and for continuing to pay for Lula’s luxurious private life, even though the president denies all charges of bribery in the form of a three-floor penthouse, a beach ranch, both refurbished by the contractors themselves, and about 30 million Reais in direct payment for very fishy jobs, both by his two sons and himself.  Congress may either impeach the President or kick him out of office by the Electoral Superior Court if such claims are proven to be true by the task force.

In the case of the President of the House of Representatives, Cunha (PMDB), besides the existence of foreign accounts with undeclared funds, the congressman is accused of receiving bribes from the Petrobras corruption scandal. Cunha is indicted by the Office of the Attorney General of the Republic for the payment of US$ 5 million to facilitate the hiring of drilling ships by Petrobras, constructed by Samsung Heavy Industries, to operate in the Gulf of Mexico and Africa. Last Thursday the Brazilian Supreme Court formally accepted the charges against Cunha. However, the STF did not decide on his removal from the office of Speaker of the House of Representatives, as put forth by the Attorney General of the Republic. In the case of the President of the Senate, Calheiros (PMDB) the Office of the Attorney General of the Republic requested a legal investigation of his financial transactions to bring him before the STF – the Supreme Court. Calheiros is denounced by receiving illegal payments in exchange for Parliament's amendments.

In November, Delcídio do Amaral, a ruling work senator who runs the senate’s economic affairs committee and PT leader in the Senate, and banker André Esteves, the billionaire CEO and controlling shareholder of BTG Pactual SA, were arrested and accused of having acted to obstruct the investigation. The Brazilian Justice authorized the arrest after seeing evidence that Amaral had planned the flight of Petrobras’ former international director, Nestor Cerveró, in return for his silence. STF said evidence also suggested Amaral had offered R$ 50,000 in monthly assistance for Cerveró’s family, to be financed by Esteves.

On February, 29, José Eduardo Cardozo left the office of Justice, alleging personal reasons. He will head the Office of the Federal Attorney General (AGU) and the Attorney General of Bahia; Wellington César Lima e Silva was appointed the Ministerof Justice[1], but a circuit judge in Brasilia put the nomination on hold arguing that the Attorney General of Bahia could not be nominated. The government has appealed the decision.

The operation has already sentenced executives of the biggest Brazilian construction firms, top managers of state companies, lawyers, lobbyists, bankers, party treasurers, party marketers and a sitting senator.

The Case of Lula

Brazilian Justice has been probing allegations about the ex-President’s - and other members of the Workers Party’s - involvement in a scheme of money laundering from kickbacks and granting benefits to companies in exchange for favors. Lula has repeatedly denied wrongdoing.

Last Friday, ex-President Lula was taken forcibly by court order to give evidence in a corruption inquiry .The investigators in charge of the probe said that the investigations on the ex-president Luiz Inacio Lula da Silva and his wife and sons are concentrated on the large volume of payments to the Lula Institute and conferences given by the ex-President, which were paid by the big contractors investigated in the operation. Lula was forcibly taken to testify on the 24th stage of the operation, which took place on March, 4th. Investigators also suspect supposed favoritism toward the contractors that refurbished the two luxurious properties in Atibaia and Guarujá (SP). According to Carlos Fernando Lima, one of the public prosecutors in the task force, 60% of the donations to The Lula Institute, between 2011 and 2014, were made by the contractors, and also they are responsible for 47% of the values paid to LILS[2] conferences. They are Odebrecht, OAS, Queiroz Galvão, UTC, Camargo Correa and Andrade Gutierrez.

As Lula Institute, the institute of the ex-President Fernando Henrique Cardoso, IFHC, is also under investigation. According to PF the Odebrecht moves money in foreign banks to pay bribes due the Petrobras contracts. According to the PF opinion the IFHC has received an amount of R$ 975,000 from Odebrecht between the months of December 2011 and November 2012.  

The analysis of the books of The Lula Institute and LILS was requested since, in the words of the representative of the Federal Revenue Roberto Leonel de Oliveira Lima, there is "operational and financial confusion between the two entities. LILS is an undertaking whose head office is in the residential address of the ex-president and it has no operational activity. The main activities are the conferences given by the ex-president. Then, the whole operational activity and logistics are made by employees and persons linked to the Institute Lula." The Lula Institute got R$ 20.7 of the R$ 35 million paid out. LILS took R$ 10 of a total of R$21 million. Regarding the distribution of the money; besides benefiting people linked to the Worker's Party, close relatives of the ex-president were benefitted by means of payments to companies in which they are partners. In addition to all this, the Lula Institute was itself headed at one time by ex-treasurer of the presidential campaign, who was himself accused by collaborators as having taken approximately R$ 3 million, which came from contracts with Petrobras, which, once again, shows a possible connection of the companies themselves to illicit payments and the party’s corruption scheme.

Ex-President Lula denied allegations of wrongdoing and accused prosecutors of abusing their authority to weaken him politically, and said his detention on Friday was a politically motivated media spectacle, vowing to fight charges in a corruption scandal. The Lula Institute described the raids and detentions as an “affront to the country and the rule of law” and accused the Lava Jato prosecutors of an “arbitrary, illegal and unjustifiable” act. President Dilma declared nonconformity with the “unnecessary enforcement… imposed on ex-president”. The President said “I express my full dissatisfaction with the fact that a former president of the Republic, who voluntarily provided information before the competent authorities on several occasions, is now subjected to an unnecessary coercive order to make a statement.”

According to the public prosecutor, Costa, “within a republic, even illustrious and powerful people must be subject to judicial scrutiny when they are suspected of criminal activity, which is based, in this case, on dozens of testimonies and extensive documentary evidence. The former president deserves respect because of the dignity of the office he held, but this does not mean he is immune to an investigation,” the Lava Jato have made many coercive orders, so it was applied not only for the ex-President. The Brazilian Media and public opinion are exaggerating the action. According to federal judge Moro, all possible care has been taken to preserve the ex-President’s image in order to avoid protests and conflict.   

As it is known, the improvement of the democracy and its political institutions’ maturation depends on the impartiality of the agents involved in the process. It is clear that Brazilian institutions are gradually improving themselves and playing a cooperation game in order to guarantee the democratic state of law. However, in the case of the Lava Jato operation, the impartiality of the federal judge, Moro, who runs the operation, is being questioned by specialists and civil society, and the legitimacy of the judicial action on Lula’s case still divides opinions. The country is more deeply polarized than ever.  

The controversial interpretation given by the Brazilian political parties and the press

The point is not the judicial procedures of the Lava Jato operation, but the form in which the case has being covered by the national press, and the role played by the national parties including the Workers’ party (PT) and the opposition party Social Democratic Party (PSDB).

Ex-President Lula has been playing a strategic game of emotional appeal using what the party has done during its time in the Executive Branch – such as cash transfer programs like Bolsa Família and the policy of racial quotas – vague slogans such as “scammer judiciary,” “offensive against the Party,” etc – calling upon social activism to defend himself against legal prosecutions and to fight against the operation. The PT has been using the 'divide and conquer' strategy and manipulates public opinion to invalidate the operation and the federal judge, Moro, in order to reconstruct the Party’s credibility.

On the other hand, the opposition’s parties play the active game of the opposition, mobilizing people to go to the streets and claim the impeachment of the President, and work at creating further aggravated instability in the political and social environment.

In addition, the Brazilian press plays the “mental contamination” game, influencing the people to choose one side (either against the Lula government and PT members or against the Lava Jato operation) making civil society more disoriented and creating an extreme social polarization.

There are no irregularities in criminal proceedings of the Lava Jato and society must await the outcome of ongoing investigations. Ex-President Lula and others under investigation have the legal right to defend themselves, but society should not ignore the presented evidence and analyze rationally the indications of corruption involving ex-President Lula, the PT’s and other parties members.

 


[2] L.i.l.s. palestras eventos e publicacoes ltda is a Brazilian service company responsible for Lula’s  presentations.  
 

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