Ex-leader of Brazil's lower house arrested on graft charges

Eduardo Cunha, the former head of Brazil's lower house of Congress who led the impeachment drive against former President Dilma Rousseff, was arrested on Wednesday on corruption charges.

Cunha, a one-time leader of the Evangelical Christian caucus in the House of Deputies, was arrested on charges he received millions in bribes from a purchase of an oil field in Benin by state-run oil company Petrobras.

Cunha's detention is the latest high-profile action in the sprawling investigation into a massive graft scheme at Petrobras. Prosecutors say Brazil's biggest construction and engineering firms paid billions in bribes to executives at the oil firm and politicians in return for bloated contracts.

In a separate case before a federal court in Rio de Janeiro, Cunha is also charged with taking $5 million in bribes in relation to contracts for two drillships for Petrobras, which is known formally as Petroleo Brasileiro SA.

Leonardo Cavalcanti, a spokesman for the federal police, said Cunha was arrested in the capital Brasilia. He was flown Wednesday afternoon to the southern city of Curitiba, where he will stand trial before anti-corruption Judge Sergio Moro.

Cunha has said he is innocent. In comments released by his lawyers and published on the G1 website of the Globo TV network, he called his arrest as "an absurd decision, without motive," and vowed he would fight to be freed soon.

Cunha was expelled from the lower house last month in an overwhelming vote by his peers in the chamber. That stripped him of legal protections that effectively give politicians immunity from all courts except the severely backlogged Supreme Court. Judge Moro, by contrast, is known for acting with speed and Cunha's case could be ruled upon before the end of the year.

Brazil's federal prosecutors said in an emailed statement that Moro accepted their request that Cunha be subject to "preventative" arrest. They said there was a risk of Cunha obstructing the investigation and raised "the concrete possibility" he would flee Brazil because of "hidden funds abroad and his dual nationality."

That means that the former congressman, who also holds Italian citizenship, can be held for an indefinite period.

To date, nearly 200 executives and former politicians - including popular former President Luiz Inacio Lula da Silva - have been charged in the Petrobras probe and 83 have been found guilty. Prosecutors are seeking 38 billion reais ($12 billion) in damages from companies and individuals involved.

Cunha is a longtime member of the Brazilian Democratic Movement Party (PMDB) of current President Michel Temer, who served as Rousseff's vice president and took over in May during the impeachment process against her. Cunha in August became the first sitting politician to be charged in the case.

Two sources close to Temer told Reuters that the order at the presidential palace is to remain silent on Cunha's arrest, mainly because of concerns that he may turn state's witness and implicate fellow PMDB politicians, whom Cunha lashed out against for not defending him against the recent criminal charges.

Cunha is a lightning rod of ire for those who opposed Rousseff's impeachment, carried out on the grounds that she broke budgetary rules.

Rousseff and her supporters say she was the victim of a "coup" carried out as an attempt to halt the Petrobras probe - and they pointed to Cunha as the crudest example of that effort.

Federal prosecutors in Curitiba, who have led the Petrobras investigation, have said they will not allow any politician to halt their work - and fought back vocally against scattered attempts by lawmakers to impede their efforts.

Source: Reuters

Brazil's ex-president Lula to stand trial for corruption

Brazil's former president Luiz Inacio Lula da Silva will stand trial on corruption charges, a crusading federal judge ruled on Tuesday, adding more turbulence to the country's political landscape.

Judge Sergio Moro said that Lula, who served as president from 2003-11 and has for two decades been an iconic and powerful political force in Brazil, will face charges of accepting 3.7 million Brazilian reais ($1.14 million) in bribes connected to a sweeping kickback probe at state-run oil company Petrobras.

Moro wrote in his ruling that according to the prosecutors' charges, Lula was a "direct beneficiary" of bribes from OAS SA [OAS.UL], one of the engineering and construction firms at the center of the graft scandal, and therefore must stand trial.

The corruption case will also put on trial Lula's wife, Marisa Leticia Lula da Silva; OAS Chief Executive Jose Aldemario "Leo" Pinheiro; Paulo Okamotto, the president of the Lula Institute, and four others.

In an emailed note late on Tuesday, Lula's lawyers again said their client had committed no crime and labeled Moro as a "impartial" judge who was on a witch hunt to see the former leader jailed.

Lula, speaking via video link, told an event held by his lawyers in New York that the charges were a "farce."

"What's happening isn't getting me down, but just motivates me to go out and talk more," said Lula, adding that he "will keep fighting."

Tuesday's events capped an incredibly choppy few weeks for Brazil.

Lula's hand-chosen successor Dilma Rousseff was found guilty by the Senate of breaking budget rules and dismissed from the presidency late last month.

Her successor, former vice president Michel Temer, has abruptly pulled the country to the political and economic right, and is trying to boost Brazil out of its worst economic recession since the 1930s.

Moro's decision may prevent Lula from making a political comeback in the 2018 presidential campaign. It could also derail any hopes the Workers' Party (PT) had of returning to power, or possibly even surviving, according to some experts.

Despite the corruption allegations facing the PT and several of its former coalition parties, the most recent polls have shown Lula remains a leading candidate for 2018.

Lula was charged with three counts each of corruption, which carries a maximum sentence of 16 years per count, and money laundering, with a possible sentence of up to 10 years per count.

If found guilty, however, the sentence would be determined by the judge, and Lula and the others to stand trial would have chances to appeal.

TURN OF FORTUNES

Nonetheless, simply putting on trial the former president who left office with an 83-percent approval rating sent shockwaves across Brazil.

Lula was widely adored at home and abroad for his exceptional life story, rising from poverty to the presidency, and of being the charismatic, rough-talking former union leader who led massive strikes in the 1980s that helped topple an entrenched military dictatorship.

"It's a huge, grave blow to Lula's myth," said Claudio Couto, professor of political science at the Getulio Vargas Foundation (FGV) university in Sao Paulo. "Any condemnation of Lula would also end up being a condemnation of the Workers Party."

The decision and the Petrobras probe as a whole make up a watershed moment for the fight against corruption in Brazil, experts say, where for centuries the rich, powerful and politically connected have enjoyed impunity.

Now they are the target of this country's most sweeping anti-corruption push ever, which became known to the public two years ago. It has since seen nearly 200 people, including top executives and politicians, facing corruption charges and 83 people already found guilty and jailed.

Federal prosecutors leveled charges against Lula last week, labeling him as the "commander" of the Petrobras graft scheme that they say has caused an estimated 42 billion reais ($12.6 billion) in losses to Petrobras shareholders and tax payers.

It was the first time that Lula, 70, has been charged by federal prosecutors for involvement in the political kickbacks scheme at Petrobras.

He has been indicted separately by a court in Brasilia for obstruction of justice in a case related to an attempt to persuade a defendant in the Petrobras scandal not to turn state's witness.

Lula's lawyers have said prosecutors lacked the evidence to back up their accusations and that charges against him amount to political persecution to stop him from running for president in 2018.

But experts say that if the prosecutors' charges are proven, the case against Lula is essential to demonstrate a new strength in rule of law and the determination of institutions to prosecute corruption at the highest levels.

"It's a crucial and critical juncture for Brazil, to try such a powerful figure like Lula and, if he is guilty, to send him to jail," said Carlos Pereira, a professor of public policy at FGV in Rio de Janeiro and one of Brazil's top experts on corruption.

"Voters now see powerful white guys going to jail - not just poor, black Brazilians, as was always the case."

But Pereira also warned that the political fallout if Lula were to be found guilty and sent to jail would be enormous, and that the chances of the PT "disintegrating" even more likely.

"The PT has been an incredibly important party for the re-democratization of Brazil, being the main force that represents leftist groups and created policies that promoted unprecedented social inclusion in our unequal society," he said.

"Without the PT, it may take a long time for smaller, left-wing parties to find a new 'nucleus' to gravitate around, to provide a healthy counterweight within the political system to the more right-leaning parties," Pereira added.

Source: Reuters