Lula’s legal woes threaten legacy of popular ex-leader

In 2014 when the investigation into corruption at Brazil's state oil giant Petrobras was still in its initial stages a former senior manager at the firm gave an interview to Valor Econômico newspaper.

Venina Velosa da Fonseca related how when she brought up with her boss reservations about what was going on inside the company, he pointed to the official portrait of Luiz Inácio Lula da Silva that hung in public buildings across Brazil during his presidency and asked her if she wanted "to bring down everyone".

Back then, such a prospect seemed remote despite all the noise the affair was making in the media.

But now, two years on, the scandal has already helped topple Lula’s protégée Dilma Rousseff from the presidency, caused the removal of the head of the lower house in congress, seen some of the country’s most powerful businessmen jailed and now finally reached Lula’s door.

On Wednesday he was for the first time formally charged in the affair, accused of personally benefiting from the Petrobras scheme. The charges arise from the mysterious case of a beachfront triplex that witnesses have linked to Lula’s family, though he denies ownership.

As well as Lula’s wife, among the other seven charged on Wednesday is Léo Pinheiro, a construction magnate whose plea bargain testimony could yet land his close friend in jail. Among the unflattering terms used by federal prosecutor Deltan Dallagnol to describe Lula was “the maximum commander of the corruption scheme”.

Though he vehemently denies the charges the development is another serious setback for Lula, coming so soon after Rousseff’s impeachment last month.

The accusations will likely distract from his Workers Party's campaign to paint the new administration of Rousseff's replacement, President Michel Temer, as illegitimate.

Electoral implications

It will also further complicate the party's efforts to avoid an electoral meltdown in next month's local elections. Polls show its candidates are only competitive in one of the country's state capitals, and that in the insignificant jungle outpost of Rio Branco.

If the polls are confirmed at the ballot box there will be important implications for the general election in 2018. In Brazil mayors are crucial in helping manage the vote in national elections. A poor showing in next month’s local vote by the Workers Party will dampen its already reduced prospects in presidential and congressional contests in two years time.

Those difficulties could be compounded by Lula’s legal woes. He has all but declared himself a presidential candidate for the sixth time, aware that his party has no other competitive option. Lula, though on the defensive, retains a solid base of support among those nostalgic for the economic and social advances achieved during his eight years in power.

But now he might not be available. If Sérgio Moro, the federal judge in command of the investigation into Petrobras, condemns Lula his verdict will pass to a federal appeals court in the southern city of Porto Alegre. If it confirms Judge Moro's sentence, Lula will fall foul of a law designed to bar criminals standing for public office and will be ineligible to stand in 2018. Worryingly for Lula the court in Porto Alegre has endorsed nearly all the dozens of sentences Judge Moro has issued in the affair so far.

For Lula such an outcome would be a grave blow to his legacy as one of the most successful and popular Brazilian presidents of all time. For his Workers Party, shorn of its one competitive candidate, it could signal an existential threat to its future as a national force.

Already Brasília is awash with rumours that many within the party, fed up with what they perceive as the damage been inflicted on it by the leadership group around Lula, are discussing among themselves a breakaway after next month's vote.

In an already adverse political environment that would make an eventual return to office by the only left-wing party to take power in what remains one of the world’s most socially unjust societies even more difficult.