UPDATE 1-Venezuela's Capriles goes on offensive after graft accusations
* Opposition candidate seeks to minimize scandal
* Capriles mocks Chavez's election manifesto
* Political passions grow ahead of Oct. 7 vote
CARACAS, Sept 14 (Reuters) - Venezuela's opposition challenger Henrique Capriles sought to deflect attention from a corruption scandal by throwing the accusation back at President Hugo Chavez on Friday in an escalating political brawl ahead of the Oct. 7 vote.
Already in an uphill fight to end Chavez's 14-year socialist rule of the South American OPEC member, Capriles' camp suffered a setback on Thursday when government lawmakers released a video of an aide taking cash in dubious circumstances.
Capriles immediately fired the aide, Juan Carlos Caldera, and tried to turn the incident in his favor by saying that he - unlike Chavez - would not tolerate any whiff of misconduct within his team.
"If this government and its candidate took on corruption, they'd have no ministers left," Capriles told a rally.
Transparency International ranks Venezuela as the second-most corrupt nation in the Americas, after Haiti.
Opposition critics revel in tales of Chavez allies who in a matter of years have moved from slums to plush homes and bought yachts and luxury cars.
Government officials constantly try to link Capriles with the pre-Chavez era during which politicians for decades pocketed oil revenues while poverty deepened.
Chavez in a late-night interview said Capriles moved too quickly to "wash his hands" of the matter.
"Imagine falling into the hands of these people, who turn knives on each other," Chavez said in the televised interview.
"The first thing you have to do is investigate, not come out condemning him in 10 minutes or a half hour," Chavez said. "Imagine a president like that!"
At a rally in western Lara state, Capriles mocked Chavez for the lofty contents of his election manifesto. Its goals include deepening socialism, striving for a "new international geopolitical" dynamic, and helping to "save" mankind.
"They want to save the human race ... (but) where do they propose the solution to the problems you are living with every day? They don't mention them because this government is worn out," Capriles said, holding a copy of Chavez's manifesto.
"Where's the solution to the electricity problem? Where's the solution to the water problem, the public services?" he asked, referring to power cuts and other day-to-day problems.
Capriles, a 40-year-old state governor who says Brazil's mix of capitalism and strong social welfare programs is his economic model, seeks to project an image of youth, energy and attention to grassroots problems.
He wants to end Chavez's statist economics - especially the nationalization program - and his alliances with anti-U.S. governments like Syria, Iran, Belarus and Cuba.
WHAT HAPPENS AFTER OCT. 7?
Chavez, 58, who has outwitted the opposition time and time again since taking power in 1999, is promising Venezuela's 29 million voters to extend his socialist crusade, spread oil wealth and overturn historic injustices.
Most of the best-known pollsters put Chavez ahead by 10 points or more. But opinion polls are notoriously controversial and divergent in Venezuela.
Capriles' numbers have crept up in recent weeks. One major pollster on Friday put him just ahead of Chavez, 48.1 percent to 46.2 percent - neck-and-neck given the margin of error.
If Chavez wins easily, he would have carte blanche to continue his socialist experiment, perhaps seeking to extend the state's grip on those areas of the economy - such as banking - still left largely in private hands.
A close result could result in protests and fraud claims from either side, leading to possible unrest in a polarized nation full of guns.
The government hopes the video of Capriles aide and opposition legislator Caldera, which shows him taking money in return for promising access to Capriles, will tarnish the candidate's image.
But Caldera has said Capriles had nothing to do with it and that the money - about $9,300 from a businessman - was a legitimate contribution to his mayoral campaign.
"The government is doing this to try and put the brakes on something that is unstoppable," he told a television station. "They are trying to stop this with mud and dirty tactics."
Both sides have leaked documents that are purported to come from each others' camps in recent days.
The government has displayed a supposed secret "neoliberal" economic package planned by Capriles, while opposition activists have circulated what they say is an internal campaign document from the Chavez camp with instructions on how to sully the opposition and exalt the president.
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