March 7, 2010 / 6:32 PM / 10 years ago

Brazil ruling party treasurer named in scandal

SAO PAULO, March 7 (Reuters) - The treasurer of Brazil’s ruling Workers’ Party defrauded investors in 2005 while director of a real estate cooperative to illegally finance party campaigns, a newsmagazine reported on Sunday, citing unnamed officials in a state run by an opposition party.

If the scandal gains traction in the media, it could derail the plans of PT Treasurer Joao Vaccari to oversee the campaign financing of President Luiz Inacio Lula da Silva’s planned successor, Chief of Staff Dilma Rousseff, in October elections.

Lula, completing his second term, is ineligible to run in 2010.

The report in Veja, Brazil’s largest-circulation newsmagazine, said the public ministry of Sao Paulo had opened an investigation into whether Vaccari defrauded investors out of at least 31 million reais ($17 million) when he was director of the Bancoop real estate cooperative and channeled the funds into the off-the-books campaign coffers of PT party members.

The report, which was widely carried by other media, did not provide any named sources.

Reports of corruption scandals often break before important elections in Brazil, with serious political consequences. In 2001, newspapers ran front-page photos of stacks of illegal campaign cash that ended the early presidential run of Roseane Sarney, daughter of former President Jose Sarney.

But Lula emerged as popular as ever after the so-called Mensalao scandal broke during his first term, in which PT party leaders were indicted for running off-the-record accounts to buy lawmakers’ votes. Lula was never directly implicated, though several members of his inner circle stepped down.

Vaccari denied on the PT Web site that he was guilty of wrongdoing and said he and his party were at the disposal of the authorities and would supply any necessary documents.

“There has never been any type of accusation against me nor have I ever responded to any criminal or civil process,” he wrote.

In a separate statement, Bancoop said that the accusations that appeared in Veja were not new and that it had already responded to them properly.

Rousseff has been closing in the polls in past weeks on Sao Paulo Governor Jose Serra, of the centrist PSDB party, who has been favored to win the presidency in recent months. ($1=1.789 reais) (Reporting by Pedro Fonseca and Reese Ewing; Editing by Eric Walsh)

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