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Financials

UPDATE 1-Brazil's opposition attacks Rousseff over scandal

* Opposition sees chance to set agenda with scandal

* Unlikely to hurt Rousseff unless direct link emerges

* Rousseff still favored to win in first round

(Adds finance minister in paragraph 5)

By Stuart Grudgings

RIO DE JANEIRO, Sept 2 (Reuters) - Brazil’s struggling opposition candidate has gone on the attack against presidential election front-runner Dilma Rousseff, accusing her of involvement in a brewing scandal over illegal access to banking details.

The accusations, which Rousseff denies, are unlikely to threaten the ruling coalition candidate’s commanding lead in opinion polls ahead of the Oct. 3 vote unless evidence emerges linking her directly to the illegal acts, analysts said.

The opposition’s Jose Serra accused Rousseff this week of being behind the illegal tapping of his daughter’s financial records last September.

That follows evidence reported by the media in recent weeks that the personal financial details of four people linked to the opposition PSDB party, including its vice president, were illegally accessed.

Finance Minister Guido Mantega said on Thursday he had no plans to fire the head of the national tax authority. Public prosecutors are investigating the agency over its role in the case.

The opposition says the secrecy violations are an attempt to build damaging evidence against its campaign, and on Wednesday appealed to the country’s top electoral court to quash Rousseff’s candidacy over the accusations.

“This is a vile, criminal and compromising process by political forces working against us. These political forces are involved with Dilma Rousseff,” PSDB president and Serra campaign chief Sergio Guerra told reporters on Wednesday.

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For a factbox on Brazil political risk click [ID:nRISKBR]

For full coverage of Brazil’s election: [ID:nBRAZIL]

Graphic on all polls: link.reuters.com/vux47n

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The scandal, which dominated newspaper front pages on Thursday, is a rare opportunity for the opposition to set the agenda and put Rousseff on the defensive, and was highlighted in its lunchtime television campaign slot.

The former chief of staff to President Luiz Inacio Lula da Silva has surged to a polling lead of over 20 points on Serra, riding a booming economy and Lula’s immense popularity to bring an outright victory in the first voting round within reach.

TOUGH QUESTIONING

The former leftist militant came in for tough questioning over the allegations in a Wednesday night interview on the SBT television station. She responded that Serra’s allegations of her involvement were “frivolous” and without basis.

The access to Serra’s daughter’s details was made before her campaign even existed, Rousseff said, adding that the authorities should investigate the cases and punish those responsible if necessary.

The allegations are unlikely to hurt Rousseff for now because there is no firm proof linking the illegal acts directly to her campaign, said political analyst Rafael Cortez of Tendencias consultancy in Sao Paulo.

“There would have to be some kind of new finding that touched more directly someone important in Dilma’s campaign,” said Cortez, who believes Rousseff will win the majority of votes she needs on Oct. 3 to avoid a run-off vote.

Lula, who is taking a major role in Rousseff’s campaign, advised her on Wednesday to distance herself from the allegations and not allow Serra to set the agenda, the Estado de Sao Paulo newspaper reported sources as saying.

Lula’s ruling coalition has weathered several corruption scandals in recent years. A more sensational scandal than the current one failed to disrupt his re-election in 2006 when people linked to the ruling Workers’ Party were caught trying to buy a dossier against the opposition with stacks of cash. (Additional reporting by Vladimir Goitia in Sao Paulo, Editing by Xavier Briand)

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