March 4, 2016 / 7:29 PM / 3 years ago

Arrest of Lula, hero to millions, in corruption probe stuns Brazil

RIO DE JANEIRO (Reuters) - Rising from a shoeshine boy to become Brazil’s first working class president, Luiz Inácio Lula da Silva is a hero to millions of Brazilians and the very face of change in Latin America’s biggest country.

Former Brazil's President Luiz Inacio Lula da Silva gives a statement to the media after being detained for questioning in a federal investigation of a bribery and money laundering scheme in Sao Paulo, Brazil, March 4, 2016. REUTERS/Paulo Whitaker

His detention for questioning on Friday in a massive corruption probe may also make him a symbol for many Brazilians of another trend: the end of impunity for the nation’s powerful.

A 70-year-old metalworker and union leader who governed Brazil from 2003 until 2010, Lula presided over an economic boom that raised Brazil’s profile on the world stage, lifted more than 40 million people out of poverty and enabled him to hand-pick a successor candidate, President Dilma Rousseff.

But that has all fizzled, with Brazil in recession, Rousseff scrambling for political survival and millions of Brazilians lamenting a lost chance for their country to enter the ranks of developed nations.

Now, prosecutors allege that Lula’s administration oversaw a huge kickback scheme through Brazil’s state-run oil company Petrobras (PETR4.SA) that provided funding for the campaigns that kept his Workers’ Party in power for the past 13 years.

“We could never have imagined what’s happening now in Brazil,” said Gil Castello Branco, founder of Contas Abertas, a government accountability watchdog in the capital, Brasilia. “Civil society is now truly believing in a new era, with less corruption and impunity.”

Lula was not formally charged on Friday and was released after three hours of questioning by police.

But prosecutors say there is strong evidence that illicit money was used to finance Workers’ Party campaigns and that Lula received payments and favors from companies in exchange for contracts with Petroleo Brasileiro SA, as the company is officially known.

Lula has denied breaking any laws.

After his release on Friday, he appeared at the Workers’ Party headquarters and returned to the fiery rhetoric that marked his rise as a labor leader. He characterized his detention as a “media show” and said he would “hold his head high” to fight what he considers a political witch hunt.

    “Today is the day of indignation. It’s the day of a lack of democratic respect, the day of authoritarianism,” Lula told a crowded room of cheering supporters. “I felt like a political prisoner this morning.” 


Prosecutors said the kickback investigation has yielded no evidence that Rousseff broke any laws.

But the president, whose approval ratings have spent much of the last year in single digits, already faces a court probe into financing of her 2014 re-election campaign and separate impeachment proceedings in Congress over budget rules.

Former Brazil's President Luiz Inacio Lula da Silva gives a statement to the media after being detained for questioning in a federal investigation of a bribery and money laundering scheme in Sao Paulo, Brazil, March 4, 2016. REUTERS/Paulo Whitaker

In November, when the Petrobras investigation escalated with the arrests of more than 20 business leaders, Rousseff said the probe could “forever change Brazil” and must “hurt whoever must be hurt.”

Little could injure the ruling party more than a criminal conviction for Lula, who remains its figurehead.

He has weathered previous corruption scandals, including revelations in 2005 of a massive vote-buying scheme in Congress that nearly ended his first term.

Since then, scandals have brought the downfall of key aides and ruling party operatives. Slowly but surely that has spelt a stunning reversal of fortune for a political movement that won power after decades of fighting Brazil’s entrenched elites.

Lula’s ascent was a storybook tale that many came to see as a metaphor for modern Brazil.

Rising from an impoverished infancy in Brazil’s northeast and a childhood migration to the industrial suburbs of São Paulo, he worked as a shoeshine boy and laundry clerk before completing a vocational course that got him a job in a car factory.

His gruff but magnetic personality enabled him to rise in Brazil’s labor movement, which led massive strikes against a military dictatorship that finally fell in the mid-1980s. Lula voiced the anger of a working class that powered Latin America’s biggest economy even as it remained marginalized.

As Brazil returned to democracy, Lula helped found the Workers’ Party and in 1986 was elected to Congress with more votes than any other legislator. He ran for president three times unsuccessfully as most of Brazil’s middle- and upper-classes viewed him, with his rants against the rich elite, as a radical.

In 2002, he shifted course, donning suits, trimming his beard and promising to respect Brazil’s financial commitments. His election coincided with the start of a decade-long commodities boom during which China ravenously bought Brazil’s iron ore, oil, soybeans and other exports.

Lula leveraged soaring exports to expand welfare and encourage lending by public banks, policies that created millions of jobs and sparked a consumer boom. He raised Brazil’s profile globally, strengthening diplomatic ties with other developing nations and luring marquee sports events, like the 2014 World Cup and the upcoming Olympics in Rio de Janeiro.

When he left office in 2011, with approval ratings over 80 percent, he had successfully ensured the election of Rousseff, his hand-picked successor.


Soon, though, a dark side of the Lula legacy began to emerge. The commodities boom faded and Brazil’s economy soured, revealing how little the country had done to diversify during the good times. Economic growth of 7.5 percent in 2010 steadily ground to a halt.

In 2013, demonstrations erupted nationwide as Brazilians protested against everything from poor public services to corruption and the billions of dollars being spent on sports events. Shortly thereafter, police began following questionable money trails that led to Petrobras and elected officials.

Once expected to run for the presidency again after Rousseff’s term, Lula now registers no better than opposition politicians in polls simulating a 2018 election.

Those who still support him are stunned.

“I feel anguish to see what is happening,” said Claudio da Silva, an unemployed worker in São Paulo who rushed to the airport where Lula was questioned on Friday to join a crowd of onlookers. “Lula is a guy of humble origins, who rose to the top from the bottom, who left a legacy of social gains and a better Brazil.”

Additional reporting by Marcelo Teixeira and Natália Scalzaretto.; Editing by Daniel Flynn and Kieran Murray

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