Brazilian ex-president detained over corruption scandal

Luiz Inacio Lula da Silva was the president of Brazil from 2003 to 2010, when prosecutors allege much of the graft took place.

Federal police in Brazil detained former President Luiz Inacio Lula da Silva – the highest-profile figure targeted so far – the latest development in a corruption investigation that has reached across Brazilian business and government.

The police raided Mr. da Silva’s home in São Paulo, and although he was taken for questioning, he has not been arrested or charged.

The long-running investigation, called Operation Car Wash, is probing allegations of money laundering and corruption at Petrobras, the state-owned oil company.

Mr. da Silva, 70,  has been under growing pressure over allegations that he and his party received favors from large companies in return for contracts at Petrobras. He has also been implicated in another probe that involves a beachfront penthouse and country estate that were allegedly renovated for him by OAS and Odebrecht, two of the builders implicated in the Petrobras scandal. He has denies ownership of the properties, however, Bloomberg reported.

Prosecutors say bribes worth more than $2 billion were paid by contractors seeking work at the company, and a percentage of the cash funneled to politicians.

"Ex-president Lula, besides being party leader, was the one ultimately responsible for the decision on who would be the directors at Petrobras and was one of the main beneficiaries of these crimes," a police statement said, according to Reuters.

The investigation is said to be based on testimony given in a plea bargain by Delcídio do Amaral, a Workers’ Party senator who has allegedly accused the former president of trying to buy the silence of witnesses, including Nestor Cervero, the former Petrobras director, the Guardian reported.

The former leader, who is from the Workers' Party, is credited for lifting millions of people out of poverty and remains the most towering figure in the governing left-wing party.

Analysts say that the probe into da Silva threatens the government of current Brazilian President Dilma Rousseff, who is already struggling with a looming impeachment challenge, an economic recession, and the Zika virus threat.

“The former president’s troubles risk deepening a rift in Rousseff’s ruling coalition as allies accuse the administration of failing to shield them from investigations. That threatens to weaken her position at a time when the opposition is pushing to impeach the president on allegations she doctored fiscal accounts,” according to Bloomberg.

Since she began her second term 14 months ago, the wide corruption probe and deep recession have diminished her support.

She has also come under scrutiny over Petrobras. As The New York Times reported,

“The report in the magazine Isto É cast doubt on her insistence that she not only knew nothing about the bribes and kickbacks at Petrobras, but also refrained from interfering in the investigation despite the problems it was causing her administration."

Ms. Rousseff has denied any wrongdoing.

It’s not the first time the Petrobras scandal has threatened Rousseff’s presidency. A year ago, more than one million citizens took to the streets, demanding her ouster over economic woes and her alleged involvement in the scandal, though until now, she had never been officially implicated.

Her impeachment fate remains unclear, and as the Los Angeles Times reported, many Brazil analysts think she is more likely to survive than lose this battle. But the longer that the proceedings take, the more likely it is that the economy will worsen and diminish her support even further.