Brazil’s former president Luiz Inacio Lula da Silva was detained by federal police detained for questioning in an investigation of a bribery and money laundering scheme that they said had financed campaigns and expenses of the ruling Workers Party.
Police said they had evidence that Lula received illicit benefits from kickbacks at state oil firm Petroleo Brasileiro SA in the form of payments and luxury real estate.
His detention, part of a sweeping investigation that has ensnared powerful lawmakers and business executives, tarnishes the legacy of Brazil’s most powerful politician and the tactics that his left-leaning Workers’ Party used to consolidate power since rising to power 13 years ago.
The evidence against Lula also brings the operation closer to his protegee and successor, President Dilma Rousseff, who is fighting off impeachment and struggling to pull the country out of its worst economic downturn in decades.
Brazil’s currency jumped more than 3 percent in early trading as traders bet that the political upheaval could empower a more market-friendly coalition.
“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.
“There is evidence that the crimes enriched him and financed electoral campaigns and the treasury of his political group.”
Lula’s foundation said in a statement on Friday that his detention was “an aggression against the rule of law and Brazilian society”. The foundation, which has consistently denied any wrongdoing by Lula, called his arrest “arbitrary, illegal and unjustifiable”.
Rousseff has also repeatedly denied any wrongdoing.
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