State Prosecutor Charges Brazil's Lula With Hiding Assets

The Sao Paulo state prosecutor’s office on Wednesday charged Luiz Inacio Lula da Silva on allegations of hiding assets, delivering a second blow to the former president in less than a week.

The prosecutor’s press office confirmed the charges were filed and declined to provide additional details when contacted by telephone. Newspaper O Globo reported the charges are for money laundering and hiding assets, such as ownership of a seaside triplex apartment in the city of Guaruja. It said prosecutors will hold a news conference Thursday to explain the accusations. According to Brazilian law, a judge now would have to accept the charges against Lula for the former president to be formally indicted.

The Lula Institute that he founded said in a e-mailed statement he hasn’t committed any crime, adding that the prosecutor responsible for the charges, Cassio Conserino, is “partial.” The prosecutor first told local magazine Veja in January that he would pursue the charges against Lula. Congressman Wadih Damous from Lula’s Workers’ Party said in a statement that Conserino was acting irresponsibly and should be removed from office.

In a separate development, authorities raided Lula’s home last Friday and briefly detained him, accusing the former president of giving out government favors in return for corporate donations and speaking fees. Investigators are zeroing in on Lula and other high-ranking politicians and business executives as part of a widespread corruption probe known as Carwash. Lula has repeatedly denied any wrongdoing.

While President Dilma Rousseff hasn’t been implicated in any investigation, analyst say that a potential arrest of Lula, her mentor, could eventually jeopardize her political survival. Rousseff is fighting against impeachment proceedings in Brazil’s Congress.

Wednesday’s charge "tightens the noose further around Lula, and by implication Dilma as well," said Gabriel Petrus, a political analyst at business consulting firm Barral M Jorge. "If he goes down, she may fall as well."

Political Tensions

Political tensions have increased since Lula’s detention, with both his supporters and critics pledging to stage street protests in coming weeks. Opposition parties have obstructed voting in Congress this week to pressure the lower house speaker to restart impeachment proceedings that have been stalled for months. Senator Aecio Neves, the runner-up in the 2014 presidential election, said in a speech on the chamber’s floor Wednesday that the president should resign.

Rousseff is facing increased pressure from some aides and allies as well, as they call on her to shield Lula by appointing him as a minister in her government, according to a person familiar with the discussions. Under Brazilian law, only the Supreme Court can authorize the investigation, imprisonment and trial of Cabinet members. Lula’s detention last week was ordered by a federal judge in Parana state.

The turmoil in Brazil hasn’t scared off investors, who are betting the scandals could bring down the administration and usher in new leadership that is better equipped to pull the country out of its deepest recession in decades. Brazil’s stock index rose the most among its global peers in the past week and the real advanced to the strongest level in six months on Wednesday.