Finance

Brazil’s presidential frontrunner is the latest to fall in a massive corruption investigation — and it’s not clear what comes next

Brazil’s former President Luiz Inacio Lula da Silva amid supporters during the final rally of his week-long campaign tour of southern Brazil, in Curitiba, Parana state, March 28, 2018.
AP Photo/Eraldo Peres

  • Former Brazilian President Lula da Silva looks likely to be jailed after an unsuccessful fight against a corruption conviction.
  • Lula would be the highest-profile Brazilian figure brought down in the Car Wash corruption investigation.
  • His exit would also significantly change the makeup of the upcoming presidential election, in which he is the front runner.

In the early morning hours on Thursday, Brazil’s top court voted 6-5 vote a deny a request from former President Luiz Inacio Lula da Silva to stay out of jail while he appeals a corruption conviction.

That ruling was followed by federal judge Sergio Moro, who has led the Car Wash corruption investigation that has shaken Brazil’s business and political worlds, giving Lula until 4 p.m. ET on Friday to turn himself in and begin serving a 12-year sentence.

A petition to quash the warrant was denied late on Friday afternoon, but Lula’s supporters counted down the final seconds, chanting “There is no surrender” after it passed. Lula himself was reportedly on his way on his way to address supporters from a sound truck outside the union headquarters, with riot police also on site.

“According to Moro’s office, [Lula’s] not technically a fugitive, until Moro issues an order that says he is, which he hasn’t, basically because … we know where he is, on a sound truck,” Globe and Mail Latin America correspondent Stephanie Nolen wrote on Twitter late on Friday afternoon.

“Federal prosecutors in Curitiba tell AFP that Lula’s missed deadline is kind of OK for now. He’s not officially a fugitive. Not yet. This is Brazil,” AFP correspondent Sebastian Smith said on Twitter.

Brazil’s former President Luiz Inacio Lula da Silva waves to supporters in front of the metal workers’ union headquarters in Sao Bernardo do Campo, April 5, 2018.
AP Photo/Nelson Antoine

EFE reported late on Friday that Lula will spend the night at the union headquarters and attend a mass for his late wife on Saturday morning. His lawyers are reportedly negotiating for Lula to surrender after that mass.

Lula’s party, the Workers’ Party, has condemned the decision and pledged he will remain its candidate for the October presidential election.

“We consider this to be a political imprisonment. An imprisonment that will expose Brazil before the world,” party chairwoman Gleisi Hoffmann said Thursday. “We will become a banana republic.”

His lawyers have said they will file injunctions to keep him out of jail, but those are unlikely to be granted. Being jailed would not necessarily end his candidacy, as the country’s top electoral court will make final decisions about who can run in August.

Lula can continue seeking his release and still has not exhausted his appeals.

But the Thursday ruling has “major implications” for the race, said Thomaz Favaro, Control Risks’ analyst for the Southern Cone region, making it much more likely the court will reject Lula’s run based on the Clean Slate Law that bars candidates with convictions that have been confirmed by an appeals court. (Though he could still be granted an exemption to that.)

A demonstrator holds up a sign that reads, in Portuguese, “Lula, a thief’s place is in prison” as people shout slogans against Brazil’s former President Luiz Inacio Lula da Silva in front of the Federal Police Department in Curitiba, April 6, 2018.
AP Photo/Leo Correa

The party’s vow to keep Lula on the ballot means he “is therefore likely to remain on campaign mode and he will continue to seek legal loopholes that would allow him to run,” Favaro told Business Insider. “The questioning of the judiciary’s decision serves the PT’s narrative of being victims of a politically motivated trial.”

That narrative seems unlikely to resonate with many voters however.

With Lula’s strong rebuke of the judiciary and investigators, “he was kind of playing into some of his core supporters from the left and moving away from the center position that actually got him elected before,” Fernando Mello, chief political analyst at the Brazilian news site Jota, said on a Friday conference call.

“By aiming his discourse to the left supporters,” Mello added, “Lula might have eliminated more the center or the majority of the population, because we have not seen many people going to the streets, for example, to defend him.”

That response has also likely been shaped by attitudes toward the legal proceedings against Lula, which have been viewed as fair, even if the prosecution itself is seen as misapplied.

According to a survey conducted Thursday by Ideia Big Data, “80% of the Brazilian population think that the trial was a fair trial,” Mauricio Moura, the firm’s founder and chief pollster, said on the Jota conference call, adding that 55% of Lula voters said the same.

Supporters of Brazil’s former President Luiz Inacio Lula da Silva, with signs that read, in Portuguese “No to prison for Lula,” outside the Metallurgic Union headquarters, after an arrest warrant for Lula was issued, in Sao Bernardo do Campo, Brazil, April 5, 2018.
AP Photo/Andre Penner

“Nine out of 10 Brazilians support … the Car Wash operation, and 85% support the work of judge Sergio Moro,” Moura said. “And from the Lula voters, 75% think that he is going to jail in the next day, so they already internalized the fact that he’s going to jail.”

“Lula was convicted in open court. Ruling unanimously upheld by 3-judge appellate panel. Ensuing motions rejected by higher courts [including the] Supreme Court. So, this was not one ‘renegade’ judge. He had due process,” Brian Winter, editor-in-chief of Americas Quarterly, said on Twitter. “On the other hand, if you’re intellectually honest, it’s impossible to justify why Lula is going to jail when so many other corrupt politicians walk free (& still hold office).”

Lula’s likely exclusion from the race means more trouble for Brazil’s already divided political left. While Lula, who left office after two terms as president with over 80% approval, has successfully boosted other candidates before — helping Dilma Rousseff follow him into office — he may not play kingmaker this time around.

Former Brazilian President Luiz Inacio Lula da Silva inside a car in Sao Paulo, April 5, 2018.
REUTERS/Paulo Whitaker

“Local pollsters indicate that his party colleagues, Jacques Wagner and Fernando Haddad, have less than 5% of voting intentions in their best scenarios, with rejection rates north of 50%,” Favaro said.

“Although the polls are probably underestimating the electoral strength of a PT candidate, it is nevertheless clear that no substitute would be able to reach Lula’s levels of support.”

Taking Lula out of the mix may also undercut Congressman Jair Bolsonaro, an extreme-right candidate who has been polling in second behind Lula, buoyed by attacking the left.

The current president, Michel Temer, who is considering running, has record-low approval, with 72% of Brazilians rating his government “bad” or “terrible.” Just 5% said it was “good” or “great.”

“The votes originally intended to go to the former president are likely to be scattered through leftist and centrist candidates,” Favaro told Business Insider.

Other candidates from the left and center, like Ciro Gomes of the Democratic Labour Party or Marina Silva of the Sustainability Network, could get a boost in a Lula-less field, Favaro said, but those votes may come from a much smaller pool.

“A substantial amount of Lula’s supporters are likely to engage in some form of protest vote — or simply refrain from voting at all,” Favaro added. “An electoral race without Lula would most likely report the lowest turnout in recent history.”

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