Petrobras Leniency Deal Adds to Rousseff Pressure

03/24/2016 - 10h57

Marcelo Odebrecht, one of the main construction bosses at the centre of Brazil's Petrobras corruption investigation, is negotiating a leniency deal that could prove politically explosive for President Dilma Rousseff and her predecessor and mentor, Luiz Inácio Lula da Silva.

Mr Odebrecht and executives of his company, Grupo Odebrecht, were considering giving information on alleged corrupt business dealings in exchange for more lenient sentences, an Odebrecht spokesman said on Wednesday (23).

"We hope the clarifications provided through this collaboration will contribute significantly to the Brazilian justice system and to building a better Brazil," the company said in a related statement.

Any revelations by Mr Odebrecht, who has already been sentenced to 19 years jail in the Petrobras case, could strengthen moves to prosecute Mr Lula da Silva for alleged corruption and unseat Ms Rousseff, who is facing impeachment in Congress.

One of Brazil's biggest companies with 130,000 employees, Odebrecht executives are accused of paying bribes to Petrobras executives and politicians from the ruling coalition led by Ms Rousseff's Workers' party, or PT, and of doing favours for Mr Lula da Silva.

These favours allegedly include renovating a rural getaway that prosecutors believe secretly belonged to Mr Lula da Silva, making donations to the former president's think-tank and paying him for speeches after he stepped down as president in 2010.

Prosecutors accuse the once wildly popular leader, who is credited with raising the living standards of Brazil's poor during his eight-year rule, of helping construction groups secure government contracts and finance.

Mr Lula da Silva has denied the allegations, deriding the investigation as an attempt to smear his name and prevent him from standing as a candidate in the 2018 presidential elections.

The allegations led to his temporary detention for questioning earlier this month, after which Mr Lula da Silva attempted to join Ms Rousseff's cabinet as a minister, a move that would give him protection from the lower court running the Petrobras investigation, headed by Justice Sérgio Moro.

His nomination was overruled last week by Gilmar Mendes, a Supreme Court judge, leaving him open to further action by Justice Moro, including possible arrest. But this week, Supreme Court justice Teori Zavascki issued a ruling effectively granting temporary protection to the former president from Justice Moro.

The investigation is now expected to stay with the Supreme Court until at least next week, when it is likely to meet to decide on Mr Lula da Silva's future. "He [Moro] cannot do anything, absolutely nothing," said Cristiano Zanin Martins, a lawyer representing Mr Lula da Silva.

It is now up to the Supreme Court to decide whether to overturn last week's decision by Justice Gilmar Mendes, banning Mr Lula da Silva from taking a ministerial post.

If the former president is allowed to join Ms Rousseff's cabinet, he would automatically gain constitutional privileges and any allegations against him could be ruled upon only by the Supreme Court.

Ms Rousseff praised Justice Zavascki's decision to temporarily take the Lula case away from Justice Moro.

She also attacked a move by Justice Moro last week to release police tapes of conversations between Mr Lula da Silva and herself that prosecutors said showed her offering the minister's post to her predecessor as a form of protection against arrest.

"To leak personal conversations that had nothing do with the investigation is an assault," she said during a press conference.

She criticised what she said was a "systematic" attempt to launch a coup against her, in reference to moves in Congress by the opposition to impeach her.

"What the Brazilian economy really needs to get growing again is political stability. That means stopping with the systematic attempts at a coup, and stopping with the creation of non-existent motives to launch an illegitimate and illegal impeachment process."

Copyright The Financial Times Limited 2016