World – Brazil’s former president Lula sentenced to 9.5 years in prison for corruption and money laundering

Brazil’s former President Luiz Inacio Lula da Silva was convicted of graft and money-laundering for his part in the country’s sweeping corruption scandal, potentially removing him from the political scene just as his prospects of returning to the presidency were gaining momentum.

Sergio Moro, the lead judge in the multi-billion dollar corruption probe known as Carwash, sentenced Lula to nine and a half years, according to a document from the federal court in Parana. The judge has not asked for the former president’s immediate arrest. Lula’s lawyers were not immediately available for comment.

The guilty verdict on Lula, one of the most popular presidents in Brazilian history, weakens his chances of leading the Workers’ Party back into power in the 2018 elections. Over the past few months he has consolidated his position in opinion polls as the front-runner for the presidential race, but he will become ineligible if his sentence is upheld on appeal. The conviction of the left-wing leader also ratchets up yet further the political tension in Brasilia, coming as President Michel Temer is battling to avoid a trial in the Supreme Court on corruption charges.

Graft investigations had been drawing closer to Lula for over a year, as prosecutors filed charges against him in five separate criminal cases, which range from allegations of influence peddling to accepting perks from companies in exchange for government favors. The former president has repeatedly denied wrongdoing and said the accusations are part of a campaign to discredit him. After today’s sentence, he still faces four more trials.

Brazil’s real and benchmark stock exchange accelerated gains after the decision was announced and were up 1.3 percent and 1 percent, respectively, at 2:22pm local time in Sao Paulo. Meanwhile, Brazil’s five-year credit default swaps, a gauge of investor perception of risk, dropped to the lowest in nearly two months.

“The market wants to know if Lula will be in the presidential race or not,” said Patricia Pereira, fixed income manager of Mongeral Aegon Investments in Rio de Janeiro.

A political firestorm broke last year when police raided his home and briefly detained him for questioning, prompting scuffles in the street between supporters and critics. He was later charged with corruption and money laundering. In May a face-to-face encounter with Moro at his courtroom in Curitiba drew tens of thousands of the former-president’s followers to the southern city.

After two terms in office Lula left the presidency in January 2011 with a record-high approval rating after tapping into a commodity boom to pull millions of Brazilians out of poverty. His handpicked successor, Dilma Rousseff, was impeached last year over accusations of budget mishandling.

Source – Bloomberg

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