Brazil's ruling party battles claim it accessed rivals' tax returns

BRAZIL’S RULING Workers Party is fighting to avoid the prospect of a police investigation into illegal activities by party militants…

BRAZIL’S RULING Workers Party is fighting to avoid the prospect of a police investigation into illegal activities by party militants preventing its presidential candidate Dilma Rousseff from grabbing a first-round victory in elections on October 3rd.

Police are investigating claims that tax officials linked to the Workers Party illegally accessed tax returns of opposition figures, including the businesswoman daughter of Ms Rousseff’s main rival, Social Democrat José Serra.

Mr Serra’s campaign team says the police investigation backs up its allegation that an “intelligence unit” within the Workers Party has used party militants placed in the state bureaucracy to seek out incriminating evidence on opposition figures.

In the latest round of radio campaign spots, the Social Democrats warn the issue is “above who wins or loses an election: Brazil is not a dictatorship, you cannot act outside the law”.

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Ms Rousseff has dismissed Mr Serra’s charges as the desperate moves of a candidate who has fallen more than 20 points behind in the polls, saying there is no link between her campaign and the activists under investigation.

But since the scandal erupted, Ms Rousseff, a first-time candidate for public office who has shown signs of nervousness during the relatively few moments she has been under pressure, has avoided debating the issue with Mr Serra.

On Wednesday night, she failed to show up for a televised debate between the candidates, citing complications with her agenda. Both campaigns are waiting to see the impact of the police inquiry on the race, but analysts say without a direct link between the party activists under investigation and Ms Rousseff’s campaign, it will be difficult for Mr Serra to narrow the yawning gap between the candidates.

A little-known former Marxist guerrilla who rose to prominence as chief of staff to President Luiz Inácio Lula da Silva, Ms Rousseff has relied heavily on the hugely popular president’s strong backing.

On Tuesday night, he appeared in a Workers Party campaign slot on national television to accuse Mr Serra of attempting to lower the tone of the campaign, but did not address the police investigation into members of his party.

In 2006, members of the Workers Party were arrested by police in a hotel in São Paulo with two large suitcases full of money. The party members were supposedly waiting to buy information linking Mr Serra, then a candidate for the governorship of São Paulo, with a corrupt scheme involving the purchase of ambulances by health authorities.

Mr Lula dismissed the arrested party militants as “crazies” on a freelance mission, but photos leaked to the media of stacks of money recovered by police are widely believed to have cost him outright victory in the first round of that year’s presidential election. He was re-elected in a landslide victory in the second round.

The opposition is desperate to avoid an outright victory by Ms Rousseff on October 3rd, fearing a landslide victory in the presidential race could wreck its hopes of holding on to important state governorships.

The Social Democrats are on course to lose control of one of their main bastions – Minas Gerais, the second most populous state in Brazil.

Meanwhile, in the rich southern state of Rio Grande do Sul, the party’s governor is running a distant third in her battle for re-election after being caught up in a corruption scandal.