FEDERAL PROSECUTORS in Brazil have accused former president Luiz Inácio Lula da Silva of misusing public funds to promote a private bank later involved in a major corruption scandal that rocked his administration.
The charges of “administrative impropriety” relate to a 2004 mass mailing which advertised low interest loans exclusively available at Banco BMG for retirees on a state pension.
More than 10 million letters signed by then-President Lula and his social security minister were posted to pensioners at a cost to the state of €4.2 million. In a statement announcing the charges, prosecutors claimed “it is evident the propagandistic nature of the letter[s]” were designed “to use the public machine to realise personal promotion and to favour Banco BMG”.
Banco BMG’s profits rose from €39.3 million in 2003 to €122.3 million in 2004 following the agreement between the public pension system and the bank which allowed retirees to use their state pensions as a guarantee against the loans.
Investigators say the agreement was suspicious, being approved within two weeks instead of the usual two months such a process requires. They also questioned why the then-president waited 10 months after the agreement was in place before advising pensioners of the scheme.
Mr da Silva was president of Brazil between 2003 and 2010.
Six months after the last of the letters were posted in December 2004, Mr da Silva’s Workers Party and Banco BMG were caught at the centre of a major corruption scandal known as the mensalão – the big pay-cheque scheme.
The bank is accused of having helped the Workers Party to illegally recycle public money into secret payments for deputies in Brazil’s congress in order to ensure votes for the government.
The worst crisis of Mr da Silva’s eight years in office, the scandal at times seemed to threaten the government’s survival and forced the resignation of a leading minister and the president and treasurer of the Workers Party.
Prosecutions against BMG and others involved in the mensalão scheme are still working their way through Brazil’s courts.
Detailing the accusations against the former president, prosecutors say they have not found a direct link between the mass mailing and the mensalão scandal. They are demanding that Mr da Silva and former minister Amir Lando reimburse the cost of the mailing and have asked a court to freeze their assets.
If convicted as well as having to reimburse the cost of the mailing, Mr da Silva could be suspended from standing for future public office.
Many members of the Workers Party openly champion his candidacy for a third term as president in 2014 elections. Last year he succeeded in getting his little-known chief of staff Dilma Rousseff voted in as his successor.
On leaving office, Mr da Silva was the most popular president in Brazil’s history, with approval ratings above 80 per cent. Accusations of impropriety against former office-holders are common in Brazil, but convictions are few.