Brazil party still wants ex-president Lula as candidate, despite corruption ruling

Brazil's Workers Party said Thursday its founder and former Brazilian president Luiz Inacio Lula da Silva will be its candidate again in the October election, despite losing an appeal against a corruption conviction that will likely bar him.

Party leader Senator Gleisi Hoffmann announced the plan for his presidential bid at a rally by labour unions.

Wednesday's unanimous ruling against the man known familiarly as Lula leaves him with little room to appeal to higher courts, and electoral authorities are expected to block his candidacy if he registers to run.

All three appellate court judges voted to uphold Lula's convictions on taking bribes and money laundering. They also added 2½ years to his sentence, condemning him to 12 years in prison. Lula, Brazil's first working-class leader, so far remains free pending future appeals.

Lula's Workers Party immediately called the ruling a "farce" orchestrated by Lula's enemies to stop him returning to power.

Lula, 72, could now be ineligible to stand for election under Brazilian laws that ban political candidates whose convictions have been upheld by an appellate court.

Lula's exclusion from the October election would radically alter the political landscape ahead of a campaign in which he is the early favourite, with 36 per cent of voter preferences, according to pollster Datafolha. That is double the percentage of his nearest rival, the far-right congressman and former army captain Jair Bolsonaro, who has been energized by anti-Lula sentiment.

But Lula still has options.

An electoral court must make the final ruling on a candidacy, and would only do so once a candidate had registered. Lula can appeal Wednesday's decision by the Appeals Court in Porto Alegre to Brazil's top Appeals Court or to the Supreme Court to delay a final ruling, possibly avoiding jail and stringing the process out long enough to register his candidacy by the Aug. 15 deadline.

Markets respond favourably

At a nighttime rally in a central Sao Paulo plaza, Lula stood atop a sound truck and rallied supporters, blasting the ruling as a "lie," and strongly maintained his innocence.

Lula said that if the three judges could "show me the crime I committed, I would give up trying to be a candidate."

"I want the judges to know that I am not worried like they think I should be," Lula said. "They cannot jail ideas or hope."

Opponents of Lula, meanwhile, celebrated on Sao Paulo's main avenue with a giant blown-up figure of the ex-president dressed as a prison convict.

Brazil's benchmark Bovespa stock index hit a new intraday high of 83,635 points on news of the ruling. It closed 3.32 per cent higher on investor expectations his exclusion from the 2018 race will clear the way for a more market-friendly candidate who can stick to Brazil's austerity agenda.

"The ruling takes off the table the worst possible scenario for the market, the biggest downside possible in terms of the election," said Roberto Campos, a partner at Sao Paulo-based Absolute Investimentos. "The guy who was completely not market friendly is out."

3 high-profile scandals

He faces six more indictments in corruption cases ranging from receiving bribes from engineering firm Odebrecht, to obstructing justice and trafficking his influence to obtain government decisions favouring the auto industry.

The scandal spans multiple countries. Odebrecht admitted in a 2016 U.S. Justice Department agreement to paying nearly $800 million US in kickbacks to politicians, their campaigns and political parties to secure lucrative public works contracts.

Ecuador Vice-President Jorge Glas sentenced to six years in prison for orchestrating an Odebrecht bribery scheme, while Peru President Pedro Pablo Kuczynski avoided impeachment last month after being implicated due to his consulting company's ties to Odebrecht. Officials in Colombia and Venezuela also came under suspicion.

Lula is among over 100 people convicted in the Lava Jato (Car Wash) investigation, the most sprawling of Brazil's numerous probes. It focuses on graft involving oil firm Petroleo Brasileiro, known as Petrobras, and other state-run companies.

Lula was convicted of corruption and money laundering last year for accepting a beachside apartment from an engineering firm vying for contracts with Petrobras.

Prosecutors said the apartment and its refurbishing was a bribe worth the equivalent of $1.44 million Cdn. Lula maintains he never owned the penthouse apartment, criticizing prosecutors for what Lula's lawyers called a reliance on the plea bargain testimony of one witness, businessman Leo Pinheiro.

Lula is one of scores of powerful politicians and businessmen caught up in sweeping corruption probes that have wracked the Brazilian establishment since 2014.

Former president Dilma Rousseff was ousted from office in the Petrobras case, and her successor Michel Temer was implicated in recorded conversations discussing bribes with executives of JBS, the largest meat processing company in the world.

The brothers who lead JBS, Joesley and Wesley Batista, have been jailed in the case. They say Rousseff and Lula, in addition to Temer, accepted bribes, accusations all three presidents deny.