Real Soars To 6-Month Highs After Former Brazilian President Lula Detained

The Brazilian Real has soared over 2.5% this morning after the shocking news that former President Luiz Inacio Lula da Silva (Lula) has been detained by the federal police. The long-running inquiry, known as Operation Car Wash, stems from accusations of corruption and money-laundering at Petrobras and police, who raided Lula's home near Sao Paulo, say they now have evidence that he received illicit benefits from the kick-back scheme with Petrobras "enriching himself and the treasury of his political group."

  • *PETROBRAS RISES 18% AS FORMER PRES. LULA TARGETED IN PROBE

And the real is surging to six month highs on the news... (we presume optimism that corruption is really being cracked down on, rather than paid lip service)

 

As Reuters reports,

Brazil's federal police detained former president Luiz Inacio Lula da Silva for questioning on Friday in an anti-corruption and money laundering operation and said that illegal gains had financed campaigns and expenses of the ruling Workers Party.

 

Police said they had evidence that Lula received illicit benefits from the kick-back scheme at state oil firm Petroleo Brasileiro SA (Petrobras) (PETR4.SA) in the form of payments and luxury real estate.

 

"Ex-president Lula, besides being party leader, was the one ultimately responsible for the decision on who would be the directors at Petrobras and was one of the main beneficiaries of these crimes," a police statement said.

 

"There is evidence that the crimes enriched him and financed electoral campaigns and the treasury of his political group."

BBC adds that officials said some 33 search warrants and 11 detention warrants were being carried out by 200 federal police agents in the states of Rio de Janeiro, Sao Paulo and Bahia.

Lula's house in Sao Bernardo do Campo, near Sao Paulo, was raided early on Friday. The headquarters of his institute in Sao Paulo was also targeted, as were his wife, Marisa, and sons, reports said.

 

Dozens of executives and politicians have been arrested or are under investigation on suspicion of overcharging contracts with Petrobras and using part of the money to pay for bribes.


Lula ran Brazil from 2003 to 2010, when prosecutors allege much of the graft took place.

Brazilian media reported on Thursday that ruling party Senator Delcidio Amaral, a major legislative ally for Rousseff before he was arrested in November, allegedly tied the president and Lula to the scandal engulfing Petrobras in 400-page plea bargain made with prosecutors.

This latest step by the police is the most significant yet as the probe gets closer to Dilma Rousseff herself:

Lula, from the Workers' Party, served two terms as president and was succeeded in office by his political protege, Dilma Rousseff.

 

He led Brazil during a time of rapid economic growth and is credited for lifting millions of people out of poverty.

 

He still is a well-liked figure but his popularity has been hit by recent allegations that he either had knowledge or involvement in the wrongdoings.

 

On Thursday, Lula's institute said the former president had never committed any illegal acts before, during or after his presidential term.

The corruption scandal threatens the government of Ms Rousseff, who has faced repeated impeachment calls, analysts say. She has denied having any knowledge of wrongdoings.

And it seems she is getting nervous:*BRAZIL'S ROUSSEFF SAID TO CALL EMERGENCY MTG ON LULA: FOLHA