Lula's Cloud of Scandal

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When Luiz Inacio Lula da Silva won the race to become Brazilian president four years ago, it was arguably more because of who he was than what he might do. In fact, no one expected miracles from Lula, as he is known to everyone in this mammoth South American nation. Though he had a long and noble history of fighting for the little guy — in a country where the vast majority are little guys — the former shoeshine boy and union leader had little formal education and no experience in government; what's more, he altered many of his long-held positions during the campaign to embrace free-market economics and soften his once leftist rhetoric. The one thing they didn't expect to see was Lula's Workers' Party (PT) — a party that built a reputation on clean government at municipal and state level — embrace the corruption, lies and cynicism it had spent two decades decrying.

But since taking power, Lula's government has been acused of doing exactly that. Just last month, Lula's Finance Minister, Antonio Palocci, stepped down, accused of breaking banking secrecy laws in an attempt to discredit a witness who testified before a Congressional committee to seeing him at a villa used by his aides to distribute bribes and sleep with prostitutes. And on Wednesday, a federal prosecutor charged 40 people in connection with the scandal, including Jose Dirceu, the man who was Lula's closest advisor for years. Says opposition Senator Arthur Virgilio: "Lula has run a corrupt government, one that is completely unstable from an ethical standpoint and incompetent from an administrative standpoint."

The cloud of corruption has hung over Lula's government for most of the past year. His administration has been accused of paying opposition deputies to support its bills in Congress, engineering an illegal campaign finance scheme worth hundreds of millions of dollars and even paying a small right-wing party to jump on the PT's bandwagon before the electoral campaign started. Before Palocci's sudden exit, the party's president, treasurer and secretary-general had all resigned under the same suspicions of graft.

Especially in an election year, the continuing corruption scandal is a big embarassment to Lula, a man whose measured discourse and conservative fiscal policies marked him as Latin America's moderate alternative to radical, anti-U.S. leftists like Venezuelan president Hugo Chavez. But amazingly, it has done little to affect his popularity with the general public, which has shown a steadfast refusal to believe Lula knew what was going on, accepting his claim that "no one in this country can lecture me on ethics."

More than happy with the Bolsa Familia program that has given nine million of the country's poorest families a guaranteed monthly handout, and credulous of his claims that the elite are out to get him, disadvantaged voters have kept Lula comfortably ahead in the polls and the firm favorite to win the Oct. 1 presidential election.

"The PT will be punished as a party but they've been able to isolate Lula and make him a Teflon president," says David Fleischer, the author of Brazil Focus, a weekly political report. "That he knew nothing about the scandals has been accepted by the poor and lower middle class and that, together with his reserves of charisma built up over the years, could be enough."

Lula doesn't need that much charisma to stand out against his main opponent, the former Sao Paulo governor Geraldo Alckmin, a dull technocrat jokingly said to have all the appeal of the chuchu, a tasteless vegetable. If Alckmin loses it will probably be more because of who he is than for what he might do. And it will probably be in spite of what Lula's party has done.