Brazilian President Luiz Inacio Lula da Silva apologized Friday in a nationwide address for a bribery and campaign finance scandal while the head of a junior party in the ruling coalition said for the first time that the president was aware of misdeeds before they occurred.
"The government and the Workers' Party have to ask for forgiveness from the Brazilian people" said Lula da Silva in a short, solemn speech at the presidential ranch in which he denied knowledge of any wrongdoing.
The scandal centers on accusations that the Workers' Party bribed Congress members to back legislation and used undeclared financing, mostly skimmed from government owned companies or from private corporations with specific interests, for the 2002 election campaigns.
In his speech the former union leader said he felt "betrayed by unacceptable actions" and called for the reform of political financing rules that he has blamed for luring off-the-books money into the system.
"I'm conscious of the gravity of the political crisis. It hurts the entire party system," he said. "It is the duty of the government to stop the crisis from contaminating the economy."
Although several top officials have resigned because of the scandal, Lula da Silva who was elected president in October 2002 had so far not been directly implicated and opinion polls showed almost unscathed support.
But this week a former Congress member said Lula da Silva was aware of undeclared campaign funding by his ruling Workers' Party.
"Lula was in the next room. He knew we were negotiating numbers" former Liberal Party head Valdemar Costa Neto told Epoca magazine in an interview. The Liberal Party is an ally of the Workers' Party. Costa Neto said the PL agreed to join the coalition because Lula's Workers Party promised to pay the group 10 million Reais, approximately 4,5 million US dollars.
He provided details of a meeting he said he held with Lula, vice president Jose Alencar, former presidential chief of staff Jose Dirceu and former PT treasurer Delubio Soares. Lula was there to seal the deal, Costa Neto said.
"Lula, Jose Dirceu and Delubio are part of the same family. You can't just crucify one of them," said Costa Neto, who resigned from Congress last August 1 after admitting to having taken the irregular funding.
For the first time since the scandal that has rocked Brazil emerged, a public opinion poll published by the Datafolha opinion research firm showed Lula da Silva would be defeated by Sao Paulo Mayor Jose Serra in a run-off vote should the opposition Social Democratic Party, or PSDB, politician choose to run for president October 2006.
Even before the latest allegations surfaced, the opposition confirmed it is consulting attorneys about the shortest routes to impeaching the president. Although opposition parties PSDB and the conservative Liberal Front, PFL, said impeachment is not their first choice, "that seems where the crisis is heading".
Lower House deputy speaker, Jose Thomaz Nono added, "even if the moderates want to prevent it, we are on the road to impeachment". One such moderate is House Speaker Severino Cavalcanti, who considers it "hasty" to speak of impeaching Lula, "though it can't be ruled out".