MercoPress. South Atlantic News Agency

Lula's administration deeper and deeper in trouble

The publicist who managed Brazilian President Luiz Inacio Lula da Silva's 2002 election campaign admitted Thursday before a congressional committee that the ruling Workers Party paid part of his fee via third-party deposits into a Bahamas bank account.

Duda Mendonca testified before a congressional panel investigating the corruption scandal involving the ruling party and many members of Congress.

Mr. Menconca said the Bahamian deposits were made by Marcos Valerio Fernandes, another publicist who helped PT obtain illegal financing for its candidates' campaigns and participated in the alleged bribing of Congress members in exchange for support for president Lula da Silva's administration

It was Fernandes who suggested that he open an account in the Bahamas to deposit the 4.4 million US dollars he was owed dating back to 2002, when he directed Lula's campaign and those of several other PT candidates running for governors and for Congress.

However the statement was denied by Fernandes who told local media that it was Mendonca who asked him to deposit the money in the Bahamas into an account he already had.

Mendonca said that the money was wired from other international banks and never passed through any Brazilian financial institutions.

Apparently his agency sold the PT a whole "package" of services for about eleven million US dollars involving not only Lula's presidential campaign.

Some PT legislators expressed their surprise at Mendonca's revelations and described as "very serious" while some Brazilian opposition leaders said that the admissions meant the "end of the current administration".

"Now, we certainly must begin seriously discussing the possibility of impeachment, which is not an alternative we want, nor one we desire, but today it looks as the only sensible option", said centre-right PSDB Senator Alvaro Dias.

The statement was endorsed by the head of the PSDB bench in the Senate, Arthur Virgilio Neto, who said he believed that Lula's government "is over".

Senator Virgilio Neto underlined that until now the growing scandal involving the administration and the PT had been limited to illegal campaign financing, but Mendonca's statement "proves that here there has been tax and currency evasion, money laundering and the opening of illegal accounts overseas".