MercoPress. South Atlantic News Agency

Slush fund scandal threatens Lula's re-election bid

Amid noisy opposition from ruling coalition members, a Brazilian congressional committee voted Wednesday to approve a report recommending the indictment on corruption charges of two former top aides to President Luiz Inacio Lula da Silva.

The ruling Workers Party, PT, had gone to great lengths to block endorsement of the document, which calls for the prosecution of erstwhile presidential press secretary Luiz Gushiken and Lula's ex-chief of staff, Jose Dirceu.

Also targeted are the PT's former chairman, Jose Genoino; secretary, Silvio Pereira; and treasurer, Delubio Soares, along with some 150 other people found to be implicated in a party slush-fund that was first exposed in spring 2005.

Once the scandal broke, Congress established a committee to investigate charges that the PT used the illegal secret fund to bribe lawmakers to support Lula's legislative program, as the president's own party did not enjoy a working majority.

Though the PT eventually acknowledged having the slush-fund, it insists the money was used only for campaign expenses and flatly denies the bribery allegations.

After failing in a bid to quash the draft report in favour of an alternate draft exonerating Dirceu and Gushiken, the PT disrupted Wednesday's session of the committee with raucous objections, but in the end, 17 of the panel's 32 members voted to approve the original document.

The next step will be for the committee to deliver its report and all the supporting evidence to prosecutors.

The indictments of Dirceu and Gushiken could harm Lula's chances for winning a second four-year term in the October election, if he decides to run again.

Though Lula appeared to have somewhat rebounded from the damage the PT corruption scandal inflicted to his popularity, his standing is likely to suffer if the Brazilian media is full with stories about two of his closest aides facing trial for alleged wrongdoing while working in the presidential palace.