Lula speech sees real and Bovespa equities down

As the former head official of the allied Liberal Party became the first person to say that Brazilian President Luiz Inacio Lula da Silva of the ruling Workers Party knew about the payment of bribes to lawmakers in return for favorable votes and of under-the-table funding of political campaigns, the Brazilian president made a nationwide address on Friday apologizing for the scandal.

In his speech Lula denied any knowledge of wrongdoing but said that the government and the party was asking the forgiveness of the Brazilian people. He said he felt “betrayed by unacceptable actions” and called for the reform of campaign finance laws that he blames for the scandal.

Allegations that Lula did know what was going on came in the form of a magazine interview with Valdemar Costa Neto, former head of the Liberal Party who resigned from the Brazilian Congress on August first when he admitted having taken illegal money. Costa Neto maintained in the interview that Lula was “in the next room” when numbers for the campaign contributions were being negotiated.

Reactions to Lula’s speech was mixed, with both the real and the Bovespa equities index down by about 1.5 percent. Meanwhile, a poll was released on Friday that for the first time indicated that Lula could be beaten in next year’s presidential election due to the scandal.

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