September 7, 2005

Lula vows to jail the corrupt, push social reform

By Angus MacSwan

SAO PAULO, Brazil (Reuters) - President Luiz Inacio Lula da
Silva, trying to resurrect his government from a wounding
political scandal, pledged on Wednesday to punish corrupt
officials and press on with his economic and social policies to
build a better Brazil.

In a speech to mark the country's Independence Day, Lula
wrapped his promises to overcome the scandal in a patriotic

"Brazil is bigger, much bigger than all this and we cannot
lose the economic and social opportunity that we have built at
the cost of so much sacrifice," he said in the six-minute,
pre-recorded address broadcast across the nation of 185 million

"It is a characteristic of the Brazilian people to fight
against adversity and overcome it," Lula said.

The scandal over alleged illegal campaign funding and
bribes for votes in Congress by the ruling Workers' Party has
dominated political and public life in Brazil for three months,
seriously hurting the reputation of a government that came to
power promising social justice and an end to the sleaze that
has traditionally inhabited Brazilian politics.

The accusations have imperiled the government's chances of
re-election next year and held up a reform program crucial to
the long-term well-being of this major emerging market and
Latin American economic power.

Lula himself has not been directly implicated, though
critics have said his handling of the worst political crisis to
hit the world's fourth-largest democracy for more than a decade
has been inept.

In his speech, Lula lauded the achievements of his
government in getting the economy on a sound basis and
launching social programs to help the vast ranks of poor. Under
his leadership, Brazil was now of a path for sustained growth
which would benefit all the people, he said.


"I say to you with conviction -- in the same way we won the
fight over the economic crisis and we are winning the fight of
the social divide, we will overcome, with courage and calm, the
current political turbulence," he said.

The guilty would be punished "be they friends or enemies,"
he said.

Four senior Workers' Party figures, including the
once-powerful chief of staff Jose Dirceu, have already lost
their jobs after being accused of masterminding the illegal
funding scheme and each day brings fresh accusations and
revelations in the media.

Street protests to demand that corrupt officials be
punished are also occurring, sometimes involving workers and
other sectors who have traditionally supported the party. But a
strong economy and an upbeat investment climate has helped
stave off potential panic in the financial markets.

Earlier Wednesday, Lula presided over the Independence Day
parade in the capital Brasilia involving soldiers and civilians
and watched by a crowd of at least 25,000 people. There were
scattered calls for his impeachment.

Government probes have yet to implicate Lula but officials
who were close to him are likely to be punished, the
anti-corruption minister, Waldir Pires, told Reuters in an

"So far there is nothing to link any decision by the
president to this," said Pires, who was appointed by Lula to
root out widespread corruption in federal and local government.

"This battle is going to take down (government) friends,
it's going to take them down for their guilt and their errors,"
Pires said.

Lula has said he was unaware of illegal funding and was
betrayed. He has yet to say by whom.

Critics say he lost control of his government and must have
known his party ran a multimillion dollar slush fund which
helped pay for his 2002 election campaign.