Lula's Appeal Rejected as Deadline Passes to Turn Himself In

(Bloomberg) -- Brazil’s former President Luiz Inacio Lula da Silva’s latest try to delay or reverse his arrest warrant was denied, adding to the uncertainty surrounding his fate after a deadline to turn himself in to police expired.

Supreme Court judge Edson Fachin rejected a request made by Lula’s lawyers late Friday, according to multiple reports in the local media. A similar request had already been turned down on Friday afternoon.

Lula this morning attended a mass in front of his former union headquarters in a working-class suburb of Sao Paulo, where he spent the night hunkered down. Thousands of supporters are gathered there, including former president Dilma Rousseff. Lula is expected to speak later.

On Friday, demonstrators who waited hours for Lula saw only a glimpse of the man, when he waved from a window. The ex-president was expected to speak, but allies who where with him inside the building say he was advised by a doctor not to as he was too emotional. There was also concern among union leaders he could be arrested if he stepped outside the door.

On Thursday Federal Judge Sergio Moro issued a warrant for Lula to turn himself in by 5 p.m. on Friday in the southern city of Curitiba to begin serving a 12-year prison sentence for corruption and money-laundering. In it, Moro vetoed the use of handcuffs by the arresting officers and wrote that a special detention area had been set aside for the former president.

Lula said he wouldn’t travel to Curitiba to turn himself in, and vowed to spend the day at the metalworkers’ union headquarters, newspaper Folha de Sao Paulo reported on Friday citing a phone interview.

"He was given the option by the judge to go to Curitiba and he didn’t take this option," said Gleisi Hoffmann, the national president of Lula’s Workers’ Party, in comments to local media. "The world knows where he is. And this is where he will stay along with his supporters."

Many of the followers gathered around the building are the ones who have been with him through his political career -- not the upper-middle class and economic elite that helped elect him more than 15 years ago. On a sound truck set up outside the building, Lula’s allies gave speech after speech, late into the night, in an attempt to keep up the spirits of the crowd. Rumors that Lula was repeatedly on the verge of surrendering to the police failed to materialize.

"It is not unlikely that Lula opts for forcing the federal police to ’come and get him’ as opposed to bowing out passively," Teneo Intelligence managing director Mario Marconini wrote in an email.

The arrest of one of the most iconic leaders in Brazilian history, though widely anticipated, is rocking Latin America’s largest nation. After leaving office in 2010 with sky-high approval ratings, the former trade unionist became a deeply divisive figure, beloved by the left for his social policies, and reviled by many on the right who blame him for the corruption that flourished under 13 years of Workers’ Party rule. While his hopes of a return to power are almost certainly shattered, the key question now is to what extent his imprisonment will influence October’s elections.

"What we are seeing is absurd," said Carlos Zarattini, a senior lawmaker from Lula’s party. "It is an obsessive attempt by Judge Sergio Moro to stop Lula from competing in elections."

Fireworks and car-honking broke out in downtown Sao Paulo and Curitiba, the seat of Moro, after the arrest order became known, as some Brazilians celebrated his imminent imprisonment. With investors wary of Lula’s pledge to roll-back market-friendly reforms if elected president, there was a brief asset rally on Thursday after the Supreme Court paved the way for his arrest. But it fizzled quickly and on Friday the Ibovespa stock index fell half a percentage point and the real ended at its weakest level since May 18, 2017.

The former factory worker was convicted of receiving benefits from a construction company -- including the upgrade of a beach-front apartment -- as a reward for government favors. He has denied wrongdoing and said the ruling is part of a strategy to stop him from becoming president again. He also faces a handful of other corruption charges.

Lula symbolically launched his presidential bid one day after an appeals court unanimously upheld his conviction in January, and his jailing does not completely rule him out of the running. Yet it now seems far-fetched to imagine his return to power.

How Even a Convicted Lula Might Sway Brazil Politics: QuickTake

While remaining hugely popular among the millions of Brazilians he helped lift from poverty during the commodities boom that characterized his years in office, Lula has alarmed investors by promising to undo the market-friendly measures implemented by President Michel Temer.

Yet his absence in the elections isn’t enough to ensure a market-friendly candidate will win, cautioned Christopher Garman, Eurasia Group’s director for the Americas. “There’s no clear pro-reform candidate who’s also aligned with the public opinion,” he told Bloomberg in a recent interview.

©2018 Bloomberg L.P.

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