Brazil's Lula Names Heir Amid Heated Presidential Campaign

(Bloomberg) -- Brazil’s imprisoned leader Luiz Inacio Lula da Silva on Tuesday endorsed his running mate Fernando Haddad as his party’s presidential candidate after electoral officials barred the leftist icon from running in the October election.

The endorsement came just before the end of a Sept. 11 deadline for the Workers’ Party to name a replacement for Lula, who has been sentenced to over 12 years in prison for corruption and money laundering. According to the country’s “clean slate” law, people with a criminal conviction upheld on appeal cannot run for elected office.

“Brazil’s judiciary has taken the right of the people to choose freely,” Lula said in a letter written from his jail cell that was read out loud by Luiz Eduardo Greenhalgh, a founding member of the Workers’ Party. “They’re censoring me like they did during the military dictatorship,” Lula wrote, asking his supporters to vote for Haddad instead.

Even before officially picking up the baton from Lula, Haddad gained substantial voter support in the most recent Datafolha opinion poll published on Monday. The 55-year-old former Sao Paulo mayor is now in a statistical tie for the second place with three other contenders -- fellow leftist candidate Ciro Gomes, environmentalist Marina Silva and former Sao Paulo Governor Geraldo Alckmin. Running first is former Army captain Jair Bolsonaro, who modestly extended his lead after being stabbed and nearly killed at a rally last week.

Another poll released late on Tuesday by Ibope confirmed Haddad and three other candidates are statistically tied in second place, while Bolsonaro got a boost.

Market Fears

Since his indictment over two years ago, the still popular Lula has denounced a conspiracy to prevent his return to power, with his supporters blasting his message on streets and to the media at home and abroad.

Investors are concerned about a return to heavy government intervention in the economy, with the Workers’ Party proposing to tax banks that charge high interest rates, introduce capital controls and force public banks to offer cheap credit.

Investors dumped Brazilian assets on Tuesday as the prospects of market-friendly candidates have dimmed ahead of Oct. 7 vote. The real weakened 1.6 percent while the benchmark Ibovespa index lost 2.3 percent.

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