Latin America & Caribbean

Brazil's ex-President Lula faces misconduct inquiry

Luiz Inacio Lula da Silva at the 31st anniversary of the Workers Party on 10 February, 2011
Image caption Luiz Inacio Lula da Silva has not commented on the allegations

Federal prosecutors in Brazil say they are opening a case against former President Luiz Inacio Lula da Silva for alleged misuse of public funds.

They say the ex-president sent out 10 million letters to older Brazilians promoting low-interest loans in 2004.

They allege the letters were not in the public interest and benefited a bank which was linked to another corruption scandal.

Lula has not yet commented on the allegations.

One of his cabinet members, former Social Security Minister Amir Lando, is also being investigated.

'Self-promotion'

The two allegedly sent out the letters to 10.6 million retirees in 2004 at a cost of around $3.5m.

The letter informed pensioners of a new credit scheme which would allow them to take out loans at a reduced rate of interest.

At the time, the only Brazilian bank offering those loans was the private financial institution BMG.

According to prosecutors, the letters served no social, informative or educational aim.

"In light of our investigations, we can easily conclude that the aim of the letters was one of self-promotion, praising the effects [of the low-interest loan scheme] and therefore advertising it, and at the same time benefiting the BMG bank," the prosecutors added.

Prosecutors have asked Lula and Mr Lando to repay the authorities the money spent on the mailing and postage of the letters.

Lula has not commented on the allegations.

Mr Lando told reporters that the letters only served to inform the recipients of the new loan scheme. He said it did not list or promote any specific banks.

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