January 24, 2018 / 4:22 PM / 9 months ago

UPDATE 3-Brazil court upholds Lula conviction

(Updates in first two grafs with majority of judges upholding Lula's conviction and adding to his sentence)

By Lisandra Paraguassu

PORTO ALEGRE, Brazil, Jan 24 (Reuters) - A Brazilian appeals court upheld the corruption conviction of former President Luiz Inacio Lula da Silva on Wednesday, a major blow to the plans of the country's most influential politician to run for the presidency again this year.

The first two of three judges voted to uphold Lula's convictions on taking bribes and money laundering and agreed with the prosecutors' request to lengthen the prison sentence of Brazil's first working-class leader, who remains free pending future appeals.

Lula, 72, could now be ineligible to stand for election under Brazil's "Ficha Limpa" or "Clean Record" law, which bans political candidates whose convictions are upheld by an appelate court. However, an electoral court must make the final ruling on a candidacy, and would only do so once a candidate had registered.

Lula can appeal Wednesday's decision to higher courts to delay a final decision, possibly avoiding jail and stringing the process out long enough to register his candidacy by the Aug. 15 deadline.

Lula is one of scores of powerful politicians and businessmen caught up in sweeping corruption probes that have wracked the Brazilian establishment since 2014.

His exclusion from the election would radically alter the political landscape ahead of a campaign in which Lula is the early favorite, with 36 percent of voter preferences according to pollster Datafolha. That is double the percentage of his nearest rival, the far-right congressman and former army captain Jair Bolsonaro, who has been energized by anti-Lula sentiment.

Brazil's benchmark Bovespa stock index has risen 8 percent so far this year, propped up by expectations Lula will be barred from the election, clearing the way for a more market-friendly candidate who would stick to Brazil's austerity agenda.

The Bovespa hit an all-time high on Wednesday as the first of three judges on the court began reading his decision, dismissing a series of arguments presented by Lula's lawyers.

Brazil's currency, the real, firmed 1.6 percent against the U.S. dollar, leading gains in Latin America.

MORE CASES

Lula faces six other indictments in corruption cases ranging from receiving bribes from engineering firm Odebrecht to obstructing justice and trafficking his influence to obtain government decisions favoring the auto industry. He is among over 100 people convicted in the "Car Wash" investigation, the most sprawling of Brazil's numerous probes, focused on graft involving oil firm Petroleo Brasileiro and other state-run companies.

Speaking at a union rally on the outskirts of Sao Paulo on Wednesday, Lula told the crowd, "I committed no crime."

"The only fair decision today would be a 3-0 ruling that I was wrongly convicted and sentenced," Lula said.

BEACHSIDE APARTMENT

Lula was convicted of corruption and money laundering last year for accepting a beachside apartment from an engineering firm vying for contracts with the state oil company known as Petrobras.

Prosecutors said the apartment and its refurbishing was a bribe worth 3.7 million reais ($1.1 million). Lula maintains he never owned the penthouse apartment, criticizing prosecutors for relying on the plea bargain testimony of one witness, businessman Leo Pinheiro.

"His word is not enough to incriminate Lula," Lula's lawyer Cristiano Zanin told the appeals court.

Writing and additional reporting by Anthony Boadle in Brasilia; Additional reporting by Bruno Federowski in Brasilia and Pablo Garcia in Sao Bernardo do Campo; Editing by Lisa Shumaker and Andrew Hay

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