Petrobras Scandal: Brazil’s High Court Rules Authorities Can Question Former President Lula da Silva In Growing Political Kickback Investigation

The ongoing investigation into who benefited from political payoffs from Brazil’s state-owned oil giant Petrobras has netted former Brazilian President Luiz Inacio Lula da Silva. The country’s high court ruled late Friday the former leader of the world’s seventh-largest economy can be interrogated by police about his possible involvement in the kickback scandal that cost Petrobras $2 billion last year.

Police said last month in a petition to the high court, which handles cases involving federal politicians, Lula “could have benefited from the scheme at Petrobras, obtaining benefits for himself, his Workers' Party (PT) or even his government,” AFP reported.

Lula, who was president of Brazil from 2003 to 2010, has been named in testimony from defendants seeking reductions in their sentences, but no specific allegations have been announced. Last month, Jose Dirceu, Lula’s chief of staff (2003-05), was charged by federal prosecutors with corruption, money laundering and racketeering. He’s the highest ranking PT member to face formal charges.

A former party treasurer is also facing trial. Current President Dilma Rousseff headed Petrobras during the time the company allegedly was being overcharged for construction and other services through a web of payments from company officials to a group of local companies. The kickback scheme dated as far back as 2004. Prosecutors said it involved companies deciding who would win a contract, such as servicing an oil rig or installing a building at a refinery, creating a false impression of competitive bidding. The scandal exposed Brazil’s close network of executives and politicians raiding the country’s single most important source of public revenue.

Lula is already being investigated for alleged use of his influence after leaving office to help engineering conglomerate Odebrecht SA win business abroad.

Shares of Petroleo Brasileiro SA -- Petrobras (BVMF:PETR3) -- gained more than 13 percent this week after the company said it would raise gasoline prices.