Why is Brazil ex-leader Lula caught up in corruption scandal?

Federal police officers are deployed at the Lula Institute headquarters in Sao Paulo, Brazil on 4 March, 2016. Image copyright AFP
Image caption Police searched the offices of the Lula Foundation and the ex-leader's home

In the early hours of 4 March, the home and other properties belonging to Brazil's former president Luiz Inacio Lula da Silva were raided as part of a huge corruption investigation.

Lula himself was taken to a police station and released after three hours of questioning.

Here we look at how the popular ex-leader has come to be at the centre of a multibillion-dollar corruption scandal that has already seen dozens of lawmakers arrested.

What happened on 4 March?

Image copyright AFP
Image caption Lula had hinted recently that he was considering running for president again in 2018

Police knocked on the door of Lula's house in Sao Bernardo do Campo in the greater Sao Paulo area at 06:00 local time (09:00GMT).

Officers took the ex-president in an unmarked car to a police station at Congonhas airport for questioning.

The officers escorting Lula to the police station were acting under a judge's order called a "conducao coercitiva" (bench warrant) which means that a person is commanded to appear before authorities to give testimony.

Police searched his house in Sao Bernardo, the offices of the Lula Institute – a non-governmental organisation founded by the ex-leader – and the homes of some of his family members and associates.

In total, 200 police officers enforced 33 search and 11 arrest warrants at locations in three Brazilian states.

What's behind Lula's detention?

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Image caption The corruption scandal revolves around contracts awarded by state-owned oil company Petrobras

Lula's detention is part of a long-running investigation into a massive corruption scandal at Brazil's state-owned oil company, Petrobras.

The investigation is called Operation Lava Jato (Car Wash) and was launched by Judge Sergio Moro in March, 2014.

Investigators allege firms and businessmen paid corrupt officials huge bribes in order to secure lucrative Petrobras contracts.

They say that starting in 2003, construction companies formed a cartel to overcharge Petrobras for building contracts.

They would then pay part of their windfall to Petrobras executives and politicians who were in on the deal.

Prosecutors allege that the governing Workers' Party partly financed its campaigns and expenses through these kickbacks.

The scandal has rocked Brazil's political establishment, with top politicians in several parties accused of taking bribes.

Where's Operation Car Wash at?

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Image caption Lula's detention was headline news on Brazilian channels

The investigation has been under way for almost two years and is in its 24th "phase" (a phrase used by investigators when they follow new lines of enquiry).

Top executives at Petrobras and dozens of directors of Brazil's largest construction and engineering firms have been arrested.

Dozens of influential politicians, including the treasurer of the governing Workers' Party, Joao Vaccari Neto, and Lula's former chief of staff, Jose Dirceu, have been arrested.

But it is not just politicians from the governing party who have been linked to the scandal.

President Dilma Rousseff's fiercest rival, lower house speaker Eduardo Cunha of the PMDB party, has also had his home raided by police.

Prosecutors say he took as much as $40m (£28m) million in bribes, which he denies.

What's Lula being questioned about?

Image copyright Reuters
Image caption The investigation centres on a luxury penthouse in the resort of Guaruja, estimated to be worth up to $550,000

Prosecutors allege Lula received "illicit benefits" from the kickbacks scheme, such as having one of the construction firms involved in the scandal renovate a luxury beachfront apartment and a ranch owned by Lula's family.

They say that "the suspicion is that the improvements and the properties are bribes derived from the illegal gains made by OAS [construction firm] in the Petrobras graft scheme".

Investigators say they also have evidence that in 2014 the ex-president received at least $270,000 (£190,000) worth of furniture and improvements for the beachfront apartment in Guaruja.

They say they are also looking into sums paid to Lula by construction firms involved in the scandal as donations or speaking fees.

Lula has denied any wrongdoing.

What are the implications for the government?

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Image caption The corruption scandal has led to a plummeting in approval ratings of President Rousseff and her predecessor, Lula

Lula was the political mentor of current President Dilma Rousseff.

As early as 2014, President Rousseff acknowledged that "this [scandal] may change the country forever".

Ms Rousseff chaired the Petrobras board of directors from 2003 to 2010.

She has denied knowledge of any wrongdoing but many of her critics have questioned how she could not have been aware of such a wide-ranging kickback scheme at Petrobras while she held a senior position at the oil giant.

How have Brazilians reacted?

Image copyright Reuters
Image caption Supporters of Lula gathered outside his apartment building

Supporters and opponents of Lula gathered outside Lula's house and the police station where he was being questioned and shouted slogans for and against the former president.

His supporters say Lula's detention is part of a dirty war against the former leader, who recently hinted that he was considering running for president in the 2018 election.

A spokesman for the Lula Foundation called his detention "an assault against the rule of law that impacts all of Brazilian society".

But public prosecutor Carlos Fernando dos Santos Lima said that the move showed that no-one was beyond the power of the law in Brazil.

"Anyone in Brazil is subject to be investigated when there are indications of a crime," he said.

What's been the effect on the Brazilian economy?

Image copyright AFP
Image caption Brazilians say they are fed up with corruption and disillusioned with the political establishment

In the immediate aftermath of Lula's detention, markets rallied.

Brazil's currency gained more than 3% against the dollar and shares in Petrobras surged by 14%.

Analysts said traders were betting on the possibility of a new coalition taking over power which could be more market-friendly than the current government led by President Rousseff.

But so far the corruption scandals besetting the country have proven very costly.

Last year, Petrobras revealed it had lost $2bn in corruption-related costs.

And on 3 March official figures showed that Brazil's GDP had contracted by 3.8% in 2015, a worse performance than almost any other major economy.

While this is partly due to low commodity prices and sluggish global growth, continuing news of corruption at the highest levels has deterred some investors and angered the Brazilian public, analysts say.