Brazil's Lula faces jail for corruption

Brazil's supreme court rejected a request from ex-president Luiz Inácio Lula da Silva to avoid his arrest, putting him closer to prison and farther away from a run at president.

In a tight vote, after nearly 11 hours of debate, the court voted 6-5 in favor of rejecting the habeas corpus requested by Lula's lawyers. Brazilians will go to the polls in October to vote for president, state governor and lawmakers.

"The ruling by Brazil's Supreme Court to imprison left-wing populist Lula all but ends his bid for the presidency and throws the election race wide open. While markets are likely to welcome the news when they open later today, there are reasons to think that any rally will be limited," said Edward Glossop, an economist at Capital Economics.

Lula (72) was sentenced last year by lower court judge Sergio Moro in relation to 3.7mn reais (US$1.1mn) in illegal benefits the former president (2003-11) is said to have received from engineering company OAS. The firm reportedly spent that sum refurbishing a beachfront apartment for Lula in return for contracts with state-run oil company Petrobras.

In January, the appeals court in Porto Alegre unanimously upheld the conviction and increased the original sentence of nine years and six months to 12 years and one month.

Now, with the rejection by the supreme court for the habeas corpus, Lula's lawyers are able to request just certain clarifications regarding votes but are not able to reverse the decision.

The arrest of the former popular leader is expected to take place after all clarifications are made by judges, and can take place in the coming weeks.

Lula is expected to face others sentences in coming months, as he is a defendant in nine different cases.

Lula's case is unique in Brazil as it represents the first time in which a candidate has been sentenced months before the election. His case must also be reviewed by the electoral court, which will decide if his Workers' Party candidacy can move forward even if he is under arrest, although experts think the chances of running for president while in jail are remote.

UNCLEAR ELECTION SCENARIO

Despite all legal challenges, recent polls show Lula as frontrunner, followed by ultra-right lawmaker Jair Bolsonaro of conservative PSL party.

With the absence of Lula, analysts see no clear scenario ahead. "With Lula leading most opinion polls by a large margin, the key question is what the ruling means for the election race. It's unclear where Lula's votes would go. But one point worth noting is that Lula would probably find it more difficult to transfer his votes to a new left-wing candidate from jail than from the campaign trail," Glossop added.

So far, centrist candidates, with a more market friendly approach suffer to gain ground.