Brazil's Lula says charges aimed at wrecking his political career

By Natalia Scalzaretto

SAO PAULO (Reuters) - Brazilian former President Luiz Inacio Lula da Silva on Thursday dismissed corruption charges against him as a fabrication and said he was being framed to stop him from running for the presidency in two years time.

Still Brazil's most popular politician despite involvement of his Workers Party in the massive Petrobras graft scandal, Lula cried and laughed as he dismissed charges that could lead to his arrest and end his political career.

"Prove I committed one act of corruption and I will walk to the police station and hand myself in," the gravelly-voiced Lula said at his first public appearance since he was formally charged on Wednesday.

Prosecutors charged him with corruption and money laundering for allegedly taking bribes disguised as favors from an engineering firm implicated in the sprawling bribery and political kickback scheme at Petrobras, the state-run oil company.

Tears came to Lula's eyes as he recalled going hungry as a child before he rose to become a union leader, founded Latin America's most important leftist party, and was elected as Brazil's first working-class president.

The 70-year-old Lula was a hero to many poor Brazilians during his 2003-2010 government, which helped to raise more than 30 million people out of poverty.

Lula said he would collaborate with prosecutors because he had committed no crime, and he pleaded for respect for his wife, who has also been charged in a case involving a luxury apartment in the coastal resort of Guarujá that prosecutors allege was given to Lula as a bribe by construction company OAS.

Lula has not ruled out a presidential bid in 2018; polls show he would beat other candidates in a first round but lose a runoff. However, a criminal conviction would bar him from running for eight years.

With its former treasurer in jail and other party members under investigation in the Petrobras scandal, Lula's party is expected to suffer big losses in mayoral races next month. Some analysts predict the party could lose half of its majors.

Lula was charged two weeks after his hand-picked successor Dilma Rousseff was removed from office in an impeachment trial that was driven by discontent with her management of the economy, now in its second year of recession.

"The damage to the Workers Party is enormous. The creator and the creation are being systematically demolished," said Thiago de Aragao, a partner at Arko Advice consultancy.

Lula's fate is now in the hands of crusading anti-corruption Judge Sergio Moro, who has until Monday to decide whether to indict the former president.

Earlier on Thursday, Moro sentenced a friend of Lula's, rancher Jose Carlos Bumlai, to nine years in jail for a fraudulent loan to the Workers Party that was allegedly repaid with a lucrative Petrobras drillship contract.

Brazilian media reported that police are investigating the Workers Party governor of Minas Gerais state, Fernando Pimentel, for facilitating loans by the national development bank BNDES to finance projects in Argentina and Mozambique by Brazil's largest builder, Odebrecht, when he was a minister in Rousseff's government.

Construction magnate Marcelo Odebrecht is serving a 19-year prison sentence for bribery, money laundering and organized crime for his part in the Petrobras scheme in which billions of dollars were siphoned off overpriced contacts with Petrobras.

(Writing by Anthony Boadle; Editing by Daniel Flynn and Leslie Adler)

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