Ex-Brazil President Lula sentenced to nearly 10 years for corruption

BRASILIA, July 12 (Reuters) - Former Brazilian leader Luiz Inacio Lula da Silva, a top contender to win next year's presidential election, was convicted on corruption charges on Wednesday and sentenced to nearly 10 years in prison.

The ruling marked a stunning fall for Lula, who will remain free on appeal, and a serious blow to his chances of a political comeback.

Lula was Brazil's first working-class president and remains a popular figure among voters after he left office six years ago with an 83-percent approval rating. The former union leader won global admiration for transformative social policies that helped reduce stinging inequality in Latin America's biggest country.

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Scarlet ibis fly near the banks of a mangrove swamp located at the mouth of the Calcoene River on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes 
Birds fly over the mouth of the Araguari River on the coast of Amapa state, near Amapa city, northern Brazil, March 31, 2017. REUTERS/Ricardo Moraes 
Jailson, a crab collector, tries to pick a crab at a mangrove swamp located at the mouth of the Calcoene River on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes
Waves reach a forest on the banks of Atlantic Ocean on the coast of Amapa state near Oiapoque city, northern Brazil, March 31, 2017. REUTERS/Ricardo Moraes 
A house stands among rivers next to the mouth of Amazonas River on the coast of Amapa state, near Macapa city, northern Brazil, March 31, 2017. REUTERS/Ricardo Moraes
Mangroves grow on the banks of Oiapoque River on the coast of Amapa state, near Oiapoque city, northern Brazil, April 3, 2017. REUTERS/Ricardo Moraes 
Valeria Leal's home is seen on an island in the Oiapoque River in Amapa state, Brazil, April 4, 2017. Oiapoque city is seen in the background REUTERS/Ricardo Moraes
Valeria Leal stands on the deck of the house where she lives on an island in the Oiapoque River in Amapa state, Brazil, April 4, 2017. Oiapoque city (R) and the French Guiana are seen in the background. REUTERS/Ricardo Moraes
Isabel Fortes, 65, an indigenous woman from the Karipuna tribe, prepares manioc flour on the banks of Oiapoque River on the coast of Amapa state, near Oiapoque city, northern Brazil, April 4, 2017. REUTERS/Ricardo Moraes
Jailson, a crab collector, tries to pick a crab at a mangrove swamp located at the mouth of the Calcoene River on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes
A flooded farm is seen near the mouth of Araguari River on the coast of Amapa state, near Amapa city, northern Brazil, March 31, 2017. REUTERS/Ricardo Moraes
A Scarlet ibis stands in trees in Cabo Orange National Park on the coast of Amapa state, near the mouth of the Oiapoque river, northern Brazil, April 3, 2017. REUTERS/Ricardo Moraes 
Denilson, a crab collector, shows his catch at a mangrove swamp located at the mouth of the Calcoene River on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes 
Fishermen unload fish off their boat at the banks of Amapa Grande River on the coast of Amapa state, in Amapa city, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes 
Scarlet ibis fly near the banks of a mangrove swamp located at the mouth of the Calcoene River on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes 
Marcos Paulo, an indigenous boy from the Karipuna tribe, plays in a hammock on the deck of his house on the banks of the Oiapoque River on the coast of Amapa state, near Oiapoque city, northern Brazil, April 4, 2017. REUTERS/Ricardo Moraes 
A boat navigates in Oiapoque River on the coast of Amapa state, near Oiapoque city, northern Brazil, April 3, 2017. REUTERS/Ricardo Moraes 
Francisco Assuncao de Lima, 65, a fisherman, carries fish in Calcoene, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes 
Scarlet ibis stand on the banks of a mangrove swamp located at the mouth of the Calcoene River on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes 
Fishermen navigate in the Atlantic Ocean on the coast of Amapa state, near the mouth of the Oiapoque river, northern Brazil, April 3, 2017. REUTERS/Ricardo Moraes
A boat stands during low tide at the mouth of the Calcoene River where it joins the Atlantic Ocean on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes 
A fisherman works on his fishing net on the banks of the Oiapoque river in Oiapoque city, northern Brazil, April 2, 2017. REUTERS/Ricardo Moraes
Fishermen unload fish from their boat on the banks of Amapa Grande River on the coast of Amapa state, in Amapa city, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes 
Francisco Assuncao de Lima, 65, a fisherman, leans on his fishing net in Calcoene, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes 
A child plays on the banks of the Oiapoque river in Oiapoque city, northern Brazil, April 2, 2017. The French Guiana is seen in the background. REUTERS/Ricardo Moraes
A cat sits below salted fish in Calcoene, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes
Boys celebrate a goal as they play soccer in Calcoene, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes 
A family is seen outside their house in Calcoene, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes
Mikimba, a fisherman, sits outside his house in Calcoene, northern Brazil, April 1, 2017. REUTERS/Ricardo Moraes 
A child plays on the banks of the Oiapoque river in Oiapoque city, northern Brazil, April 2, 2017. The French Guiana is seen in the background. REUTERS/Ricardo Moraes 
A farm worker washes his pig in a boat as they wait to sail up the river during low tide at the mouth of the Calcoene River, on the coast of Amapa state, northern Brazil, April 6, 2017. REUTERS/Ricardo Moraes
Rodolfo Antonio Ferreira da Silva, 62, works on his fishing net on the banks of the Oiapoque river in Oiapoque city, northern Brazil, April 2, 2017. REUTERS/Ricardo Moraes 
People gather at a small port from where boats cross the Oiapoque river between the Oiapoque city, northern Brazil and the French Guiana in Oiapoque, April 2, 2017. The French Guiana is seen in the background. REUTERS/Ricardo Moraes 
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The verdict represented the highest-profile conviction yet in the sweeping corruption investigation that for over three years has rattled Brazil, revealing a sprawling system of graft at top levels of business and government and throwing the country's political system into disarray.

Judge Sergio Moro found Lula guilty of accepting 3.7 million reais ($1.2 million) worth of bribes from engineering firm OAS SA, the amount prosecutors said the company spent refurbishing a beach apartment for Lula in return for his help winning contracts with state oil company Petroleo Brasileiro.

Federal prosecutors have accused Lula, who first took the presidency in 2003, of masterminding a long-running corruption scheme that was uncovered in a probe into kickbacks around Petrobras.

Lula's legal team has previously said they would appeal any guilty ruling. They have continuously blasted the trial as a partisan witchhunt, accusing Moro of being biased and out to get Lula for political reasons.

Moro has denied the accusations.

Lula's lawyers did not immediately respond to requests for comment.

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Senator Gleisi Hoffmann, the head of the Workers Party, lashed out at the ruling, saying Lula was convicted to prevent him from running for the presidency next year. She said the party would protest the decision and was confident the ruling would be overturned on appeal.

The Brazilian real extended gains following Moro's decision and reached its strongest in two months. The benchmark Bovespa stock index rose to a session high. Investors fear that another Lula presidency would mean a return to more state-directed and less business friendly economic policies.

"POWER VACUUM ON LEFT"

Lula would be barred from office if his guilty verdict is upheld by an appeals court, which is expected to take at least eight months to rule.

If he cannot run, political analysts say Brazil's left would be thrown into disarray, forced to rebuild and somehow find a leader who can emerge from the immense shadow that Lula has cast on Brazilian politics for three decades.

"Lula's absence opens a gaping hole in the political scene, it creates an enormous power vacuum on the left," said Claudio Couto, a political scientist at the Getulio Vargas Foundation, a top university. "We have now entered a situation of extreme political tension, even beyond the chaos we have been living for the last year."

Couto said he expected Lula's guilty verdict to be upheld by the appeals court. That would leave the 2018 presidential race wide open and raise chances of a victory by a political outsider, given most known contenders are also ensnared in Brazil's corruption investigations.

BOOM TO BUST

Lula's two-terms were marked by a commodity boom that momentarily made Brazil one of the world's fastest-growing economies. His ambitious foreign policies, aligning Brazil with other big developing nations, raised the country's profile on the global stage.

With Lula's swagger setting the tone, Brazil sought to shrug off northern economic and political hegemony and engage in global problems, like Middle East peace and the standoff over Iran's nuclear program.

Former U.S. President Barack Obama once labeled him the most popular politician on earth.

But upon leaving office and managing to get his hand-selected successor Dilma Rousseff elected, Brazil's economy soured, with the nation just now beginning to emerge from its worst recession on record.

Rousseff was impeached last year for breaking budgetary rules. She and her backers say her ouster was actually a 'coup' orchestrated by her vice president and now President Michel Temer, who himself faces corruption charges.

During his trial, Lula gave five hours of fiery and defiant defense, proclaiming his innocence and saying that it was politics and not the pilfering of public funds that put him on trial.

"But what is happening is not getting me down, just motivating me to go out and talk more," Lula said in his testimony. "I will keep fighting."

($1 = 3.22 reais) (Reporting by Brad Brooks; Additional reporting by Bruno Federowski in Sao Paulo; Editing by Paulo Prada and Andrew Hay)

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