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Aug. 12, 2005 / 12:05 PM

Brazil: Scandal creeps closer to Lula

BRASILIA, Brazil, Aug. 12 (UPI) -- Brazil's ongoing political scandal crept closer to implicating the president after his election coordinator admitted to using undeclared funds for campaigns.

The undeclared funds from contributors abroad were used for lawmakers in the ruling Workers' Party, said Duda Mendonca in his congressional testimony.

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Mendonca insisted that the funds were not used for the campaign of President Luiz Inacio Lula da Silva, O Globo reported Friday. Opposition lawmakers and critics of Lula insist the president used undeclared funds in his 2002 campaign.

Brazilian markets and currency traders reacted negatively to the late Thursday testimony of Mendonca.

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Luiz Inacio Lula da Silva

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