Lula handed over power in 2010 but, as the alleged scandal simmers, President Dilma Rousseff, a former protege, has stepped into the debate with a passionate defense of the populist leader.
"I consider despicable and pathetic the attempts to tarnish his image," Rousseff said at a news conference in Paris this month.
Rousseff said Lula had built Brazil's global image and helped develop links with the international community.
Despite those comments, Rousseff's position is under scrutiny after Attorney General Roberto Gurgel said he would examine claims by businessman Marcos Valerio implicating Lula in a multimillion-dollar cash-for-votes scheme in Brazilian Congress.
Valerio's comments directly implicated Lula in the cash-for-votes scandal after an anti-corruption campaign launched by Rousseff was picked up by the media. The campaign led to 25 convictions last month and more newspaper reports have triggered prosecution cases.
Valerio alleges that Lula approved of a monthly payout scheme and that he used cash from it for personal expenses while in office. Lula denies the allegations, calling them all "lies."
Valerio was sentenced to more than 40 years in prison and fined $1.3 million. The Supreme Court branded Valerio the "operator" of the scheme that gave legislators cash handouts in return for their support of Lula's policies after he took office in 2003.
Valerio made the allegations to federal prosecutors that have been called into question because of the timing of the testimony. Valerio was already convicted but was awaiting sentencing when he made the allegations. Lula loyalists and critics of Valerio say the testimony is flawed.
Gurgel noted this when promising to look into Valerio's testimony.
"Marcos Valerio has frequently made statements that he considers bombastic and when we analyze them in depth, there's nothing there," said Gurgel. "But we're going to see what's behind this statement and whether it could be the basis for other investigations. As always, nothing will fail to be investigated."
Critics of the former president have implicated Lula in alleged corrupt dealings before but have failed to follow those through.
Lula left office in 2010 with an 87 percent approval rating. His previously announced plans to return to power after a single-term Rousseff presidency have been abandoned, mainly because of health issues.
Although Lula has denied any wrongdoing, several people close to him to him were convicted, including former Chief of Staff Jose Dirceu, who was sentenced to 11 years in prison on charges of racketeering and of leading the cash-for-votes scheme in Congress.
Critics say Lula lost his immunity to prosecution when he left the presidential office. Gurgel says that with the loss of that immunity it is up to a prosecutor in a lower-level court to investigate the case.