Brazil’s ruling party was newly buffeted on Thursday as federal prosecutors opened an investigation into former President Luiz Inácio Lula da Silva for alleged influence peddling on behalf of a Brazilian construction giant.
Officials are trying to determine whether the popular Mr. da Silva used his clout upon leaving office to convince international leaders to award contracts to Odebrecht SA, and to push Brazil’s development bank, known as BNDES, to finance those deals with subsidized loans.
Under Brazilian law, both acts are criminal offenses, with influence peddling punishable by up to five years in prison. The alleged offenses occurred between 2011 and 2014, after Mr. da Silva left office, and involved a series of big infrastructure deals that Odebrecht won with nations including Ghana, Angola, the Dominican Republic and Cuba.
Mr. da Silva has previously denied the allegations, which surfaced earlier this year in article by Brazilian news magazine Epoca. On Thursday, a spokesman for the Instituto Lula, Mr. da Silva’s private foundation, said it would “prove the legality and fairness of all [his] activities.”
In a Thursday statement, Odebrecht denied any wrongdoing and said it maintains only an institutional relationship with Mr. da Silva.