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stephanie nolen

Stephanie Nolen

Prosecutors in the sweeping Brazilian corruption investigation known as Lava Jato were dealt their first serious setback on Wednesday. The country's Supreme Court ruled that one case in the now many-tentacled investigation should be moved to a court in Sao Paulo, away from the jurisdiction of Judge Sergio Moro in Curitiba in the south of the country, where all of the proceedings have occurred until now.

It seems like a fairly innocuous ruling – but defence lawyers for the dozens of senior political figures and business leaders accused in the case have been fighting for more than a year to get their cases moved out of Judge Moro's court. One of the prosecutors, Carlos dos Santos Lima, told the newspaper Folha de Sao Paulo that this could be "the end of Lava Jato as we know it."

The Lava Jato case has riveted Brazilians for the past 18 months both because of its scale and the unprecedented degree to which it has removed the impunity of powerful people.

Judge Moro has been afforded hero status by Brazilians angry at the ongoing revelations about graft, and the order to move this one case away from his jurisdiction was seen by many people as the first breach in the wall of integrity that has made this investigation so unusual. A number of prominent business and political figures have already been convicted and sent to jail – an occurrence that would have been unthinkable just a few years ago – and the public reaction to this ruling reflects a fear that other courts will not act with the fearlessness many believe Judge Moro has shown.

"The bullet-proof coating on Lava Jato was broken for the first time," wrote columnist Ricardo Noblat in the Rio newspaper O Globo. "So now it will be easier to break it when ever necessary. Wait and see."

In the majority opinion, Supreme Court Justice Dias Toffoli argued that an investigation into whether President Dilma Rousseff's former chief of staff Gleisi Hoffmann received bribes related to a federal planning ministry contract with a software firm was unrelated to Petrobras and could be heard by a different judge. (Ms. Hoffmann has not been charged and has said she received no benefit from the software company.) The case was part of the Petrobras prosecutions because the accusations originated in evidence from that investigation.

The court said that non-elected suspects in the alleged planning ministry fraud should be judged by a court in Sao Paulo state and not by Judge Moro. (Elected office-holders can only be tried by the Supreme Court.)

A dissenting justice, Gilmar Mendes, said that scattering the cases to courts around the country, "based on where one or two events occurred," could irretrievably compromise the criminal prosecutions.

This past week, Judge Moro convicted Joao Vaccari, who was treasurer of the ruling Workers' Party during the 2010 electoral campaign, and Renato Duque, a former Petrobras director, and eight others of money-laundering and criminal association for receiving $1.1-million (U.S.) in bribes for Petrobras contracts.

Sentencing them, he wrote that the defence's efforts to "disperse" the cases around the country "don't serve the cause of justice."

Judge Moro, 43, is an expert on financial crimes and money-laundering and has worked as an aide on the case known as the "Mensalao," which was until now Brazil's biggest corruption case and involved bribes-for-votes in Congress.

He has publicly criticized the law that says only the Supreme Court can try sitting politicians, saying it provides hierarchies of justice.

While Lava Jato is unquestionably a national case, prosecutors in the state of Parana have been running the case and Judge Moro is hearing it, because the initial alleged bribery took place there and investigations began there.

Judge Moro had previously rejected attempts by defence lawyers to have the cases broken up – even though Lava Jato has by now ballooned well beyond contract procurement at Petrobras – on the grounds that they all originated from that initial bribery investigation and are all connected.

Directors at state-run Petrobras are alleged to have taken more than $2-billion (U.S.) in bribes from construction and infrastructure firms to award contracts, and to have funnelled a percentage of their takings to government officials.

A new law that provides for lighter sentencing for those who co-operate with police and prosecutors has led to an unprecedented spate of revelations by informants.

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