Lula joins Brazilian cabinet

Former Brazilian President Luiz Inacio Lula da Silva was named chief-of-staff to embattled President Dilma Rousseff on Wednesday, the presidential palace confirmed.

Critics say the move is intended to protect the former president from a deepening corruption scandal.

The Cabinet post makes it harder for investigators to probe corruption allegations against da Silva because only Brazil's Supreme Court can authorize the investigation, imprisonment and trial of Cabinet members and legislators.

Prosecutors have accused him of accepting a luxury house and cash, allegations da Silva vehemently denies.

Despite being arguably the most popular president in Brazilian history when he left office at the end of 2010, the burgeoning Petrobras scandal, currently engulfing members and parties of both the governing coalition and the opposition, has soured many Brazilians on their one-time hero, da Silva, and his Workers Party (PT).

A severe economic recession has also badly damaged both da Silva and Rousseff’s public standing.

Prosecutors reached a plea-bargain deal with Senator Delcidio Amaral on Tuesday who, in turn, accused President Rousseff's former chief of staff of urging the senator not to testify in the corruption probe surrounding Petrobras, the state oil company.

President denies allegations

Amaral said he believed the former aide, Aloizio Mercadante, who is now the education minister, contacted him at the behest of President Rousseff. It is unclear whether Amaral offered any empirical evidence to substantiate his claims against Rousseff - allegations the president vigorously denied.

The president "vehemently and indignantly repudiates the attempt to associate her name with the personal initiative of Minister Aloizio Mercadante," her office said in a statement.

Amaral did provide prosecutors with tapes of conversations in which Mercadante urged him to "keep calm" and warned that "monumental responsibility in destabilizing the government" could fall on him if he talked to investigators.

Prosecutors have leveraged similar plea agreements throughout their probe - a sprawling bribery scandal, in which construction companies conspired with Petrobras executives to overbill the oil giant by some $2 billion (1.8 billion euros), of which some was used to bribe politicians and political parties.

"These revelations are going to cost the government dearly, as Senator Amaral was always a key figure in the government," said Ivar Hartmann, a political analyst at the Getulio Vargas Foundation in Rio de Janeiro.

"The way out of the crisis sought by the PT, with Lula's eventual participation in the government, is now even more difficult," he said.

On Sunday more than 1 million people, and perhaps as many as 3 million, took to the streets to demand President Rousseff's resignation.

bik/kms (AFP, Reuters, AP)