By Anthony Boadle
BRASILIA (Reuters) - Brazil's top court voted narrowly on Wednesday to allow retrials in the country's biggest-ever political corruption case, a decision seen by many as a major setback for efforts to hold Brazilian officials accountable for wrongdoing.
The ruling could save Jose Dirceu, the political leader in the so-called "mensalão" or monthly payment scandal, from going to prison. Dirceu was chief of staff to former president Luiz Inacio Lula da Silva when a scheme to pay legislators a regular allowance in exchange for support was uncovered in 2005.
On Wednesday, nine months after it convicted 25 people in what was considered a landmark ruling in a country notorious for corruption, the Supreme Court voted 6-5 to allow a retrial on charges for which defendants received at least four votes for acquittal. The convictions were for crimes including corruption, racketeering and money laundering.
The trial, years in the making, was the first time in Brazil that the Supreme Court had convicted leading politicians for corruption. Wednesday's ruling will undermine the credibility the court gained in the eyes of Brazilians as the only institution committed to ending the impunity enjoyed by Brazil's ruling class, long seen as venal and self-interested.
After widespread protests in June against rising prices, poor public services and corruption, the reversal could fuel new unrest. "This is shocking. It is very bad news for Brazil and very bad news for the Supreme Court," said David Fleischer, a professor of politics at the University of Brasilia.
Among those voting against the retrials was court President Joaquim Barbosa, Brazil's first black chief justice, who became so popular for seeking harsh sentences in the trial that some Brazilians wanted him to run for president.
Celso de Mello, the oldest member of the court who cast the decisive vote on Wednesday, said the court could not be subject to external pressures and the "the demands of the populace."
If the decision results in more lenient prison sentences, it will confirm the prevailing view among many Brazilians that impunity rules when it comes to politicians, said Leo Torresan, head of the Brazilian chapter of Transparency International.
It could also reaffirm the idea that even minor reforms toward accountability are done mostly for show.
The June protests, an unexpected outburst of discontent that shook Brazil's political establishment, led Congress to rush through an anti-bribery law and other measures to increase accountability. But on August 28, the lower house shocked the country by voting to allow Natan Donadon, a lawmaker jailed for embezzlement, to keep his seat while in prison.
Meanwhile, three of those convicted for the mensalão still hold seats in Congress, including Jose Genoino, who was president of the ruling Workers' Party when the scandal erupted, and João Paulo Cunha, a former speaker of the lower house.
COURT TURNOVER TIPS BALANCE
Dirceu, Cunha and the party's former treasurer Delubio Soares will likely get retrials that could reduce their sentences and allow them to do time in an open regime, meaning they would only have to spend nights at a detention center. Genoino could also see his sentence reduced.
Two chief justices appointed to the court by President Dilma Rousseff after the convictions in November tipped the balance in favor of retrials.
One of them, Luis Roberto Barroso, acknowledged that most Brazilians wanted a swift end to the trial.
"I too am tired of this trial. Nobody wants to prolong it, but I think they have the right (to a retrial) and that's what the Constitution is for, so that the interests of (a few) do not get trampled on by the desire of millions," he said last week in justifying his vote in favor of a retrial.
The ruling will extend the trial into 2014, an election year, and keep alive a scandal that severely tarnished the reputation of the Workers' Party as Brazil's most honest party.
That could be bad news for Rousseff, who is widely expected to seek re-election next year.
Dirceu, 67, helped former labor leader Lula found the Workers' Party in 1980 and was instrumental in his rise to the presidency two decades later. He was the most powerful member of Lula's cabinet until he resigned in 2005 when the corruption scandal broke.
For many Brazilians, his conviction showed that their country's democratic institutions, while not perfect, had matured, especially a judicial system that historically was unable and often unwilling to punish corrupt politicians.
Lula's first term was crippled by the scandal though he was easily re-elected for a second four-year term, helped by an economic boom. Lula, who was not charged in the scandal, has denied any knowledge of the scheme and has even suggested it never existed.
(Editing by Paulo Prada and Cynthia Osterman)