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Former President Luiz Inacio Lula da Silva’s has been detained for questionning as part of a fraud inquiry into the state oil company Petrobras.
Police said they had evidence that Lula received illicit benefits from the kick-back scheme at state oil firm Petrobras in the form of payments and luxury real estate.
“Ex-president Lula, besides being party leader, was the one ultimately responsible for the decision on who would be the directors at Petrobras and was one of the main beneficiaries of these crimes,” a police statement said.
The once wildly popular leftist president has been linked to Brazil's biggest ever corruption case for the first time.
His home has been raided by Brazilian police early on Friday.
Over 30 search warrants and 11 detention warrants were being carried out, official say.
Addresses linked to one of his sons and the headquarters of the former's president's institute in Sao Paulo were also a target.
Lula's foundation said in a statement on Thursday that the former president had never committed any illegal acts before, during or after his presidential term.
Federal prosecutors who uncovered a huge corruption scheme at oil company Petrobras started looking into whether Brazil's former president received undue favours from engineering firms they are investigating this week.
In a letter to the Supreme Court made public on Monday, Deltan Dallagnol, the head of the investigation, argued for a federal probe because some of the alleged gifts were made while Lula was still in office.
The prosecutor’s suspect favours were extended to Lula by executives of engineering firms Odebrecht and OAS that have been charged with corruption and money laundering in the massive bribery and political kickback scandal involving contracts with state-run Petrobras.
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Lula, who was president from 2003 to 2010, has already faced police questioning over the financial dealings of one of his sons and now faces questioning by Sao Paulo state prosecutors over his alleged ownership of a beach-front penthouse triplex and country estate.
Brazil has been rocked by the growing Petrobras scandal that has ensnared dozens of members of its business and political establishment and could now implicate Lula.
Additional reporting by Reuters
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