The chairman of Brazil's governing Workers' Party has resigned amid mounting corruption allegations against President Lula's core supporters.
Jose Genoino is the third party member to resign in a week
Jose Genoino denied any wrongdoing after weeks of unrest during which his party was accused of paying bribes to MPs to shore up its coalition.
His decision to resign followed a bizarre arrest on Friday.
An adviser to his brother was seized at an airport with nearly $200,000 in cash stuffed in his underpants and luggage.
Mr Genoino's brother, Jose Guimaraes, represents the Workers' Party at state level in the north-east of Brazil.
The BBC's Steve Kingstone reports that it is unclear whether this was hard evidence of corruption or Mr Genoino was somehow being set up.
However, our correspondent reports, front-page newspaper photographs of the money led inevitably to his resignation.
Mr Genoino became the third member of the party's executive to step down in less than a week.
The suspicious money was intercepted before a domestic flight
"The Workers' Party does not buy and does not pay deputies," he told reporters as he announced his departure.
"We have made mistakes... but we do not practise irregularities, we do not practice any illicit activities."
Repeatedly over the past month, the Workers' Party has denied allegations that it paid bribes to lawmakers in return for parliamentary support.
But it has since been forced to admit to financial dealings with the advertising executive now at the centre of the police investigation.
Officers are studying large cash withdrawals from the company bank accounts of Marcos Valerio.
He denies opposition claims that the money was used for bribes.
Until now, the country's president has remained above suspicion.
But in an opinion poll published on Saturday, 55% of those questioned said that in their opinion Lula knew that bribery had been taking place.