BRASILIA,  (Reuters) – The acting governor of  Brazil’s federal district resigned yesterday over a corruption  scandal that has tarnished one of the main opposition parties  and could affect the campaign of front-runner Jose Serra in  this October’s presidential race.

The resignation of Paulo Octavio effectively leaves the  federal district of the capital Brasilia without a government,  making it likely that President Luiz Inacio Lula da Silva will  have to appoint an interim administrator.

The district’s governor, Jose Roberto Arruda, was jailed  this month for interference with an investigation into a  suspected racketeering scheme.

Arruda, Octavio and several of their aides are accused of  getting kickbacks from construction firms in exchange for  public works contracts. They deny the charges.

Octavio owns one of the biggest construction firms in  Brasilia.

The scandal, widely publicized since it broke in November,  could hurt the chances of Arruda’s right-wing Democratas party  (DEM) in the Oct. 3 general election.

“This is unfortunate and it will be used against us,” DEM  chief Rodrigo Maia told local media.

Democratas is the main ally of Sao Paulo state Governor  Jose Serra of the centrist PSDB party, who leads Lula’s chief  of staff Dilma Rousseff in the presidential race, according to  recent opinion polls.

Serra had been expected to choose a DEM running mate as his  vice-presidential candidate but may now may try to bring on  board Minas Gerais state Governor Aecio Neves from his own  party.

Political analysts say the scandal may make it more  difficult for the opposition to take the moral high ground in  campaigning for the October election. It had planned to remind  voters this year of a 2005 campaign financing scandal involving  Lula’s Workers’ Party.

Corruption scandals tend to surface during election years  in Brazil. Numerous politicians, including congressmen and  mayors, are being investigated by federal police on suspicion  of lining their pockets in exchange for political favors.