* Court orders video mocking mayoral candidate banned
* Appeals exhausted, Google obeys censorship order
* Google Brazil chief faced arrest for non-compliance
* Court decision violates free-speech ideal, Coelho says
RIO DE JANEIRO, Sept 27 (Reuters) - The Brazilian unit of Google (GOOG.O), the world's No. 1 Internet search engine, said on Thursday it had obeyed a court order to remove a video attacking a candidate in Brazilian municipal elections from its YouTube service after legal appeals were exhausted.
"We are profoundly disappointed to not have the opportunity of openly debating our arguments in the electoral justice system that the videos were legitimate manifestations of the freedom of expression and should continue (to be) available in Brazil," said Fabio Coelho, director-general of Google in Brazil in an e-mailed statement.
The legal challenges underscore broader questions about Google's responsibility for content uploaded by third parties to its websites, including an anti-Islam video that sparked a wave of protests and violence in the Muslim world. [ID:nL5E8KLNNP]
An arrest warrant was issued for Coelho earlier this week by a court in Brazil's Mato Grosso do Sul state after Google failed to obey an order demanding removal of the video attacking a mayoral candidate. [IDnL1E8KPLW5]
Judges in Brazil have held executives responsible for resisting the removal of online videos in violation of a stringent 1965 Electoral Code. The law bans campaign ads that "offend the dignity or decorum" of a candidate.
Google, which says it complies with local law but fights "diligently" to protect free speech, complied with the judge's order after it ran out of appeal chances, Coelho said.
On Wednesday, Coelho was questioned by Federal Police officers over the failure to remove the video and was later released.
"Despite this, we will continue with our global campaign for liberty of expression, not just because it is a prerequisite for a free society but also because more information generally means more schools, more power, more economic opportunities and more liberty for people," he said.
DEFAMING THE PROPHET
The person or persons who posted the offending videos "ironically" removed them on their own accord and closed their YouTube account, Coelho said.
"This is just one example of the intimidation effect of such an episode for freedom of speech," he added.
Earlier this month, an electoral court in Brazil's Paraiba ordered the arrest of another senior Google executive, Edmundo Luiz Pinto Balthazar, after the company refused to take down a YouTube video mocking a mayoral candidate there.
The video clip loaded by the user "Paraiba Humor" seized on a verbal slip by a candidate in a montage remarking, "What an idiot - give him an F!" Within days, another judge overturned the order to arrest Balthazar, writing that "Google is not the intellectual author of the video, it did not post the file and for that reason it cannot be punished for its propagation."
Brazil also entered a broader international debate this week about an inflammatory YouTube video depicting the Prophet Mohammad as a womanizer, fool and child abuser, when a state court in Sao Paulo ordered Google to take down the video. World leaders have decried the video, which set off a string of violent protests in the Muslim world, including attacks on U.S. embassies in Egypt, Libya and Yemen. Several Muslim leaders called for international action to outlaw acts of blasphemy. When President Barack Obama addressed the U.N. General Assembly on Tuesday, he repeated his condemnations of the video as "crude and disgusting" but defended the importance of free speech in the United States and throughout the world.
Ruling on a lawsuit by Brazil's National Islamic Union, Sao Paulo Judge Gilson Delgado Miranda gave Google 10 days to remove the video. In his decision, Miranda said he weighed freedom of expression against the need to protect against action that might incite religious discrimination.
(Reporting By Jeb Blount; editing by Todd Eastham)
((Jeb.Blount@thomsonreuters.com)(+55-21-2223-7143)(Reuters Messaging: email@example.com)) Keywords: GOOGLE BRAZIL/CENSORSHIP
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