FCPAméricas Blog
A New Focus in the Car Wash Probe
7.09.2019
This guest post is from Victoria Arcos and Fernanda Martins, anti-corruption lawyers at KLA Koury Lopes Advogados in Brazil.
Brazilian anti-corruption efforts have a new focus – money laundering by banks. These are new targets and are directly connected to the illicit activity and vast corruption schemes that have been under investigation for the past years.
For example, on May 8, 2019, arrest warrants were issued for 3 executives of Banco Paulista S.A allegedly involved with money laundering orchestrated for the construction conglomerate Odebrecht S.A. The executives are alleged to have been involved with fictitious contracts presented by the bank as supporting documentation for wire transfers in connection with Odebrecht’s Division of Structured Operations, also known as “bribery department”.
Rumors had circulated that the probe´s new phase would focus on financial and banking institutions, that some claim have helped launder millions of reais in connection with the bribery schemes. It is noteworthy that this new phase is under the responsibility of the probe´s new chief judge, Luis Antônio Bonati (the replacement for the current Minister of Justice Sérgio Moro).
Publicly available information provided by the Brazilian Federal Police indicates that this new chapter of the Car Wash has required the participation of 170 federal police officers to perform 41 dawns raids in 35 different locations in the cities of São Paulo, Rio de Janeiro and Porto Alegre.
Pursuant to the Car Wash investigations, approximately BRL 48 million would have been laundered between 2009 and 2015 by Banco Paulista S.A with a modus operandi similar to the kinds that have already been witnessed: use of overseas bank accounts; supposedly forged contracts; use of brokers, shell companies and offshore entities. An additional BRL 280 million of loans by the bank to presumed shell companies is also reportedly under investigation.
In relation to the use of overseas banks, Odebrecht would have deposited values in accounts at Meinl Bank, in the Caribbean, which were then withdrawn by brokers and delivered to Banco Paulista S.A in cash. Banco Paulista S.A would thereafter have entered into contracts with consulting companies that belonged to partners of Meinl Bank. These consulting agencies allegedly had no employees, and 99% of their income was said to be associated with Banco Paulista S.A.
The technical department of Brazil´s Central Bank is also said to be investigating an allegation that Banco Paulista S.A. made 401 payments to collaborators for services that were never rendered.
Six partners of the Meinl Bank have already become collaborators and are providing information to the Brazilian authorities.
The executives of Banco Paulista S.A. were released on June 12, 2019, under protective measures, including payment of bail, relinquishing passports and prohibitions to leave the country.
Uncertainty looms over this new phase. It could possibly result in investigations and measures as vast as those that originated the Car Wash Probe. The trigger has been fired, but the next chapters remain unclear.
The opinions expressed in this post are those of the author in his or her individual capacity and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.
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