BAC failed to assess adequately the risk that certain South American money service business customers were conducting illegal activity through a Manhattan office of the bank. Many Brazilian money service businesses conducted illegal transmittal operations through the account of a Uruguayan money remitter at the office of BAC’s subsidiary, Bank of America, N.A., at 110 West 33rd Street in Manhattan.
Now that the elections are over, the most eagerly awaited Brazilian literary event of the year will undoubtedly be the publication of a book by the former Estado de Minas reporter Amaury Ribeiro Jr.
Ribeiro is a respected, prize-winning investigative reporter once nearly assassinated by a drug mafia while researching a report on the phenomenon — and now, potentially, a criminal defendant. He is charged with hiring a shady character who submitted false documents to get his hands on the tax data of relatives of a major political candidate, and then paying hush money to the shady character. Or so says the shady character.
I reproduced some earlier coverage on the subject, but may have been hasty in taking at face value accusations that the reporter engaged in “checkbook journalism” in order to obtain the financial records of politically prominent figures.
In any event, Mr. Ribeiro is currently in legal difficulties that make Judy Miller’s contempt of court citation look like a littering ticket..
And yet, oddly enough, Ribeiro has not been elevated to the level of a martyr to press freedoms, as Judy was — grotesquely, in my view — before being quietly pushed into early retirement.
In any event, we should not prejudge the guy.
This is one of those brain-scrambling tales of dirty doings in high Brazilian places. Trying to follow all the shell corporations involved is like playing a game of four-dimensional three-card monte.
The story of the story has tended to be framed in terms of the national political contest, especially after the journalist reportedly testified to federal police that his research was motivated by a desire to counter opposition research designed to discredit Aécio Neves, a leading candidate for the PSDB presidential nomination.
The reporter was quoted as testifying that he became aware of an attempt by partisans of José Serra to subject Neves to a S.W.I.F.T. Boat treatment in order to abort his bid for the presidential nomination.
This alleged campaign on Serra’s behalf was allegedly run by former federal police agent and federal deputy Marcelo Itagiba of Rio de Janeiro — who failed in his bid for reelection in the recent elections.
If I ever write a political thriller, Itagiba is going to provide me with plenty of fodder. Meanwhile, rather transparent fictional references to the controversial lawmaker in the current sequel to the hit film Elite Troop — Tropa de Elite — has tongues wagging.
At any rate, this testimony by the reporter tended to contradict the thesis of an abortive scandal in which the “dossier” was attributed to the “campaign intelligence” team of the PT presidential candidate.
In fairness, I ought to add a «?» to that headline and translate the open letter from Amaury Ribeiro Jr. to Brazilian journalists for the record, in which he denies having received information by illegal means.
Also noteworthy has been the posting of an interview with the Swiss whistleblower who denounced bribes paid to São Paulo elected officials to a Wikileaks mirror site — an interview by Leonardo Attuch, be it said, who still figures pretty high on my personal list of “dubious integrity, journalists exhibiting.”
All this pre-publicat ion coverage of the book has been a publicist’s pipe-dream, needless to say.
Hell, even I can’t wait to get my hands on a copy.
On October 26, the journalist published an open letter to fellow journalists along with part of the documentation he turned over to the federal police in connection with investigations he conducted between 1998 and 2002 into the privatizations promoted by the government of Fernando Henrique Cardoso. The letter contains information on the CPMI of Banestado, obtained, he says, “legally and without violating privacy laws.”He reiterated as well that his motives were purely journalistic and not partisan-political.
Amaury was indicted on October 25 on four charges relating to violation of the privacy of political allies and family members of José Serra (PSDB). The federal police found in its report to the prosecutor that the journalist violated financial privacy, paid bribes, used forged documents and suborned a witness.
The text of the letter follows.
To my journalistic colleagues:
I am forwarding to all of you a copy of a small portion of the material I handed over today to the federal police. All of these papers were obtained legally, without violating privacy rights. Recall that these documents refer to the period 1998-2002.
The documents I handed over are not the result of any partisan activism, in which I have never engaged, but rather an expression of the only form of activism I have ever engaged in — the practice of journalism. As evidence of this, I remind you that it was I who authored the story in IstoÉ magazine No. 1863 (June 2005) titled “The Money Appears,” in which I exposed the PT slush fund scheme. My only desire is that the freedom of the press we enjoy in Brazil might serve to enlighten the population.
These are official reports to which I had access while working on a book about the privatizations. They are being released to the public now for the first time. They were obtained by legal means through the discovery process in my defense of a lawsuit against me and belong to the archives of the parliamentary commission of inquiry into the Banestado case. Once sealed against public scrutiny, they are now out in the open. I hope they will shed light on a shadowy but highly significant chapter in our history.
I call your attention to two points in particular, both based on official documents of the Banestado CPI, obtained from information on the Beacon Hill account at JPMorganChase in New York and from the account of Beacon Hill Service Corporation (BHSC) at the MTB Bank, which managed a number of anonymous and clandestine subaccounts In the United States, BHSC was found guilty in 2004 of illegal transactions
Actually, it was condemned for failing to meet its “Know Your Customer” due diligence duties — a new set of stringent rules that emerged from the USA PATRIOT Act.
. In Brasil, inspired by the name Beacon Hill, the federal police mounted its own operation Farol da Colina, examining such figures as former governor Paulo Maluf and banker Daniel Dantas. The points I would emphasize are the following.
Before Englishing this part of letter for my personal notes, I will acknowledge that this sort of Byzantine tale is not the sort of story that translates well into a Brazil-themed story for the press back home.
You have to plow through a ton of historical background and filter out quite a lot of crazy claims by quite a few dubious actors before you can settle on the essentials of the story.
I look upon it as a form of mental exercise not unlike trying to tackle the more difficult Sunday cryptic crosswords in British newspapers.
Plowing through my copy of the CPI of Banestado — all 1,142 pages — has provided me with useful exercise in the translation of Brazilian legalese — something I sometimes actually make money at — for example.
The case involved allegations of the illegal use of CC5 accounts — reserved for foreign citizens resident in Brazil, and now extinct — by Brazilian citizens to funnel R$150 billion into offshore accounts under the nose of the tax man.
The congressional inquiry counted on the assistance of the Manhattan DA — which around the same time issued a standing arrest warrant for Paulo Salim Maluf, former Sâo Paulo governor and poster child for official raping and pillaging of the public treasury.
The “bombshells” of Amaury Ribeiro follow:
1 . I provide documentation of deposits by business owner GREGÓRIO MARIN PRECIADO, married to a cousin of JOSÉ SERRA and a former business partner of the former São Paulo governor — SERRA, that is — into an account owned by Franton Interprises, with ties to the former campaign treasurer of SERRA and FERNANDO HENRIQUE CARDOSO, RICARDO SÉRGIO OLIVEIRA. These deposits exceeded US$ 1.2 million and increased during the election year 2002, when SERRA ran for president. More than 80% of the funds depositied in Franton’s Beacon Hill account came from PRECIADO. RICARDO SÉRGIO, as we know, was director of the Banco do Brasil and a principal architect of the consortia formed to carry out the privatizations during the CARDOSO government.
2. Deposits were made by Infinity Trading, owned by CARLOS JEREISSATI, into the Beacon Hill account of Franton Interprises. RICARDO SÉRGIO. JEREISSATI led one of the consortia participating in the privatization auctions, ending up with part of Telebrás. It is general knowledge that RICARDO SÉRGIO.intervened directly in the composition of these consortia and the privatization of Telebrás The payment of bribes during the privatization process has often been speculated about, but this is the first evidence of such bribes founded on official banking records.
The Jereissatis — as in Senator Jereissati — were the main beneficiaries of the recent merger of Brasil Telecom and OI.
I am convinced of the importance of these documents and know that you will make good use of them.
Amaury Ribeiro Junior
The bad news, from what I can puzzle out, is that RICARDO SÉRGIO donated a sum to FRANTON and declared it on his income tax.
To be honest, I am not quite understanding the import of this donation or what it implies about the bank president’s “ties” to the illegal offshore account.
According to a report by the Terra news portal, however, Amaury had testified that Ricardo Sérgio was the effective owner of Franton, a New York corporation, basing the charge on Sérgio’s 1998 tax return.The documents recently made public by the journalist stemmed from discovery in a libel suit brought by Sérgio against Amaury over these accusations.
According to deposition made public by the news service, Amaury alleges having had access to documents from the Manhattan DA showing that Sérgio moved millions of dollars through the Beacon Hill subaccounts. Sued for libel by Sérgio, he used the discovery process to obtain confidential documents supporting this claim.
PRECIADO, who made a series of deposits to the FRANTON-Beacon Hill account, had a BRL 74 million loan forgiven by the Banco do Brasil at a time when RICARDO SÉRGIO was the bank’s director.
The good news is that RICARDO SÉRGIO succeeded in getting a separate case against him for criminal mismanagement dismissed last week.
The deal in question in that case was a loan to a consortium of companies bidding on the privatization of the state telephone monopoly — among them SOLPART.
Solpart had been created a month earlier by Banco Opportunity, controlled by Daniel Dantas. Its stated capital was R$ 1,000.
Daniel Dantas was convicted last year of bribery of a federal agent and sentenced to 10 years.
In defending himself, he caused a phony dossier to be published in Veja magazine, accusing the director of the federal police of owning a bribe-stuffed Swiss bank account. Phony is the operative word, and no exaggeration.
Even so, the Banco do Brasil green-lighted the loan without demanding substantial collateral from Solpart.
In a conversation recorded as part of the famous BNDES wiretap, Ricardo Sérgio discussed the matter with Luiz Carlos Mendonça de Barros, the federal Minister of Communications at the time.
At certain point, Ricardo Sérgio tells Mendonça de Barros that he had okayed the loan to Solpart, saying “We are at the limit of our irresponsibility.”
Solpart had three partners: two holding companies belonging to Opportunity Invitel and Timepart, and Stet International, a subsidiary of Telecom Italia.
The only collateral the BB received was Techold, another Opportunity shell corporation – with a mere R$20,000 in capital at the time.
Mendonça is now in the publishing business, having published the ill-fated Primeira Leitura, whose editor later went over to Veja magazine as a featured columnist — a sort of a Brazilian Glenn Beck.
Mendonça currently owns Analise Editorial, which publishes a fairly decent set of yearbooks on different sectors of the Brazilian economy — which company is which, who runs them, and what their financial condition is, that sort of thing. His staff is for the most part poached from Veja magazine.
The company is a important promoter of foreign investment in São Paulo, but its publications suffer from poor translation.
The Attuch interview, finally, is headlined with the customary hysteria, calling Rudolf Elmer “The Suicide Bomber of Switzerland.”
Elmer was an auditor one of Switzerland’s biggest banks, Julius Baer, with US$ 42 billion in assets, and directed its Cayman Island branch until 2002, when he was fired and began a long legal battle against the bank. Now, he means to tell what he knows — and guarantees that the trail leds back to Brazil. “I may collaborate with a number of governments in the attempt to trace and repatriate undeclared funds,” he told this magazine. Elmer says funds belonging to Brazilian politicians, lawyers and business owners were laundered through Julius Baer. Among distinguished Latin American clients of the bank, he mentions the family of former Mexican president Carlos Salinas.
Revelations about the contract awarded to Alstom — which provided the cars used in the São Paulo subway system — pose a tangible political risk to the political group that has run São Paulo state for the past twenty years.
An attempt to establish a parliamentary inquiry into the case was recently quashed by the pro-situation majority in the state assembly — a frequent occurrence over the years.
Filed under: Accounting, Banking and Brokerage, Brazil, Business, Financial Services, Infotainment, Journalism, M&A, Media, Money Laundering, Privatization, Telecom Tagged: | Briberry, corruption, Slush Funds