Legal Magazine

Corruption Probe Snares Banker Safra

Posted on the 26 April 2016 by Angelicolaw @AngelicoLaw

For as long as governments have levied taxes, people have tried to find ways to avoid paying them. Joseph Safra, one of the wealthiest people in the world, has significant financial interest in lowering his tax burden. His $18.3 billion net worth makes him the world’s richest banker, according to Forbes magazine.

Safra, who is the majority owner of Brazilian bank Banco Safra SA, is now linked to a tax avoidance scheme designed to skirt Brazilian law. Prosecutors have filed charges against him, claiming that the banker intended to bribe government officials in exchange for canceling up to $500 million in tax debts, according to prosecutors’ statements reported by Reuters.

Prosecutors say the banker is suspected of planning to bribe tax officials by paying R$15.3 million. The damage to Safra may hinge on how closely prosecutors can tie him to the alleged corruption. According to The Guardian, Brazilian officials are not claiming that Safra was directly involved with the alleged scheme, but rather there was evidence that an employee acted on his instructions in arranging the alleged deal. Prosecutors are basing their charges on tapped telephone calls that João Inácio Puga, a bank executive, had with tax officials. Prosecutors say the calls demonstrate that Puga reported to Safra on these negotiations.

In statements offered to the media, representatives for The Safra Group denied the allegations of bribing tax officials, adding that the Group did not receive any favored treatment from the government.

While the ongoing probe of state-owned oil giant Petrobras has garnered most of the headlines in the news about corruption, the charges filed against Safra show that the government’s zeal to clean up corruption is broad in scope. The investigation into Safra is part of Operation Zealots (Operação Zelotes), an inquiry that has touched on prominent companies such as steel giant Grupo Gerdau and consulting firm LFT Marketing Esportivo, a firm that belongs to the son of former President Luiz Inácio Lula da Silva. So far, more than 70 firms have been investigated in Operation Zealots.

The aggressiveness of prosecutors in pursuing corruption charges combined with the government’s need to clamp down on tax evasion suggests that the legal appetite for investigating corporate malfeasance remains healthy.

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