BRASÍLIA--Prosecutors are investigating allegations that
Brazilian tax authorities solicited bribes from major companies in
exchange for reducing their liabilities in corporate tax disputes,
officials say.
On Tuesday, the Finance Ministry said the alleged scheme wasn't
systematic but rather, involved "isolated acts" carried out by a
small group of government tax officials. When prosecutors announced
the investigation on March 26 they said that losses to the nation's
treasury totaled $6.1 billion over 15 years.
The case comes amid a scandal at state-owned Petróleo Brasileiro
SA, or Petrobras, in which authorities have arrested dozens of
people for their alleged roles in bribery and money laundering.
That unrelated case, involving hundreds of millions of dollars in
losses, has roiled the government because prosecutors allege some
illicit money was funneled to some members of President Dilma
Rousseff's ruling Workers' Party. The party denies that and Ms.
Rousseff is not accused of wrongdoing.
The new case, which prosecutors dub Operation Zealots, has no
apparent links to the government. But it comes as Ms. Rousseff is
trying to convince an emboldened opposition to support unpopular
measures aimed at resuscitating a moribund economy.
The new probe is focused on the Finance Ministry's
Administrative Council for Tax Appeal, an arbitration board that
hears appeals from taxpayers who dispute how much they owe the
government.
Prosecutors said 74 companies and 24 individuals are under
investigation. None have been named publicly and no charges have
been filed. But a leading investigator on the case said companies
under investigation include Ford Motor Brazil, a unit of Ford Motor
Co.; JBS, the world's largest meatpacker, the Brazilian unit of the
Spanish bank Banco Santander SA; and Brazil's second largest
private-sector bank, Bradesco SA.
Santander said that all its dealings with the council have been
"ethical and in accordance with applicable law." In a written
statement, Bradesco denied wrongdoing and said its appeals to the
council were "supported by well-known law firms" and that the
company follows "the best governance practices." Ford Brazil said
in an email that it hasn't been informed "by government officials
or investigators about this investigation." A representative for
JBS declined to comment.
Brazil's Finance Ministry is investigating the case alongside
Brazil's internal revenue service, the federal police and the
federal prosecutor. On Tuesday, the ministry said it was taking
steps to increase the transparency of the appeals process. The
ministry said that, as of Feb. 28, it was deliberating on 112,000
tax cases with a total of about $171 billion in dispute.
Brazil's tax system is among the most onerous and complex in the
world. Penalties can be steep. That has fostered an environment
where corruption can flourish, experts say.
"Taxes in Brazil are so high and complicated that it is easy for
companies to get in trouble with the taxman," the leading
investigator told The Wall Street Journal. The investigator said
frequent tax disputes created opportunities for ill-intentioned
public servants to profit by helping firms circumvent red tape.
Prosecutors say the probe began in 2013 after they received an
anonymous letter describing details of the alleged scheme.
Write to Paulo Trevisani at paulo.trevisani@wsj.com
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