PANAMA PAPERS: 107 ACCOUNTS TIED TO PETROBRAS AFFAIR

The largest journalistic investigation on money laundering has revealed connections between Mossack Fonseca and individuals already investigated by Operation Car Wash

Brazilians first heard of a Panamanian law firm, Mossack Fonseca & Corporate Services (MF), on January 27. Federal marshals had an arrest order for six people connected to the firm, because MF was suspected of helping former President Luiz Inácio Lula da Silva conceal the fact that he is the de facto owner of a beachfront triplex apartment. Back then, a federal prosecutor called the law firm “a massive money launderer.” But that was it. Yet with the recent revelation of the Panama Papers, we now know that MF’s connection to the corruption schemes investigated in Operation Car Wash transcends the Brazilian coast.

The Panama Papers are a massive leak of more than 11 million documents that explain how politicians, celebrities and criminals use offshore accounts to hide their assets. This was the work of 109 media outlets from 76 countries, based on documents obtained by the German newspaper Süddeutsche Zeitung. Three Brazilian outlets have partaken in the investigation: UOL, O Estado de S. Paulo and RedeTV.

MF is the world’s fourth-largest provider of offshore services, having acted on the behalf of over 300,000 companies. The company’s documents show that it has also acted on the behalf of 57 individuals already mentioned in Operation Car Wash investigations. There are references to 107 companies connected to these individuals, some of which had not previously been uncovered by the investigation. Prosecutors only had access to documents from MF’s Brazilian subsidiary.

Among Brazilian politicians who appear on the Panama Papers, there is House Speaker Eduardo Cunha, omnipresent in every recent corruption scandal, and former Congressman João Lyra – formerly the richest man in the Brazilian Congress.

By all means, having an offshore account is not necessarily illegal, as long as everything is declared to Brazilian revenue authorities. If the sums of money surpass $100,000, the Brazilian Central Bank must also get a heads-up. However, these types of accounts are often used to hide assets, to avoid paying taxes, and to launder money.

MF’s documents corroborate information given to prosecutors by defendants who chose to collaborate with the investigations. They help explain the path of the money syphoned away from state-owned companies, especially Petrobras, into the pockets of dirty politicians and businessmen.

According to depositions given by lobbyists who operated the money transactions, House Speaker Eduardo Cunha received $702,000 in bribes wired to an account at Swiss bank BSI. That account was property of Penbur Holdings – allegedly owned by Cunha. According to MF’s documents, the holding was opened in September 2011, just months before the wiring of the first payment. Two Panamanian MF employees signed as Penbur’s directors, a service offered by the law firm to hide the identity of the account’s true owners.

Documents also show how Brazilian multinational companies pay bribes to secure hefty contracts abroad. In Venezuela, construction company Queiroz Galvão –involved in the Petrobras scandal – has negotiated a $4 million payment in exchange for contracts with the country’s government. It was labeled as a “finder’s fee” to an offshore account under the name of a Venezuelan national. The company was also willing to pay this person 3% of every dollar made in Venezuela.

Another big shot cited in the MF’s documents is Senator Edson Lobão, former Minister of Mines and Energy (under which Petrobras operates). He was accused by a collaborator of forcing an investment of a fund connected to Petrobras into a company owned by a friend of his. The investment was entirely lost, but Lobão allegedly received his cut anyway for helping make the deal. In response, the Senator’s lawyer only said that Lobão was never formally charged of any wrongdoing.

The full content of the Panama Papers will be revealed in the coming weeks. They could compromise even more people in the Brazilian political scene. With the impeachment process against President Dilma Rousseff still to be voted upon, this will likely add turmoil to an already-explosive atmosphere.