Brazilian businessman hid taxpayers' millions in Jersey bank account
Former São Paulo mayor Paulo Maluf took bribes while commissioning public construction works, St Helier court rules
Brazilian businessman Paulo Maluf created a 'slush fund' to hide cash he and his son, Flavio, had stolen by over-invoicing on a roadbuilding scheme. Photograph: AP
One of Brazil's richest and most powerful men has been found guilty of stealing millions from Brazilian taxpayers and stashing it in a secret bank account in Jersey.
Paulo Maluf, a multimillionnaire businessman and serving congressman in the Brazilian parliament, took bribes and "kickbacks" when commissioning public work projects while the mayor of São Paulo in the 90s, a court in St Helier ruled on Friday.
A judge ruled Maluf, 81, and his son, Flavio, created a "slush fund" to hide cash they had stolen by substantially over-invoicing on a road-building scheme.
About US$10.5m (£6.6m) made from overcharging on the construction of the eight-lane Avenida Água Espraiada in São Paulo found its way into a Deutsche Bank account in Jersey through secret accounts in the British Virgin Islands and New York.
But in his ruling on Friday, the judge, Howard Page QC, said "other public works projects may also have been affected by similar (alleged) frauds" carried out by the pair.
It has previously been reported that Brazilian prosecutors believe Maluf took bribes and construction kickbacks amounting to US$344m during his mayoralty between 1993 and 1996. Father and son have been ordered to pay back the $10.5m, plus interest, to the Federal Republic of Brazil and the Municipality of São Paulo.
Prosecutors in Brazil believe they may have more success in pressing criminal charges against Maluf in his home country. He and his 50-year-old son are wanted by Interpol to face charges of fraud and theft in the US, and cannot leave Brazil for fear of arrest.
Despite the scandals surrounding Maluf, he maintains strong support and sufficient influence to be considered something of a kingmaker in his city. In the recent São Paulo mayoral elections, he was photographed joining hands with the former president and Workers party leader, Luiz Inácio Lula da Silva, to support the eventual winner, Fernando Haddad.
The suggestion that Maluf's criminality could extend beyond the charges heard in Jersey will not surprise many Brazilians. Fraud and corruption allegations have dogged the latter stages of the political career of this wealthy businessman, who has interests in lumber, plywood and real estate through his company, Eucatex.
Most rumours concern kickbacks he is alleged to have received from energy companies and construction firms for major public works projects, such as the eight-lane Avenida Água Espraiada and the Ayrton Senna Tunnel, which were over budget by hundreds of millions of dollars.
Maluf has been one of the country's most notorious and powerful politicians for more than four decades. Such is his reputation for corruption, evasion of justice and underhand dealings that his name has is become synonymous with corruption.
Rising rapidly to high office, thanks to his close ties with the military dictatorship in the late 1960s, he served as mayor and then state governor of São Paulo. A proponent of lavish road-building projects, his mark is still evident in the concrete, elevated highways that loom over the city centre.
After two failed presidential bids in 1985 and 1989, he returned to his power base in the commercial hub, winning a three-year term as mayor in 1993 and various legislative posts – including federal deputy – as a senior representative of the right-wing Progressive Party of Brazil.
In 2003, a parliamentary inquiry was set up to investigate claims that he laundered money through Jersey. In 2005, police jailed Maluf and Flavio for several weeks for intimidating witnesses.
Two years later, the Manhattan district attorney indicted him for money laundering, prompting Interpol to add them to its "red list". Last month, a court in São Paulo ruled that Maluf must repay $21m of securities he misused. So far, however, he has avoided a prison sentence.
Much of the Brazilian coverage of the Jersey case has focussed on the defeats for Maluf's expensive Swiss legal team and evidence that shows the politician has been lying for years.
Under a headline, "Defence lawyers admit Maluf has money in Jersey", Veja magazine noted: "The admission by the lawyers dismantles the claim Maluf has maintained for years that he has no offshore accounts."
With court cases in Brazil often dragging on for more than a decade, other newspapers revelled in the judge's rejection of defence request for more time as a "cynical tactic" and his refusal to accept an appeal that the São Paulo government had no jurisdiction. The Estado de S Paulo newspaper cited city lawyers, who called this "the biggest victory so far".
Even if Maluf is found guilty of stealing money from Brazilian taxpayers, he may be too elderly to be sent to jail. But defeat in Jersey will reinforce his image as a representative of a corrupt era that has not yet ended.
President Dilma Rousseff has vowed to crack down on graft. Even before she came to power, prosecutors appeared to have been taking a tougher line. Brazil is in the midst of its biggest corruption trial – the so-called Mensalão (Big Monthly Allowance) case, which has resulted in numerous convictions, including a 10-year sentence for Lula's former righthand man, Jose Dirceu, for fraud and vote buying.
O MP DESDE QUE POSSA ENGAIOLAR GAJOS DA "EXTREMA-DIREITA" QUE SE OPÕEM AO HOMEM NOVO E MULATO, DEPOIS DA ENTREGA DE TUDO O QUE TINHA PRETO E NÃO ERA NOSSO E AGORA POR NOSSA CONTA JÁ FICAM SATISFEITOS...