The companies being investigated by Brazil’s Federal Public Ministry include large banks such as Santander, as well some of Brazil’s largest public and private enterprises, among them Embraer and the country’s embattled state-run oil giant, Petrobras. The companies are suspected of paying bribes to members of Brazil’s Conselho Administrativo de Recursos Fiscais (Administrative Council of Tax Appeals—CARF), a body within the Finance Ministry that deals with tax disputes, in order to reduce or avoid fines for tax evasion.
The federal investigation, called Operação Zelotes (Operation Zealots), began in 2013 but exploded into the public consciousness last Thursday, when federal police raided CARF headquarters and the offices of several of the companies and individuals believed to be involved in the scheme. While no arrests were made, authorities seized 1.3 million reais in cash (about $400,000), as well as reams of documents. Investigators have shown that the scheme has cost government coffers $1.8 billion, but believe that the real number could be as high as $5.9 billion.
Several companies, including Brasil Foods (BRF) and Marcopolo, have released statements denying any wrongdoing. In a press release, BRF stated that it will “take all measures necessary to protect its interests.” Others have taken a different tack. Federico Paiva, one of the prosecutors leading the investigation, indicated yesterday that several of the companies under investigation have signaled their willingness to enter into a plea bargain. The Federal Public Ministry has reportedly begun to analyze those proposals today.