Offshore Scorecard: US Safra Bank moves Brazilian politician‘s kickbacks to Jersey account

By Lucy Komisar
March 11, 2007

A few days ago, Manhattan District Attorney Robert Morgenthau announced the indictment of Paulo Maluf, the former governor and mayor of Sao Paulo, Brazil, and four co-conspirators, for stealing more than $11.6 million from a Brazilian public works project. Safra The money moved through the Safra Bank in New York.

The case offers another example of how the offshore banking system, controlled by the global banks, helps the world’s crooks.

Maluf is currently a Federal Deputy in the lower house of the National Congress of Brazil. He is charged with participating in an over-invoicing and kickback scheme which generated millions of dollars in criminal proceeds. The stolen funds were transferred to a bank account, which Maluf secretly controlled, at Safra National Bank, 546 Fifth Avenue, New York, and then much of it wired offshore, to an account he controlled in Jersey, the Channel Islands.

The account’s owner was an offshore shell company, Durant International Corp. A shell company is a paper front that exists only to move and hide money. The indictment says that Durant is controlled through offshore shell entities and offshore trusts from the British Virgin Islands. Using more than one venue is called layering, done to obscure the paper trail.

The amount in this case was only a fraction of what Maluf appears to have stolen from 1993 to 1997 when he was mayor. During 18 months alone in 1997 to 1999, $130 million passed through the Safra account Morgenthau said he registered in a confederate’s name.

The money-laundering system he used was composed of four parts.

Doleiros: He used “doleiros,” black market money transmitters in Brazil who move money via American banks into the offshore system for drug dealers, arms traffickers and terrorists, Morgenthau said. And, one would add, corrupt politicians.

Safra Bank: Maluf used a New York bank which under law was supposed to know the origins of the $130 million. It appeared not to have done much “due diligence.” The home page of Safra’s website highlights its private banking. Private banking is a service the global banks provide to high networth individuals – HNWIs – to help them evade home country taxes and legal oversight. Safra was not charged in this case.

Offshore system: The money passed through an offshore bank in Jersey registered in the name of an offshore shell company in the British Virgin Islands. Offshore jurisdictions sell secrecy to clients like Maluf who want to launder money.

International financial system: The world‘s banks, with the major financial powers turning a blind eye, run the offshore system that helps Maluf and people like him steal and hide $billions.

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