Brazil’s federal tax authority and prosecutors are investigating 13 foreign and local banks for possible financial crimes intermediating loans to Brazilian engineering conglomerate Grupo Schahin, newspaper O Estado de S. Paulo reported on Monday.
The banks under investigation include Itaú BBA – the investment-banking unit of Itau Unibanco Holding SA, – Banco Bradesco SA, Banco Santander SA, HSBC Holdings Plc, Deutsche Bank AG, Banco Votorantim SA and other smaller Brazilian institutions, Estado reported, citing a tax office document.
The authorities are investigating whether the banks could be accused of money laundering for being originators, underwriters or managers of loans to Schahin. Schahin is currently under investigation by Brazilian authorities for potential fraudulent operations that prosecutors allege benefited the ruling Workers’ Party through state-run oil firm Petroleo Brasileiro SA.
In a statement, Itaú BBA said that it participated alongside the other banks in Grupo Schahin’s debt restructuring process in 2009, which included a transaction backed by receivables from Petrobras. The operation was in full compliance with the law and market regulations, the statement said, adding that Itaú BBA will collaborate with authorities.
Bradesco’s press office said it could not comment on operations or positions of its clients because of bank secrecy rules. HSBC said it did not receive any official information about being under investigation. HSBC added that it always collaborates with authorities when requested. Deutsche Bank declined to comment.
Representatives at Brazil’s federal prosecutors’ office and other banks under investigation did not immediately respond to requests for comment. Other banks named in the Estado report are Banco Bonsucesso SA [BONSD.UL], Banco Fibra SA [BANFI.UL], Banco ABC Brasil SA, BicBanco SA [BICBA.UL], Banco Pine SA, Banco Tricury SA and Banco Rural SA.
Prosecutors say the engineering branch of the Grupo Schahin, Schahin Engenharia, was awarded a contract to operate a drill ship for Petrobras in exchange for the bank canceling loan repayments for Jose Carlos Bumlai, a friend of former president Luiz Inacio Lula da Silva.
Bumlai was arrested on Nov. 25 and charged with loan fraud on Dec. 14.
Dozens of executives from Brazil’s top construction and engineering firms have been charged with bribery and money laundering, and about 50 politicians are being investigated for receiving kickbacks off Petrobras contracts.