Embezzling Drug Money: Brazil Judge Becomes Target of Probe

As he prepared to oversee the insider-trading case against Brazil’s most famous fallen billionaire, Judge Flavio Roberto de Souza said the nation was entering an era in which corruption would no longer be tolerated. He couldn’t have realized how right he was.

Judge Souza admitted to embezzling about $265,000 of drug money seized by his Rio de Janeiro court, according to a statement Thursday from Brazil’s federal prosecutor. It comes two weeks after Souza was removed from presiding over a separate insider-trading trial of ex-billionaire Eike Batista after photos emerged of the judge taking a joy-ride in the entrepreneur’s seized Porsche. Souza told Agencia Estado newswire that he took the car to his building’s garage because of a lack of parking at police and court facilities.

The allegations against Souza conflict with the picture of a spiritual anti-corruption fighter that he painted himself in an interview with Bloomberg News on Nov. 18, just minutes before the start of Batista’s case. At the time, he said being a Buddhist helped him remain calm during trials and gave him “the serenity to examine the proof without attachments.”

Batista “had a megalomaniac dream of becoming the world’s richest man,” the judge said about the ex-billionaire after his first hearing in November, adding that the case was an example of how Brazil’s judiciary was helping eradicate corruption. “To see a person with that type of attitude sitting on the defendant’s bench is really an historic moment.”

Spiritual Retreats

Items on his office desk at Rio’s Third Federal Criminal Tribunal included a copy of the Brazilian constitution and penal code and literature about financial and capital market crimes. The office was decorated with Buddhist artwork and keepsakes of his trips to spiritual retreats in Nepal and India.

Now Souza is being investigated for keepsakes of a different kind: embezzlement, as well as money laundering and fraud, according to the statement from the federal prosecutor.

Instead of helping to eradicate graft, allegations that a judge diverted assets seized in cases over which he was presiding become the latest setback in the nation’s fight against corruption.

Souza’s lawyer Renato Tonini declined to comment on the prosecutor’s statement, saying the investigation is confidential. Souza, who hasn’t been formerly charged by a court, didn’t reply to an e-mail seeking comment. His mobile telephone wasn’t working.

Institutions Destabilized

In the past year, Brazil has been shaken by a money-laundering probe into an alleged cartel of builders that colluded to inflate contracts with Petroleo Brasileiro SA. That investigation, in which Souza played no part as a judge, is now considered the biggest corruption scandal in Brazil’s history.

“The offenses committed by a magistrate of a criminal court affect the rule of law and destabilize institutions,” the prosecutor’s office said in the statement. “It causes people to distrust public authorities.”

Earlier this week, an appeals court in Rio said that more than $10,000 of cash confiscated from Batista as part of the insider trading case is missing and that Souza was under criminal investigation.

Batista’s lawyers have repeatedly said their client is innocent of the insider-trading charges.

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