Billionaire Safra Accused of Corruption in Brazil Tax Case

Updated on
  • Grupo Safra official allegedly offered bribe to lift tax debt
  • Joseph Safra wasn't directly involved in negotiating bribe

Billionaire Joseph Safra and five other people were accused of corruption by Brazilian federal prosecutors in a case related to a tax evasion investigation.

Prosecutors, which presented the accusations to a court in Brasilia, allege a Grupo Safra executive, Joao Inacio Puga, negotiated a bribe in exchange for lifting a tax debt owed by a subsidiary, JS Administracao de Recursos, according to a statement posted on the federal prosecutor’s website Thursday. Though Joseph Safra wasn’t directly involved in the negotiations, prosecutors said at least three tapped phone calls indicated Puga discussed the bribes with Safra, according to the statement.

“The allegations being promoted by a Brazilian prosecutor are unfounded,” Safra Group spokesman Mark Semer said in an e-mailed statement Thursday. “There have not been any improprieties by any of the businesses of The Safra Group. No representative of the Group offered any inducement to any public official and the Group did not receive any benefit in the judgment of the tribunal.”

The tax debt owed by Grupo Safra’s subsidiary totaled 1.49 billion reais ($420 million) as of August 2014, while the alleged kickbacks negotiated with two public servants and two ex-servants were worth 15.3 million reais, according to prosecutors. Prosecutors said the penalty for such illegal activity can be 12 years in prison plus fines.

The accusations against Safra come a month after steelmaker Gerdau SA’s Chief Executive Officer Andre Gerdau was brought in for questioning by federal police as part of the same investigation, known as Operation Zelotes. The investigation targets alleged manipulation at Brazil’s board of tax appeals, known as Carf. Last year, Brazil’s tax agency said Zelotes investigators were looking at suspicious cases totaling 19 billion reais.

When asked for comment on the investigation at the time, Gerdau said in an e-mail that it abides to rigorous ethical standards.

Safra, who is worth about $13.8 billion, is Brazil’s second-richest individual and the world’s 63rd wealthiest, according to the Bloomberg Billionaires Index. He built up his fortune with a network of banks in Brazil, Switzerland and the U.S.