Billionaire Banker Safra Said to Get Court Date in Graft Case

  • Safra required to participate in Oct. 20 hearing in Brasilia
  • Criminal case is part of sweeping Zelotes tax-fraud probe

A court date has been set for billionaire banker Joseph Safra in a criminal case that’s part of a federal investigation into tax fraud in Brazil, said a person with direct knowledge of the matter.

Defendants including Safra will be required to participate in a federal court hearing scheduled for Oct. 20, with a ruling due within a few weeks, said the official, who asked not to be identified disclosing the court date ahead of the public release. Those residing outside of Brasilia, as Safra does, will be allowed to participate through video conference, the official said.

Grupo Safra reiterated the allegations are unfounded, saying "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.”

Prosecutors allege Grupo Safra executive Joao Inacio Puga, who is also a defendant in the case, negotiated paying a kickback to zero a tax debt owed by a Safra subsidiary, JS Administracao de Recursos. While Joseph Safra, 78, wasn’t directly involved in the illicit negotiations, Puga allegedly discussed the bribes with the billionaire owner, prosecutors say intercepted telephone conversations indicate.

While Judge Vallisney de Souza Oliveira, in a court order obtained by Bloomberg, says there appears to be little evidence of wrongdoing against the billionaire, there also isn’t enough to dismiss the case without a hearing.

The JS tax debt totaled 1.49 billion reais ($458 million) as of August 2014, while the alleged bribes negotiated with two Brazilian public servants and two former government employees were worth about 15 million reais, according to the prosecutors.

Safra, who built up his fortune with a network of banks in Brazil, Switzerland and the U.S., is Brazil’s third-richest individual with an estimated net worth of $14.2 billion, according to the Bloomberg Billionaires Index.

The two-year Zelotes probe has focused on exposing fraudulent dealings involving Brazil’s board of tax appeals, a unit of the finance ministry. Prosecutors allege that bribes or the promise of bribes were traded in exchange for favorable tax rulings that could result in companies saving billions of reais in taxes.

The probe’s lead prosecutor Frederico Paiva said at the end of July that the investigation had narrowed its scope, aiming to recover about 5 billion reais in dodged taxes, plus fines, down from an original estimate of 19 billion reais.

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