Brazil: “American Tech Firm Cheats Tax Man of Gazillions”


Daslu House Music CD, export edition, $25

The protest leader, PSDB deputy Alberto Goldman, explained the rationale for the protest. According to Goldman, “this arrest could lead to an economic crisis. Businesses will say: why invest in Brazil if we are going to wind up getting arrested?” That is: in the Toucan view of the world, the only folks that ought to be in jail in this country are the chicken thieves! The businessman who evades taxes, sends money out of the country illegally or commits other crimes can’t be touched and can even count on the help of certain politicians — who will later get a nice campaign contribution. See Cultural Reference Lexicon Entry No. 48: Daslu

PF realiza operação contra sonegação em SP, RJ e BA: The Estado de S. Paulo reports on Operation Persona, a joint operation of the Brazilian federal police and the federal tax authority.

Persona non grata, apparently.

Updates (October 19):

SÃO PAULO – A Receita Federal e a Polícia Federal deflagraram na madrugada desta terça-feira, 16, a Operação Persona, cujo objetivo é desarticular uma rede de fraudes no comércio exterior envolvendo uma multinacional americana. Segundo a Receita, a empresa é líder mundial no segmento de serviços e equipamentos de alta tecnologia para redes corporativas, para internet e telecomunicações.

The Federal Revenue and the Federal Police unleashed Operation Persona in the early morning hours today, October 16. Its objective is to bring down a network of fraud in foreign trade involving a U.S. multinational. According to the tax authority, the firm is a global leader in the area of high-tech equipment and services for corporate networks, Internet and telecommunications.

Uh oh.

Brace yourself for a wave of screeching lectures from the usual suspects on the dangers of “nationalism,” “protectionism,” “socialism,” “demagogic populism” and, of course, the inference that “nationalism + socialism = Nazism.”

The firm in question receives the courtesy of not being perp-walked — mentioned by name — in this report. Or in any other news reports on the case so far. Cisco Systems is the guess going around, but I stress GUESS.

I have not confirmed it, so please: no wagering. Seriously. I do not know that for a fact. And I really do not think either humans or algorithms should be making investment decisions based on what they read on blogs.

O Ministério Público Federal também participa da operação, que ocorre em três Estados brasileiros: São Paulo, Rio de Janeiro e Bahia. Segundo nota oficial da Receita, 93 mandados de busca e apreensão e 44 ordens de prisão temporária foram expedidos pela Justiça Federal de São Paulo (SP).

The federal prosecutor’s office is also taking part in the operation, which is running in three states: São Paulo, Rio de Janeiro and Bahia. According to a press release from the tax authority, 93 search warrants and 44 arrest warrants were issued by a São Paulo federal court.

A Operação Persona é fruto de dois anos de investigações da PF. O esquema utilizava laranjas para importação, ocultação de patrimônio, contrabando, sonegação fiscal, falsidade ideológica, uso de documento falso, evasão de divisas e corrupção ativa e passiva.

Operation Persona is the fruit of two years of investigations by federal police. The scheme used “cut-outs” in import transactions and [is accused of engaging in] failure to declare assets, smuggling, tax evasion, perjury, use of forged documents, evasion of tariffs, and active and passive corruption.

Por meio de offshores sediadas em paraísos fiscais – Panamá, Bahamas e Ilhas Virgens Britânicas – e com quadro societário composto por pessoas de baixo poder aquisitivo, as importações eram solicitadas pelo cliente final junto à multinacional, possibilitando a redução de tributos. Com este esquema era possível a ocultação do real importador, do solicitante e dos reais beneficiários.

Using offshore accounts in financial paradises — Panama, the Bahamas, and the British Virgin Islands — and with partners who commanded very little financial means, these import transactions were solicited by the final recipient from the multinational, enabling the avoidance of taxes. Using this scheme, it was possible to hide the identity of the real importer, the tech firm and the real beneficiaries of the scheme.

As investigações identificaram que, no esquema, eram realizadas operações comerciais simuladas, lastreadas em notas fiscais ideologicamente falsas ou inexistentes, de subfaturamento das importações, que levavam a situações de importações a custo zero e concessão de descontos que atingiam até 100% do valor das mercadorias, fato que inviabilizava a cobrança dos tributos.

The investigations uncovered simulated business transactions, recorded in invoices that were either phony or nonexistent, in which import good were undervalued, leading to situations of imports at zero cost and the granting of discounts of up to 100% of the value of the merchandise, preventing the collection of taxes impossible.

De acordo com a Receita, na cadeia de importação encontram-se dirigentes brasileiros da multinacional americana e de sua distribuidora em São Paulo, que conseguem abastecer o mercado nacional com seus produtos sem industrializá-los e sem participar formalmente de qualquer processo de importação.

According to the tax authority, the import chain including Brazilian executives of an American multinational and its distributor in São Paulo, which managed to supply the national markets with its products without manufacturing them, while avoiding any formal important procedures.

Nos últimos cinco anos, o grupo teria importado, de maneira fraudulenta, aproximadamente US$ 500 milhões em valores declarados de produtos para a multinacional americana e um volume mensal de 50 toneladas de mercadorias. Os impostos que deixaram de ser pagos e as multas somam cerca de R$ 1,5 bilhão.

In the last five years, the group is said to have imported, in a fraudulent manner, approximately US$500 million worth of products (declared value) on behalf of the American multinational, at a monthly rate of 50 tons of merchandise. The taxes and penalties due amount to some R$1.5 billion.

The Estadão basically rewrites the DPF press release — cutting out some information it contains.

This is what I pay my R$2.50 for? To get LESS INFORMATION than I could get from subscribing to the press release for free? (Which I do.)

For example:

Na criação e administração das empresas off-shores, atua renomado escritório da advocacia especializado em direito internacional e financeiro, com sede no Panamá, com grande atuação em operações irregulares na América Latina.

The creation and management of offshore firms was carried out by a renowned law firm specializing in international law and finance, headquartered in Panama and highly active in irregulation transactions in Latin America.

Names, please.

A friend of a friend down at the boteco the other evening gave an interesting, impassioned (fairly drunken) speech on the looming “dictatorship of the tax man” here in Brazil — along with some extremely interesting practical tips on interjurisdictional regulatory arbitrage in this area.

Based on hypothetical case, of course. Not that good a friend of our friend, by the more. More of a friend of her friend.

More on that later.

Recent opinion polls I saw showed the federal police as the most trusted government institution in Brazil. “White collar perp-walks: That’s what the people like to see,” as one analyst put it.

No indication yet of how the yellow press will try to link the current government to the scheme. But they will, I bet you. The American tech firm will most likely turn out to be a government contractor for some federal ministry. That would be my off-the-cuff guess.

Anonymous comment on the Estadão piece:

Fiscais aduaneiros sao os que mais ganham dinheiro facil no Brasil depois dos politicos. Para ter um exemplo do descaramento, um conhecido meu ao se mudar da Alemanha para o Brasil, foi obrigado a pagar um suborno de 500 euros para que os fiscais de Santos liberassem o conteiner com os objetos pessoais. A familia dele dormiu no chao do apartamento com colchoes e cobertores emprestados durante 2 semanas. A estrategia destes vadios e retardar a liberacao para que o preco das diarias em Santos seja tao alto que as pessoas ao pagar o suborno ainda economizam dinheiro! E ninguem faz nada.

Customs inspectors are the ones making the most easy money in this country, after politicians. To give you an example of how shameless they are, a friend of mine moved from Germany to Brazil and was obliged to pay a bribe of 500 euros for the Santos inspectors to release the container with his personal stuff. His family slept on the floor of their apartment on borrowed mattresses and blankets for two weeks. The strategies of these bums is to slow down the release of goods until the daily storage fees run so high that people pay the bribe in order to save money! And no one does a thing.

We happen to have a shipment (my personal books) going through Santos right this moment. More on that as it unfolds.

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