Dubai Telegraph - Brazil police target network that siphoned billions from fuel sector

The group allegedly laundered money for the First Capital Command (PCC), one of the country's most powerful gangs engaged in cocaine trafficking from South America to Europe, according to prosecutors.

The network is alleged to have hidden ill-gotten gains of some 52 billion reais (about $9.6 billion) in investment funds and fintech digital companies in four years to 2024, according to the Federal Revenue Service (RFB).

It controlled four refineries and allegedly diluted fuel products to increase yield and cheated clients with dispensers that supplied less fuel than indicated at the pump.

Irregularities were identified at more than 1,000 gas stations in ten states, according to officials.

The group is alleged to have controlled elements of fuel supply all the way from import, production, distribution and marketing to the end consumer, and had about 1,000 fuel delivery trucks of its own.

"Investigations indicate that the sophisticated scheme devised by the criminal organization, by laundering the proceeds of crime, generated significant profits in the fuel production chain," the statement said.

In what Justice Minister Ricardo Lewandowski said was "one of the largest operations against organized crime in history," some 1,400 agents were deployed Thursday to execute 350 search and seizure warrants targeting individuals and companies.

The operation was carried out in a dozen of Brazil's 26 states, including Rio de Janeiro and Sao Paulo -- the South American giant's financial hub.

In the first hours, police arrested five people and seized 1,500 vehicles, 192 properties, two boats, and more than 300,000 reais ($55,000) in cash.

Brazilian police released images of a mass deployment of officers in Sao Paolo's Faria Lima Avenue Thursday, where many financial institutions are headquartered.

- 'Threatened with death' -

According to the revenue service, the PCC controlled "at least 40 investment funds" worth about $5.5 billion used, among other things, to purchase ethanol plants to produce fuel sold at gas stations controlled by its members.

Some gas station owners who sold their establishments to PCC members, "did not receive the transaction amount and were threatened with death" if they insisted on payment, it said.

According to investigators, the PCC was also involved in illegally importing methanol, a "highly toxic and flammable" substance that was then mixed with ethanol, which Brazil produces mainly from sugar cane, and sold as car fuel.

One of the fintech companies implicated in the fraud acted as a "parallel bank" and received nearly 11,000 suspicious cash deposits in 2022 and 2023, according to the RFB.

The financial companies under investigation allegedly allowed clients to transfer money clandestinely, added the prosecutor's office.

Organized crime represents an immense challenge for Brazil's security forces, with a plethora of gangs involved in drug trafficking, illegal logging, extortion and other rackets.

Brazil is South America's biggest producer of petroleum and other liquid fuels, and the ninth biggest in the world, according to a 2023 report of the US Energy Information Administration (EIA), based on 2021 data.

According to the International Energy Agency, it is the second biggest biofuels producer in the world.

I.Menon--DT