Switzerland Freezes $400 Million Amid Petrobras Laundering Probe

Switzerland Freezes $400 Million Amid Petrobras Laundering Probe

1:55 PM BRT
March 18, 2015

Petroleo Brasileiro SA
Petroleo Brasileiro SA (Petrobras) is mired in a corruption scandal in which company executives allegedly directed hundreds of millions of dollars from overpriced contracts to politicians. Photographer: Dado Galdieri/Bloomberg
(Bloomberg) — Switzerland has frozen $400 million of assets in more than 30 banks as the country’s attorney general probes money laundering related to Petroleo Brasileiro SA’s widening corruption scandal.

Nine investigations have been opened since last April based on allegations of corruption involving eight Brazilian citizens, the Bern-based Federal Prosecutors’ Office said in an e-mailed statement on Wednesday. More than $120 million of those frozen funds were released for repatriation to Brazil, it said.

“The Swiss criminal proceedings will continue with the aim of holding the perpetrators accountable and establishing the origin of the remaining frozen assets,” the Federal Prosecutors’ Office said in the statement.

Petrobras is mired in a corruption scandal in which company executives allegedly directed hundreds of millions of dollars from overpriced contracts to politicians. Disagreement about the corruption writedown led to the departure of the state-owned company’s Chief Executive Officer Maria das Gracas Foster. More than 1 million Brazilians demonstrated on Sunday against corruption and President Dilma Rousseff.

The beneficial owners of more than 300 Swiss bank accounts used to process bribery payments include senior executives at Petrobras, according to the Federal Prosecutors’ Office, which is handling requests for legal assistance from Brazil and The Netherlands. Swiss Attorney General Michael Lauber held talks with his Brazilian counterpart Rodrigo Janot in Brasilia on the prospects of working together to resolve the scandal, according to the statement.

Carwash Scheme

Brazil’s prosecutor general has named 48 politicians for investigation in the kickback scheme dubbed Carwash, hailing from parties including the ruling Workers’ Party, or PT, and the allied Brazilian Democratic Movement Party, or PMDB. The court has said it doesn’t have the authority to investigate Rousseff, whose approval rating is the lowest of any Brazilian president in 15 years.

Switzerland updated its anti-money laundering legislation at the end of 2014 to reflect international standards. Its Money Laundering Reporting Office is a member of the Egmont Group of nations that share information to combat illicit financial transactions.

“The Brazilian bribery scandal affects Switzerland’s financial center and its anti-money-laundering strategy,” the Federal Prosecutors’ Office said. The office “has a close interest in contributing fully to the resolution of the scandal through its own investigations,” it said.

The Swiss Federal Prosecutors’ Office declined to name the individuals, companies and banks involved.

Lauber expects an increase in anti-money laundering cases in Switzerland from July 1 when holding untaxed assets in offshore accounts will be treated by Swiss authorities as money laundering, according to an interview last month with L’Hebdo magazine. Lauber has defended seven years of inaction by federal prosecutors after reports showed drug cartels and arms dealers laundered money through HSBC Holdings Plc’s private bank in Geneva.

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