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Crime infiltrates legal business and complicates investigations

The largest criminal organization in Brazil, the PCC is no longer a problem restricted to security authorities. It has also become a factor that hinders and distorts businesses in various sectors across the States.

Companies report difficulties in competing with businesses that receive “investments” from the criminal faction with the aim of laundering money and, in some cases, generating extra revenue for crime.

Other companies have changed routines due to the threat to the security of their operations in areas under crime control.

Recently, warnings about the penetration of organized crime into the formal economy were made by prosecutors, governor Tarcísio de Freitas (Republicans), the Minister of Justice, Ricardo Lewandowski, and even the president of the Central Bank, Roberto Campos Neto. Information also emerged about companies linked to crime being hired by public bodies.

Over the course of two weeks, the Market brought together reports from companies, lawyers, members of the Public Ministry, the Federal Police, deputies who had a career in the police and academics on the effects of organized crime on business.

Former owner of gas stations in São Paulo, a businessman who says he remains anonymous for security reasons says that what he paid to the distributor was often the price that stations close to his charged at the pump. According to him, many competitors with very low prices are “drug money laundries”. When I wanted to leave the business, one of those interested in buying the business was from outside the sector. He ended up selling it to another suitor.

The list of legal businesses that have become of interest to crime for money laundering includes hotels, motels, restaurants, butchers, beauty clinics, car dealerships, bakeries and even fintechs.

At the beginning of April, a Federal Police operation raided two companies in São Paulo that produce artists and funk parties, also identified as laundering channels.

“Organized crime moves a lot of drug money, which is its main revenue. It's money that needs to be laundered. Often, criminals start a company with money that needs to be laundered and suddenly the business emerges. We are not talking about small businesses, but about establishments that sell good products, where there will be a turnover of legal money mixed with illegal money and this makes investigations difficult”, says the regional delegate for the Judiciary Police of the Federal Police in São Paulo, Cristiano de Pádua . Other times, the crime is associated – through co-option – with already established companies, says the delegate. In this case, the business owner is able to increase his profitability, keeping part of the money laundered by crime.

Sometimes, crime enters a legal business through coercion. The owner of a bakery that was very busy in the capital of São Paulo received an offer to buy that he couldn't refuse, associated with an order for him to immediately accept the deal. Organized crime also takes advantage of one of the businesses that generates the most money: the cigarette industry.

“This is a subject that has become the subject of periodic discussions within the company’s management”, says the member of a cigarette manufacturer. Criminals linked to the PCC, Comando Vermelho, Os Manos (from Rio Grande do Sul) and other factions are seen by the industry as engines behind illegal cigarette operations. Another relevant player in the clandestine market, at least in Rio, are Jogo do Bicho operators.

Part of the Paraguayan brand cigarettes sold illegally in Brazil enters the country as contraband and is attractive due to its low price. They are legal brands in Paraguay, but not here.

Another part of illegal cigarettes has been produced domestically in Brazil. These are improvised factories that counterfeit cigarettes from Paraguayan brands, to reduce costs and risks in international logistics.

Last year, Brazilians smoked 108,7 billion cigarettes. Of this total, 36%, or 39 billion units, were illegal cigarettes, according to a study by Ipec, a market research company. The market share in the hands of criminals was around R$10 billion.

The contamination of private companies by the PCC gained prominence this month in São Paulo due to two cases. One of them, an operation that dismantled a scheme that involved directors of two bus companies in the capital of São Paulo with PCC criminals. Companies legally move millions of reais every year, with their own revenue and with transfers from the city hall. Public prosecutors pointed out that part of this money benefited the PCC.

Another operation attacked a fraud scheme in tenders in city halls and city councils in cities in the interior of São Paulo and which also benefited companies providing cleaning and inspection services that had members of the PCC behind them, according to prosecutors.

A lawyer who knows companies that provide cleaning services reports that the presence of the criminal scheme in cities in São Paulo is causing some entrepreneurs in the sector to simply stop seeking contracts in municipalities where crime is a direct competitor.

For legal companies, the environment of insecurity and competition with crime is fatal, says Edson Vismona, executive president of the Brazilian Institute of Ethics in Competition (ETCO) and the National Forum Against Piracy.

According to the National Confederation of Industry, losses in 14 sectors due to illicit activities went from R$100 billion in 2014 to R$410 billion in 2022.

The MP has already pointed out connections between PCC members and Social Health Organizations (OSS), which provide services for public health facilities.

Lincoln Gakiya and Fábio Bechara, São Paulo prosecutors, say that betting on entry into formal companies is often accompanied by schemes to circumvent control bodies, always with the aim of hiding the real beneficiaries.

Companies discuss how to combat piracy

Sectors of the economy affected by piracy and counterfeit products are joining forces to intensify the fight against this type of crime, given the significant increase in cases in recent years.
In a meeting held yesterday in São Paulo, representatives of segments such as audiovisual, content producers, fuel and clothing, among others, began mobilization to work with the exchange of information and actions with public authorities, in order to show how piracy affects not only companies, but also the population.

— There are fewer public hospitals, or fewer jobs caused by tax evasion and counterfeit products or TV signal piracy, for example. Each sector has been doing its work, but the idea is that we can work together in the same direction to combat these illegalities — says André Dias, director of Institutional Relations and Special Projects at Globo, who organized the meeting.
The numbers collected by the National Forum Against Piracy and Illegality
(FNCP) show that, in 2022, the illegal market grew 34,2% compared to 2021, causing losses of R$410 billion to the economy, involving tax evasion, sale of fake products, copyright infringement. The numbers were collected from 14 sectors, and the value corresponds to two and a half times the volume of resources that the government needs (R$ 168 billion) to close 2024 with zero deficit.
Edson Vismona, president of the FNCP, notes that the population needs to be aware that, by purchasing counterfeit cigarettes or adulterated fuel, they are financing organized crime and militias, which have been dominating these illegal activities.
— The union between affected sectors, society and public authorities is essential to combat this irregular market — says Vismona.

The journey of tax reform

Finally, we approved the tax reform, aiming to overcome old problems that affect our economic growth. We will move from an old system to a new one, starting the regulation and implementation of the general measures of Constitutional Amendment 132. The time has come to begin our journey — scheduled for ten years — towards the promised land in search of GDP growth, tax equity, neutrality fiscal, simplification, transparency, de-bureaucratization, modernization of taxes, redistribution of revenue between federative entities, reduction of tax evasion, collection at destination, changes in income tax, end of the cascade effect.

We begin a long journey, and the old and the new will coexist in the transition.

On this journey there will be a debate on dozens of complementary laws, detailing more than 70 points that must be regulated through government proposals to Parliament.

The definition of tax rates; who will pay and to whom; exceptions with lower rates; what will be the administration of the system and the interaction between the federative entities; the collection, inspection and distribution of taxes by the Management Committee that will be created; compensation mechanisms between states and municipalities; procedural standards and definition of selective tax are some of the important topics that will spark many disputes and generate great movement throughout society, with in-depth technical discussions in the legal, auditing and accounting sectors.

We will face the divergence between those who rightly defend the necessary balance of public accounts and those who do not agree with spending cuts, creating a conflict that will affect the size of the tax burden.

In the corporate environment, there will be conflicts between productive sectors to define which activities will be more or less burdened and how the criteria for the incidence of the Selective Tax will be established. And we still have to guarantee taxpayers' rights, reduce trillion-dollar tax litigation, combat tax evasion and the growth of the illegal market, issues that must necessarily be directly included in these debates.

Faced with so many matters that must be scrutinized, and knowing that “God or the devil are in the details”, the time has come to decide whether we will take advantage of or lose this historic opportunity to finally improve our tax system.

It certainly won't be a smooth crossing. We will have to part seas, face bad advisors and deep conflicts of interest, accept structural changes and so, without Moses to guide us, we have to move forward.

Get out of speech and take action. Our destiny depends on us getting the right direction and overcoming archaic structures that hinder our economic and social development. In truth, we need to move away from what Roberto Campos said: “Brazil does not miss the opportunity to miss an opportunity.”

 

What really works to defeat smuggling? Discover seven actions

On Brazilian borders, organized crime is winning. It maintains vast networks of collaborators, organized and well-armed, to transport weapons and drugs to cigarettes and pesticides into the country. The profits obtained from the sales of clothing, perfumes and electronics help to finance, including the payment of tuition fees. Meanwhile, law enforcement is grappling with budget contingencies.

“Corruption is an economic problem, but also a social one, and is present due to working conditions, insecurity, lack of infrastructure, as well as misconduct by the corrupt agent”, says lawyer José Vicente Santos de Mendonça, professor of Law at the State University of Rio de Janeiro, where he coordinates the Economic Regulation Laboratory.

How to fight this vicious circle? Check out seven measures capable of reducing the force of smuggling and embezzlement. They work best if taken together, in order to tackle crime simultaneously on several fronts.

1. Bet on technology

Satellites, sensors and radars are capable of identifying stolen vehicles used to transport contraband on the roads. Unmanned planes can attack aircraft and vessels used by criminals. Biometric reading at border posts reduces the risk of a suspect escaping because he used false documents. “The new technologies for controlling people and goods at borders and airports are an attempt to adapt to the current reality, in which people and goods are highly mobile”, says researcher Pinja Lehtonen, from the University of Tampere, Finland.

“On the other hand”, points out the researcher, “international criminal organizations have a huge amount of money and very intelligent people at their disposal, which indicates that technological solutions would only work until criminals found a way to circumvent them. ”, says she, who is developing her doctoral research on automated border control in the European Union.

In other words, just buying technology is not enough. The human factor, she says, is still very important. "Experienced officers can detect a suspect's nervousness with great ease."

2. Equip law enforcement officers

“The revenue dedicated to the smuggling attack is not enough. In terms of infrastructure, organized crime wins,” says Luciano Barros, president of the Institute for Economic and Social Development of Borders (Idesf). Brazil has less than a thousand Federal Police agents operating along the entire border.

In all of Brazil, only 48 federal employees work in security, against 120 in the United States. The Armed Forces, which carry out frequent actions in the most strategic points of Brazilian borders, had to adapt the strategy after, between 2012 and 2017, the budget for discretionary spending fell by 44%. The focus is now on specific actions. These are large-scale operations that bring together dozens of different government agencies. But, at the end of the action, routine border surveillance is again flawed.

3. Carry out integrated actions

In order to prevent a suspect investigated by the Civil Police, for example, from passing through a Highway Police checkpoint without being arrested, the Ministry of Justice and Public Security is betting on the creation of the National Public Security Information System (Sinesp), a service that would bring together all available information nationwide about ongoing investigations and incident reports. But the system is still in the implementation phase.

4. Attacking corruption

Whether at border posts or camelódromos, criminals often rely on the support of agents who receive bribes to clear the way. “The data proves that the number of deviations and police corruption are significant”, says the study “Police corruption in debate: Diversion and impunity in police institutions in Rio de Janeiro”, authored by Andréa Ana do Nascimento, a researcher at the Pontifical Catholic University of Rio Grande do Sul (PUC-RS).

The study shows that, between 2009 and 2013, the number of complaints against the actions of the Military Police and the Civil Police in Rio de Janeiro increased, respectively, by 93,6% and 68,5%. Meanwhile, the total number of police officers punished has dropped from 21 in 2010 to 4 in 2013.

5. Act in cities

Criminals cross the border, but the consumer market for smuggled goods is in the biggest cities. This is what Edson Luiz Vismona recalls, president of the Brazilian Institute of Competition Ethics (ETCO) and of the National Forum Against Piracy and Illegality (FNCP). “It is essential to tackle illegal sales on the streets across Brazil. This trade in pirated products directly attacks the honest trader, who generates legal employment and pays taxes”.

For Vismona, actions to combat illegal trade, such as those recently carried out in São Paulo on the outskirts of Rua 25 de Março, are capable of attacking an important source of income for criminals. “Each time large loads of contraband are seized, the groups suffer a blow. Collecting these products is an effective way of hampering smugglers' actions, as it attacks their profits”, says Luciano Barros.

6. Reduce taxes

As Brazil reduced taxes on electronics products, the demand for pirated versions of these products decreases. On the other hand, by increasing taxes on cigarettes, the country encouraged consumption of versions from Paraguay. Reducing taxation, or convincing neighboring countries to increase their taxes in order to match them with the values ​​practiced in Brazil, is a way of attacking smuggling, by reducing the size of the consumer market for illegal products.

7. Improve life on the borders

Cities on the borders of Brazil with other countries are characterized by poor indicators of quality of life, education and the generation of formal jobs. Encouraging the entry of legal companies in these regions, capable of increasing income and leading young people to seek to improve their professional training, is an effective way of reducing the cheap labor available to criminal groups operating at the borders.

How contraband corrupts public officials

Professor José Vicente Santos de Mendonça details the crime routine on the triple border in four moments in which public agents are corrupted. Follow:

1st moment: Near the Paraná River ravine and the shores of Lake Itaipu, where the value available is the lowest, and there is a closer cooperation bond. This link is established between the smuggler and the public agent, and the value of corruption is pre-established, and is around R$ 100/day per public agent. In this case, the public agent remains indifferent to the situation, and a positive sum relationship is established, that is, everyone “wins” in the process.

2nd moment: The public agent, after an agreement with the smuggler, monitors the cargo up to the limit of its circumscription, thus preventing the cargo from being apprehended at inspection posts. For this scenario, the value is around R$1.000 to R$1.500.

3rd moment: It happens at the inspection posts, if the vehicle used to transport the cargo is stopped. In this case, there may or may not be a prior agreement, and the value of the transfer is around R$3.000 to R$10.000.

4th moment: The public entity forges the seizure, with the objective of providing the smuggler with the opportunity to negotiate for the release of cargo. In this context, there is the highest amount of corruption, which varies from R$ 15.000 to R$ 50.000, and can reach 50% of the value of the cargo, normally paid with the goods themselves.

By Tiago Cordeiro, especially for the Gazeta do Povo – 06/07/2019

spending

The title of this article refers to a word not yet incorporated into Brazilian dictionaries. In Portugal, however, it has already been endorsed by the renowned dictionary of the Lisbon Academy of Sciences, which defines it as the “practice that consists in the exaggerated expenditure of money, in the realization of excessive expenses or expenditures and little evident utility, especially on the part of the State. or other public entities”.

In the recent election campaign, I didn't hear any candidate for any office mention cutting wasteful spending. On the contrary, many defended, often as a mere demagogic appeal, the expansion of expenses.

It is reasonable to admit that some proposals for new expenditures are justified, but they should be accompanied by measures aimed at containing expenditure, otherwise their financing will be at the expense of raising the known high tax burden, or an irresponsible increase in public debt.

In addition to extreme weather events, it cannot be ignored that the next government will face an adverse international scenario, involving inflation and recession in developed countries, economic slowdown in China impacting commodity exports, energy crisis in Europe, hunger in Africa and an unpredictable trajectory. in Russia's aggression against Ukraine.

In the context of the enormous needs of the Brazilian State, it would be advisable, although unlikely, to implement a program to restructure public spending, which would honor the efficiency, proclaimed in art. 37 of the Constitution, and eliminate spending.

There is an inexhaustible list of expenses that drain revenue and compromise the provision of public services: the evil secret budget, a permanent source of misuse of public money and corruption; the positions of deputy in the Executive Power of the Union, States and Municipalities; parliamentary “representation” quotas; the remuneration and “advising” of councilors in small municipalities, which subsist at the expense of transfers; the remuneration of public agents for participation in boards of state-owned companies; the working hours of the military police, which allows the provision of private services or participation in “militias”; the “indemnities” in the Legislative and Judiciary Powers, and in the Public Ministry; the excess of diplomatic representations abroad, without any economic or political foundation; double vacations and conversion into remuneration, special holidays and recesses in the Judiciary and the Public Ministry. Utopia? Certainly.

 

THE INTERDEPENDENCE OF THE BRAZILIAN STATE

Throughout the history of Brazil, we have traveled an extensive journey towards the consolidation of a national identity and, with it, the realization of the interdependence that should unite us in the construction of our destiny.

These postulates highlight a fundamental aspect of any civilized society: the preservation of coexistence. All existing rules seek to preserve peaceful relationships between people, environmental sustainability, overcoming social inequalities, seeking justice and social harmony. There is a clear sense of utopia that, as the filmmaker Fernando Birri taught; “Utopia is there on the horizon. I approach two steps, she moves two steps away. I walk ten steps and the horizon runs ten steps. As far as I walk, I will never reach. What is utopia for? That's what it's for: so that I don't stop walking.”

Life in society presupposes recognition and the need to preserve our relationships, permanently encouraging ethics, inclusion, diversity, postures that, lately, have also been valued in the corporate environment with the adoption of ESG metrics, bringing companies, finally, the defense of human rights.

However, actions aimed at strengthening coexistence are threatened. The political debate attests to a radicalization that distances understanding, opposing opinions are violently attacked, without attachment to argumentation, and the “cancel culture” spreads. The opposite is not an adversary but an enemy.

This environment has deep roots in our history. Disrespect for rights are plentiful, sponsored by government officials and supported by parts of society – increasingly suspicious according to a global survey by the Ipsos Institute. The investigation released by Veja shows that when asked “Do you trust others?” made to 22 people in thirty countries, Brazil appears in last place.

Corruption scandals, the sense of impunity that contaminates the whole of society, the profound inequality and certainly difficulty in enforcing the most basic consumer rights are clearly harmful to our coexistence. Yes, our past and what we are living in the present are not encouraging, but they can serve as fuel to change the future.

By remembering that our mutual dependence is the reality that should mean union and that it is possible to overcome our countless difficulties with dialogue, tolerance, without subservience. Thus, we can question and find ways. Utopia? Perhaps, but as Birri taught, this should be our way.

spending

The title of this article ('Despesismo') refers to a word not yet incorporated into Brazilian dictionaries. In Portugal, however, it has already been endorsed by the renowned dictionary of the Lisbon Academy of Sciences, which defines it as the “practice that consists in the exaggerated expenditure of money, in the realization of excessive expenses or expenditures and little evident utility, especially on the part of the State. or other public entities”.

In the recent election campaign, I didn't hear any candidate for any office mention cutting wasteful spending. On the contrary, many defended, often as a mere demagogic appeal, the expansion of expenses.

It is reasonable to admit that some proposals for new expenditures are justified, but they should be accompanied by measures aimed at containing expenditure, otherwise their financing will be at the expense of raising the known high tax burden, or an irresponsible increase in public debt.

In addition to extreme weather events, it cannot be ignored that the next government will face an adverse international scenario, involving inflation and recession in developed countries, economic slowdown in China impacting commodity exports, energy crisis in Europe, hunger in Africa and an unpredictable trajectory. in Russia's aggression against Ukraine.

In the context of the enormous needs of the Brazilian State, it would be advisable, although unlikely, to implement a program to restructure public spending, which would honor the efficiency, proclaimed in art. 37 of the Constitution, and eliminate spending.

There is an inexhaustible list of expenses that drain revenue and compromise the provision of public services: the evil secret budget, a permanent source of misuse of public money and corruption; the positions of deputy in the Executive Power of the Union, States and Municipalities; parliamentary “representation” quotas; the remuneration and “advising” of councilors in small municipalities, which subsist at the expense of transfers; the remuneration of public agents for participation in boards of state-owned companies; the working hours of the military police, which allows the provision of private services or participation in “militias”; the “indemnities” in the Legislative and Judiciary Powers, and in the Public Ministry; the excess of diplomatic representations abroad, without any economic or political foundation; double vacations and conversion into remuneration, special holidays and recesses in the Judiciary and the Public Ministry. Utopia? Certainly.

 

 

Senate Bill provides for combating persistent debtor

At the moment when the implementation of a new Refis, for the renegotiation of companies' debts, is being evaluated, the discussion about the search for compensatory measures arises.

In this sense, there is an initiative ready to be voted by the plenary of the Federal Senate that will allow the combating the debtor, which bleeds the federal coffers in the order of R$ 14 billion a year, just in the fuel market. It is PLS 284/17 that provides, among a series of measures, for the objective distinction between debtors: the eventual debtor e the reiterated debtor (who will not be affected by said PLS) and the persistent debtor, this yes, must be fought, therefore, it is structured intentionally to not pay the taxes due.

To get an idea of ​​liabilities, also in the fuel sector, active debts reach R$ 70 billion. Which corresponds, for example, to 8% of the GDP of Minas Gerais last year.

O PLS 284 / 17 was reported by Senator Fabiano Contarato (PT-ES) and was approved by several commissions and now it only depends on the President of the Federal Senate, Rodrigo Pacheco (PSD-MG) to move forward and be guided. The delay in approving this project encourages the stubborn debtor, harming public coffers and society as a whole.

For the president of ETCO (Brazilian Institute of Ethics in Competition), Edson Vismona, who follows the course of the agenda in Congress, the great challenge of the Brazilian legal system is distinguish the defaulter from the defaulter. “Contumacious is not a taxpayer, he is a criminal, as he practices fraud in the exercise of his activities. Delinquents, on the other hand, want to be up to date, but due to different circumstances they are unable to meet their tax obligations, this one deserves the government's attention and encouragement for its regularization, on the other hand, persistent debtors must be rejected”, he says.