Joseph Safra corruption charges shake up Brazil’s corporate elite

At a function in São Paulo recently a guest asked for an informal introduction to one of the businessmen present, Joseph Safra. “Sorry,” came the reply. “He won’t meet journalists, even informally.”

This week the Brazilian billionaire banker, who owns the “Gherkin”, London’s distinctive Norman Foster-designed skyscraper, was thrust into the limelight whether he liked it or not.

Brazilian prosecutors have filed corruption charges alleging that he had knowledge of a corruption scheme at his Safra financial group allegedly to pay off government tax auditors to settle a tax dispute.


The prosecutors say a company official allegedly acting for Mr Safra agreed to pay $15.3m in bribes to help reduce tax debts amounting to R$1.8bn ($504.6m).


Mr Safra is not accused of directly negotiating the corrupt deal with the members of the tax appeal tribunal. That was allegedly done by a company official. But prosecutors claim they have evidence of conversations showing he was aware of the talks.


The charges, which are denied by the Safra Group, are set to further shake up a Brazilian corporate elite that had become accustomed to a legal system that traditionally offered impunity to the rich and powerful.


They follow a sweeping corruption investigation into Petrobras, the state-run oil company, in which Marcelo Odebrecht, one of Brazil’s biggest corporate titans, has been jailed. Police also raided the office of another fixture of the Brazilian corporate world, steelmaker Gerdau, in February, also in a tax-related investigation.


The probes have reached as far as former president Luiz Inácio Lula da Silva and are threatening to undermine support for his handpicked successor, President Dilma Rousseff, at a time when she is struggling with the nation’s worst recession in more than a century.


“The developments in Brazil are a further sign that law enforcement around the world is increasingly motivated to tackle international, cross-border corruption,” said Polly Sprenger, fraud and financial crime expert at Eversheds, a law firm.


A 77-year-old Sephardi Jew, who arrived in Brazil as a migrant from Lebanon in his 20s, Mr Safra is the world’s richest banker, according to Fortune magazine, with an estimated wealth of $18.6bn.

He is Brazil’s second-richest man after Jorge Paulo Lemann, the Brazilian beer and industrialised food billionaire and partner of US investor Warren Buffett, who shares Mr Safra’s taste for staying away from the limelight.


Clients of the Safra family, whose business dates from the Ottoman Empire, when it financed camel caravans, have traditionally valued the clan’s discretion. For decades, the family has been guardian of the fortunes of the super-rich from Geneva to São Paulo.


The Safra banking empire began in Syria with Joseph’s great-uncle, Ezra, who financed trade between east and west. In 1920, Mr Safra’s father, Jacob, opened a bank in neighbouring Lebanon.


With the emergence of the state of Israel after the second world war and the persecution of Beirut’s Jews, Jacob fled to Brazil. His elder brother Edmond then helped found banks in Geneva and New York.


His family paid £726m for the Gherkin in 2014 and then teamed up with another low-profile Brazilian billionaire family, the Cutrales, who own an orange juice empire, to launch a $1.3bn joint takeover of Chiquita, the banana company.


The investigation into Safra is part of a probe into a tax audit scandal that could unveil even deeper corruption than the parallel Petrobras investigation.


Termed Operation Zealots by police, the investigation is examining decisions by the so-called Carf, the part of Brazil’s finance ministry responsible for ruling on tax appeals.


Prosecutors say they are looking into at least 70 industrial, engineering, agricultural and financial groups over possible bribes to the tribunal in exchange for favourable rulings.


Although media-shy, the Safras are well-known in high-society circles in São Paulo, throwing lavish weddings in the city’s elite suburbs. Its bank headquarters with the trademark Safra name in gold letters stands at one of the most important crossroads in São Paulo.


For this reason corruption charges will come as a jolt for Mr Safra and his empire.


The company’s response this week was blunt. “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,” it said.



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