Luis Bulcao Pinheiro 15 May 2019
Brazilian politicians might be “attempting to create tension” between President Jair Bolsonaro and Justice Minister Sérgio Moro by seeking to transfer the country’s anti-money laundering body from the Ministry of Justice, lawyers have said.
On 9 May, a specialist congressional committee made up of senators and deputies voted by 14 votes to 11 to move the Council for Financial Activities Control (COAF) from Moro’s remit and return it to the Ministry of Economy.
The upper and lower houses of Brazil’s National Congress must now vote on whether the COAF should be moved to the Ministry of Economy before it is enshrined in law. Under Brazilian law, the matter must be confirmed by 3 June.
The COAF is a government body that investigates money laundering and financial misconduct. It was created in 1998 as a unit of what is now the Ministry of Economy (then the Ministry of Finance) and it remained there until January 2019 when Bolsnaro moved it to the Ministry of Justice.
Bolsonaro reportedly moved the COAF to the Ministry of Justice following a request by Moro, who reportedly argued such a move was crucial for tackling corruption as the body would be able to coordinate with prosecutors on criminal investigations into financial misconduct.
However, several politicians forcefully objected to the move. In April, senator Rogério Carvalho said that placing the COAF under the command of Moro would be akin to “establishing a Gestapo”, according to reports.
Bolsonaro announced Moro’s appointment as justice minister on 1 November, after Moro reportedly said he would only assume the role if he was granted “total freedom to operate”. He was previously the judge overseeing the wide-reaching Operation Car Wash investigation into alleged corruption linked to state-controlled oil company Petrobras.
Lawyers told Latin Lawyers sister publication Global Investigations Review that the opposition to having the COAF under Moro’s remit may stem from political motivations and a desire to drive a wedge between the president and justice minister. Eloy Rizzo Neto at Koury Lopes Advogados in São Paulo said he thinks the move from Congress is “an attempt to create tension” between Bolsonaro and Moro.
“Several congressmen from the lower and higher houses are currently under investigation for their potential involvement in wrongdoings,” he said. “As a result of this, they are not really enthusiastic about Mr Moro, who is the symbol of the fight against corruption in Brazil.”
Rodrigo Maia, president of Brazil’s Chamber of Deputies, and former governor of São Paulo Geraldo Alckmin are among the Brazilian politicians currently under investigation. Maia and his father were accused in April of receiving $362,000 in bribes as part of an ongoing investigation into their part in the Odebrecht scandal, while Alckmin had his assets frozen following allegations he received illegal campaign donations from Odebrecht. All three deny the allegations.
Politicians have reason to fear Moro. He presided over the case that saw ex-Brazil president Luiz Inácio Lula da Silva sentenced to 12 years in prison in July 2017 for corruption and money laundering. Lula’s 12-year sentence was recently shortened to eight years and 10 months following an appeal. Lula denies wrongdoing.
Rizzo said creating tension between the two might be considered a good strategy for politicians under investigation.
Ludmila de Vasconcelos Leite Groch at TozziniFreire in São Paulo said the drive to move the COAF to the Ministry of Economy is politically motivated.
Returning the COAF to the Ministry of Economy would “return it to its status quo”, she said. She said that if it is moved, Moro will make working with the COAF one of his top priorities “because it is an important ally for fighting organised crime”.
Karlis Novickis, a professor in compliance management at Insper University and partner at KMN in São Paulo, said that there does not seem to be any friction between Bolsonaro and Moro at all.
He said Bolsonaro does not want to lose a battle with Congress over the COAF move or any other issue, while Moro wants to show the public the importance of keeping the body in the Ministry of Justice to keep up the pressure on members of Brazils congress to tackle corruption.
Whatever the reasons for the transfer of the COAF, the majority of lawyers Global Investigations Review spoke to said they believe the body will continue to function and investigate as it always has, regardless of where it ends up.
Rizzo said that while he wants it to stay under the Ministry of Justice, he does not think that too much will change, noting that the presidency of the body will remain the same.
“The move might have the effect of reducing the budget of the COAF, with a potential loss of staff and slowdown of the council’s work,” he said. He said that the COAF “worked really well” while it was under the Ministry of Economy before.
“Our economy minister Paulo Guedes is a very competent and serious person and I do not believe he would somehow try to interfere in the COAF’s activities,” he added.
Similarly, Thiago Jabor Pinheiro at Mattos Filho Veiga Filho Marrey Jr e Quiroga in São Paulo said that from a policy perspective, where the COAF moves is less important than ensuring it continues to work well.
“There is a technical point that it will be more effective under the Ministry of Justice, as it will be closer to the federal police and other enforcement agencies and so more efficient at doing its job,” he said.
However, he pointed out that the COAF’s move to the Ministry of Justice was recent and so how effective it is under that ministry is yet to be seen.
“The key is providing the COAF with adequate resources regardless of where it sits,” Jabor said.
Isabel Franco at Azevedo Sette Advogados in São Paulo was more sceptical, stating that the move “could represent a weakening of investigations that deal with money laundering crimes”.
She said that the COAF’s initial transfer at the start of January “enhanced its capabilities and expanded its resources”, giving it more strength via increased autonomy and independence.
Franco added that the integration of the COAF with police and prosecution agencies under the Ministry of Justice had “facilitated the fight against money laundering, organised crime and corruption”, citing that since moving to the Ministry of Justice, the COAF has produced 2,735 financial intelligence reports, which is a 25% increase from the same period in 2018, according to figures from the ministry.
Transparency International Brazil said on 26 April that the removal of COAF from the Ministry of Justice “would be a step backward in the fight against corruption” and urged Bolsonaro to consider the change and to continue strengthening the body.
The COAF recently uncovered allegedly suspicious payments made by Bolsonaros son, Flávio Bolsonaro to his driver Fabrício Queiroz between 2016 and 2017. The case was temporarily suspended in January but has since resumed, with the Public Prosecutor’s Office of Rio de Janeiro reportedly asking for access to Queiroz and Flávio Bolsonaro’s bank accounts. He denies wrongdoing.
Moro has been critical of the plans to transfer the COAF back to the Ministry of Economy but said he will respect whatever decision is made in the wake of the special committee’s decision. Bolsonaro, who himself has been reluctant about the move, has reportedly said that he expects Congress to reverse the committee’s vote. COAFs president Roberto Leonel de Oliveira Lima has reportedly said that he would prefer the body to remain within the Ministry of Justice.
This article was first published by Latin Lawyer’s sister publication Global Investigations Review on 10 May.
https://latinlawyer.com/article/1192895/brazilian-politicians-vote-to-move-money-laundering-body-away-from-moro?utm_source=05%2f15%2f19-11%3a39%3a30-880+-+Compliance+teams+are+enablers%2c+not+roadblocks+for+the+OG+business&utm_medium=email&utm_campaign=05%2f15%2f19-11%3a39%3a30-880+-+Compliance+teams+are+enablers%2c+not+roadblocks+for+the+O%26G+business&utm_term=Compliance+teams+are+enablers%2c+not+roadblocks+for+the+OG+business&utm_content=64929&gator_td=%2bKc0JjIf%2f9dYgm0cFQht%2fpIhVcxUVTW%2flO6OfWVwoXrWyJW4iJ33LBRJMB%2bZYpI68WUBh%2fjqcm3HUIg7uZJcOLfeQpVhjTIyDFRZfOYtFQXrBm2t8%2bPZb0Lm1vVh2blb2ERm13m46G2lkgwWaPJPnsdmoo8FonE9vpDT6TUOuw7NVGzNld1NhTE45O%2fGSCDum%2b8g%2bFvKpLC9iD4gdwTTcIl1LxpZ838LfoZHaU%2fumd11nU1ZU2%2fk5ETvfszpVoYun4OcNm4RxptmMOnssg7%2btiy2o73%2f0%2b8klkcVJH0LVbs%3d