Arrested Governor of Brazil Sergio Cabral Floated Dozens of Shell Companies in India

The Enforcement Directorate has told the Delhi High court that Sergio Cabral, the Brazilian politician who was jailed for corruption, had created dozens of shell companies in India and received $13.24 million in those accounts. The former Rio de Janeiro governor was arrested in November 2016 by the Federal Police of Brazil while investigating alleged nexus between administrative members of state-owned oil company Petrobras, politicians and big companies. Cabral was accused of embezzling $161 million, the ED said in an affidavit led in the high court. He had registered more than 3,000 companies in 53 countries, including over 60 in India, using a computer system called 'Bank Drop' to siphon off bribes received for sanctioning public contracts, the affidavit claimed.

In November 2018, the ED received a letter from the Central Authority of Brazil seeking legal assistance in the corruption and money laundering case, people in the know said. In July this year, the ED asked State Bank of India and some other banks to freeze the accounts of 67 companies on a request from the Brazilian government. These included accounts of JK Tyre, Hamilton Housewares and KP Sanghvi & Sons in a New Delhi branch of SBI. The ED led the affidavit after Hamilton Housewares moved the high court against freezing on the account.

Brasília’s request came under the UN convention against corruption, of which India and Brazil are members, said an official privy to the matter. In the communique, the Brazilian authorities claimed that Cabral, during his eight-year stint as the governor, had charged a commission of 5% of all public contracts as bribe. “While the payment was made in Brazil and was in kind, Cabral along with his associates ran a sophisticated network between black market dealers. Cabral sent money diverted from the public treasury through thousands of offshore companies. He then tasked his brothers for sending resources abroad who in turn used a network of financial operators whose only task was to conduct transactions outside the banking system without the knowledge of the authority,” added the official.