Brazil's crackdown on criminal links to fuel supply chain nets $220M in assets

Key Points

• Brazil's authorities seized 1.2 billion reais (approximately $220 million) in assets linked to a money laundering scheme involving organized crime and the fuel sector.
• The operation resulted in five arrests and highlighted the infiltration of criminal organizations into both the fuel industry and financial markets, affecting various supply chain elements.
• Authorities identified 40 investment funds allegedly used to conceal assets for criminal syndicates, including the First Capital Command (PCC), Brazil's most powerful organized crime group.
• Investigators found that adulterated fuel was sold at over 300 gas stations, with money laundering schemes involving shell companies and complex intermediaries.

SAO PAULO (AP) — Brazil on Thursday said it seized 1.2 billion reais (about $220 million) in assets linked to a sprawling criminal network as part of a nationwide investigation into a money laundering scheme involving investment funds and the fuel sector.

Officials executed 14 search and seizure warrants and 14 preventive arrest warrants, resulting in five arrests, in what Justice Minister Ricardo Lewandowski said was one of the largest operations against organized crime in the country’s history.

Federal authorities did not name any individuals or companies targeted, citing sealed and ongoing investigations. However, state prosecutors in Sao Paulo, who contributed to the operation, said the scheme involved members of the First Capital Command crime syndicate, or PCC.

Lewandowski said: "This operation addresses how criminal organizations have infiltrated and appropriated parts of the fuel industry, and how this connects to the financial sector through money laundering schemes.”

Later in the day, President Luiz Inácio Lula da Silva said on X the operation was “the largest response by the Brazilian State to organized crime in our history so far.”

"Our commitment is to protect citizens and consumers; to cut off the flow of illicit money, recover resources for public coffers, and ensure a fair and transparent fuel market, with quality and fair competition,” Lula said.

Authorities identified 40 investment funds with a combined asset value of 30 billion reais (about $5.5 billion). These funds were allegedly used to shield assets for criminal organizations, holding properties such as a port terminal, four ethanol plants and about 1,000 gas stations across 10 Brazilian states.

“People know how it has worked, but it took a national effort to reach the heart of the problem and be able to confront it,” Finance Minister Fernando Haddad told journalists.

Andrea Chaves, deputy secretary for tax enforcement at the Brazilian Federal Revenue Service, said the investigation highlighted the “extremely serious” infiltration of organized crime into the real economy and financial markets.

“This affects the entire supply chain — from fuel importation, production, distribution and commercialization,” Chaves said.

Sao Paulo's State Public Prosecutor’s Office said its investigation found that criminal organizations used adulterated fuel at more than 300 gas stations to launder illegal money through a complex network of intermediaries, including shell companies, investment funds and payment institutions.

“A significant portion of the unbacked funds was used to acquire ethanol plants and expand the group’s criminal operations, which now include fuel distributors, transport companies and gas stations,” prosecutors said.

The fraud also involved irregular imports of methanol through the Port of Paranagua, in Parana state. The methanol was not delivered to the recipients listed on invoices but instead sent to gas stations and distributors, where it was used to adulterate fuel.

Consumers allegedly were overcharged, receiving less actual fuel than indicated by the pumps, or received substandard fuel, prosecutors said.

Nívio Nascimento, a foreign relations adviser at the Brazilian Forum on Public Safety — an independent group that tracks crime — said the operation marked a milestone in combating the infiltration of strategic sectors of Brazil's economy by criminal organizations.

“Enforcement still needs to be expanded, considering the centrality of these economic sectors — fuel, beverages, cigarettes and several other items — that have been appropriated by criminal organizations,” Nascimento told The Associated Press.

PCC is Brazil’s biggest and most powerful organized crime group. It was founded in 1993 by hardened criminals inside Sao Paulo’s Taubate Penitentiary to pressure authorities to improve prison conditions. It quickly started using its power to direct drug dealing and extortion operations on the outside. Over the past few years, the gang has diversified their investment portfolios into various illicit markets.

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