Unearthing money laundering at Brazilian oil giant Petrobras
| Published date | 07 May 2019 |
| DOI | https://doi.org/10.1108/JMLC-03-2018-0027 |
| Date | 07 May 2019 |
| Pages | 400-406 |
| Author | Lucas Maragno,José Alonso Borba |
Unearthing money laundering at
Brazilian oil giant Petrobras
Lucas Maragno and José Alonso Borba
Department of Accounting, Federal University of Santa Catarina,
Florian
opolis, Brazil
Abstract
Purpose –This paper aims to providean overview of key points pertaining to financial crimes taking place
during the single largest fraudscandal in Brazilian history. The authors provide details onhow the historic
fraud was carried out at Petrobras, as well as an overview of recent anti-money laundering regulation in
Brazil.
Design/methodology/approach –The paper is based on an analysis of the scandal and on legal
ramificationsenacted by the prevailing Public Ministry taking placethrough the “Lava Jato”operation.
Findings –Fraud perpetratorscontinue to find new ways to move laundered money into campaignfinance.
The authors provide details on howthe scheme was perpetrated at the placement, layering and integration
stages.
Research limitations/implications –This study comprehends the first stage of the Federal Police’s
operation,comprising 14 allegations of financial crimes.
Practical implications –A disconnect betweenregulations in effect and the reality of money laundering
in Brazil over several years has failed to impede numerouscases of fraud. However, changes in legislation
have allowedstate agents to discover cases of fraud, with more and more wrongdoings being investigated.
Originality/value –The Petrobras fraud, individual experiences of organized financial crime and a
widespreadlack of understanding of how to detect and prevent fraudon this scale.
Keywords Money laundering, Fraud, Petrobras
Paper type Conceptual paper
Introduction
In January 2018, the Brazilian state-owned oil giant Petrobras offered a payment of US
$2.95bn to settle a class-action lawsuit in the USA alleging corruption and money
laundering. This amounts to one of the top-five largest settlements in the USA, placing it
among settlements pertaining to the cases of Enron (US$7.2bn), WorldCom (US$6.2bn),
Tyco International(US$3.2 billion) and Cedant (US$3.2 billion)[1].
In 2014, the Federal Police of Brazil began an operation directed at investigating and
dismantling a scheme of diversion of public resources and money laundering that would
have generated R$10bn (approximately $3bn). From the arrestof doleiros and, later, former
employees of Petrobras, the Lava Jato operation brought to light a network of corruption
and money laundering linked to the Brazilian State involving contractors, political parties
and public servants.
The authors would like to thank Kevin Good for excellent research assistance and to Paulo Knupp for
helpful feedback, as well as to the Núcleo de Estudos em Contabilidade e Controladoria (NECC/
UFSC). The authors would also like to thank the participants of the 2017 Annual Meeting of the
American Accounting Association for their valuable contributions during presentations of this paper.
JMLC
22,2
400
Journalof Money Laundering
Control
Vol.22 No. 2, 2019
pp. 400-406
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-03-2018-0027
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