Deutsche Bank to reimburse money embezzled by Paulo Maluf

The São Paulo Public Prosecution Office, the city government and Deutsche Bank have reached an agreement on Monday (Feb. 24) whereby the German institution commits to paying the government $20 million to settle the case in which irregularities were found in transactions made by the relatives of Paulo Maluf, former mayor of the city of São Paulo, and currently a deputy. Transfers total approximately $200 million in bank accounts abroad, and were made by fake offshore companies on the island of Jersey, from 1996 to 2000.

According to the Prosecution Office, Deutsche Bank collaborated with the entire investigation, but the institution does not admit in any part of the agreement to being guilty. “It’s another step in the fight against corruption, and an effective way of repairing the damages caused by these doings. It’s a measure taken which turns into a benefit for society,” said Attorney General Márcio Elias Rosa.

Paulo Maluf’s Office said he had nothing to declare, as the former mayor was not mentioned in the agreement, and that he does not hold, nor has he ever held, an account at a foreign bank.

In a statement, the German bank expressed their satisfaction with the decision made after having cooperated with the authorities throughout the whole investigation process.

Out of the repatriated funds, $18 million will be sent to the City Hall; $1.5 million to the state government, $300 thousand to the State Fund of Diverse Interests, and $200 thousand will be dedicated to further inspections and investigations in two other processes related to the money embezzlement case.

The Public Prosecution Office, the Federal Police and the city government have ascertained that, during Maluf’s administration (1993-1996), $340 million were embezzled from the construction works of the Água Espraiada Avenue and the Ayrton Senna Tunnel. The Prosecution Office estimates that at least $200 million were transferred to the island of Jersey, out of which $93 million were invested from 1997 to 1998 in Eucatex, a company run by the Maluf family.

In a note to the press, the city government announced that the funds will be used in the purchase and expropriation of areas for the construction of city parks and other social institutions.

The City Hall also explains that the agreement does not put an end to the rulings issued in Brazil and abroad against the other defendants, nor does it compensate for all the losses suffered by the city government in the case. The note further shows that Municipal Prosecution authorities were also favorable to the deal, as they find the amount agreed upon reasonable; and that the municipal government will be safeguarded against costs and legal processes.

The Public Prosecution Office declared that if further agreements are made with three other banks involved in the ex-mayor’s money transactions – Swiss UBS, in Zurich, and Citybank, in Geneva; and Safra, in New York – up to $60 billion dollars are expected to be reimbursed.

Translated by Fabrício Ferreira