US bank faces allegations over Brazil
By Jonathan Wheatley in São Paulo
Published: August 28 2009 21:06 | Last updated: August 29 2009 00:03
The US Department of Justice has alleged that an employee of Brown Brothers Harriman, a US private bank, helped Brazilian clients avoid measures to detect money laundering and conceal the proceeds of crimes including fraud and tax evasion.
The DoJ made the allegation in an application to freeze about $450m in an account held at BBH in New York in the name of Tiger Eye Investments Limited, a company registered in the Cayman Islands.
The account was frozen on a request from the Brazilian government last December.
The DoJ made its latest accusation in preparation for an Appeal Court hearing in October that will decide whether to maintain the freeze. Kenneth Counts, an investigator hired by the DoJ, said in an affidavit there was probable cause to believe Tiger Eye was owned by Daniel and Veronica Dantas, Brazilian brother and sister and business partners. Mr Dantas is founder and head of Opportunity, a Rio de Janeiro investment firm that formerly managed Citigroup’s private equity interests in Brazil. The DoJ alleges the Tiger Eye account received redemptions from the Opportunity Fund, an off-shore fund managed by Opportunity and restricted under Brazilian law to foreign investors.
BBH said: “We have acted appropriately in regard to this client. There are no charges against BBH or any of its employees and no indication that BBH or its employees are under investigation by the DoJ.
“We are co-operating fully with the DoJ in its efforts to assist the Brazilian authorities.”
Opportunity said the restrain order was based on “erroneous premises”. It added: “Opportunity has never been involved in money laundering. Therefore, BBH has never helped Opportunity to launder money.”
Mr Counts’s allegations against BBH concern instructions from Ms Dantas to transfer about $90m from accounts held at UBS Wealth Management in London and Banque Safra in Luxembourg into the Tiger Eye account in New York last year.
Drawing on telephone conversations recorded by Brazilian police, his affidavit states: “The BBH employee appears to tell Ms Dantas he can assist her to avoid providing further information to the anti-money laundering compliance components of two financial institutions.”
BBH said notwithstanding the transcript that it had provided anti-money laundering information.
Last year, a Brazilian police investigation alleged the Opportunity Fund had been used illegally by Brazilian individuals and companies, avoiding tax on profits from those investments (which are tax free for foreign nationals) and concealing their ownership of large sums of money.
Mr Dantas was temporarily detained twice last year for alleged crimes including fraud and money laundering. On both occasions he was released by Brazil’s Supreme Court. He was found guilty in December of attempting to bribe a police investigator and sentenced to 10 years in prison.
The sentence is suspended pending an appeal.
Opportunity said: “Daniel Dantas has never ordered, agreed with, suggested or participated in any offer of bribery to public agents.”
A further $168m was frozen in Brazil and about $46m in Britain, the DoJ said. To support its case at the appeals court the DoJ has presented documents prepared by Brazilian police which contain a list of more than 70 individuals and companies which Brazilian authorities say invested in the Opportunity Fund. Among the list are dozens of individuals including one minor and several Brazilian companies and investment funds, including Opportunity companies.
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