MercoPress. South Atlantic News Agency

Another major corruption scandal hits Brazil, this time fraud at the tax office

The tax office detected suspect appeals rulings that cost the state 5 billion Reais in tax evasion and are probing other cases that could raise the total to 19 billion Reais

Brazilian authorities on Thursday said they uncovered a tax fraud scheme at the Finance Ministry's tax appeals board that may have cost taxpayers up to 19 billion Reais (5.96 billion dollars).

 The news came in the midst of a multibillion-dollar corruption scandal at state oil company Petrobras that has rattled Brazil's political establishment and weighed on the fragile economy.

In the latest case, federal police inspector Marlon Cajado said companies bribed members of the CARF, a body within the Finance Ministry that hears appeals on tax disputes, to get favorable rulings that reduced or waived the amounts owed.

Cajado said 70 industrial, agricultural, civil engineering and financial companies, including banks, were being investigated on suspicion of bribing tax officials.

Early on Thursday, police raided the offices of the tax appeals board in Brasilia, and the homes and offices of tax consultants and lawyers suspected of acting as intermediaries.

They also raided the headquarters of Banco Safra SA, Brazil's eighth largest bank, owned by Lebanese-Brazilian billionaire Joseph Safra and his family. So far, investigators have detected suspect appeals rulings that cost the state 5 billion Reais in tax evasion and are probing other cases that could raise the total to 19 billion Reais, Brazil's tax agency said in a statement.

The cases under investigation came before the board between 2005 and 2013, well before current Finance Minister Joaquim Levy took office. While Levy will not be held responsible, the tax fraud case could worsen the political climate at a time when the popularity of President Dilma Rousseff's government has plummeted due to the Petrobras scandal and a stagnant economy.

“It further clouds the atmosphere,” said a Finance Ministry official who requested anonymity due to the sensitivity of the matter. “Our only alternative is to crack down on corruption.”

Police seized documents and 1.3 million Reais in cash in the raids in three cities, but no arrests occurred, Cajado said at a news conference. He said companies paid bribes of up to 10 percent to “manipulate” rulings in cases that involved between 1 and 3 billion reais in -taxes due.

The suspects face charges of influence peddling, corruption, criminal conspiracy and money-laundering, which carry prison sentences of up to 50 years. Companies accused of paying to obtain favorable rulings will have their cases reopened.