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Brazil

Fall of an opportunist
Dec 4th 2008 - BRASÍLIA
From The Economist print edition

Justice for a controversial financier

MANY bankers may be worried about whether some fancy product dreamed up during the bubble years might yet lead to a visit from the police. Daniel Dantas, a financier who has profited by operating at the opaque place where business and government meet in Brazil, has been opening the door to find the police outside for much of the past decade. On December 2nd he was convicted of a less sophisticated crime: trying to bribe police officers. Mr Dantas, who has acquired great notoriety in Brazil, was fined 12m reais ($5m) and sentenced to ten years in prison. He has appealed against his conviction.

The charge stems from a police investigation into money laundering known as Operation Satiagraha. (Many investigations have titles that sound like airport thrillers; this one borrows from Mahatma Gandhi’s independence slogan meaning “holding onto truth”.) It grew out of a previous probe into Mr Dantas’s use of Kroll, a security consultancy, to watch over his business partners. During this investigation the police seized a computer from Opportunity, Mr Dantas’s investment bank, which contained data from the mid-1990s to 2004 and apparently showed suspicious movements of money.

The judge found that Mr Dantas tried to pay bribes, via two go-betweens, to keep his name out of the Satiagraha investigation. A man fitted with a bugging device was offered $1m in cash, with another $4m to follow, the police say. They claim that Mr Dantas’s scam involved money travelling to the Cayman Islands, then via the British Virgin Islands to an account in Ireland, on to Delaware, and then re-entering Brazil as foreign investment. They say that the money-laundering racket’s clients included a former mayor of São Paulo, Celso Pitta.

For Mr Dantas the verdict is a steep fall from grace. A man who sleeps little and socialises less, he is a vegetarian and self-made billionaire, a gifted financier who has serially fallen out with his business partners. He once controlled a large telecoms firm, acting for investors who included Citigroup. He says he is the victim of a conspiracy mounted by the government.

It is Mr Dantas’s supposed influence in government circles that has added to his notoriety. During the 1990s, when many state-owned businesses were privatised, Mr Dantas positioned himself as the man with the needed expertise and contacts. He enjoyed easy access to the government of President Fernando Henrique Cardoso, including meetings with the president himself. That influence carried through into the government of President Luiz Inácio Lula da Silva. Mr Dantas is alleged to have been one of the funders of a cash-for-votes scheme in Brazil’s Congress mounted by leaders of Lula’s Workers’ Party in 2003-04. Many of those who have had dealings with Mr Dantas insist that these have been legitimate and conducted in good faith. They include Luiz Eduardo Greenhalgh, a lawyer and PT politician, whom he hired as a consultant.

Mr Dantas’s lawyers accuse the police of fabricating evidence and the judge of bias. The investigation brought widespread complaints that police wiretapping is out of control. The policeman who led the probe, Protógenes Queiroz, has been suspended. He accuses Mr Dantas of mounting a campaign through the media to discredit him.

Justice in Brazil is marred by clogged courts and interminable appeals. Big trials such as this one are often fought through the press before fizzling out. Tarso Genro, the justice minister, says that the trial of Mr Dantas shows that the institutions of justice are now functioning properly. It is too soon to know if he is right.