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Wednesday, May 25, 2022

Police raid Brazil steelmaker Gerdau, summon CEO to testify

SAO PAULO (Reuters) – Federal police raided the offices of Brazilian steelmaker Gerdau SA (GGBR4.SA) on Thursday and summoned its chief executive to testify on suspicion the company evaded hundreds of millions of dollars in taxes.

André Gerdau Johannpeter, the chief executive, agreed to appear voluntarily rather than be arrested under an outstanding warrant, a federal police spokesman said, adding he was one of 22 people police ordered to testify in the case by day’s end.

Gerdau, Brazil’s largest steelmaker and a family company that has made steel for generations, is suspected of evading 1.5 billion reais ($ 380 million) in back taxes, the spokesman said.

The raids on Gerdau come as Brazilian prosecutors grow increasingly aggressive in efforts to crack down on corruption by some of the country’s most powerful companies.

Thursday’s operation was part of an inquiry, known as “Operation Zealots,” into kickbacks by companies through lobbyists to tax officials in return for waiving tax debts and fines.

Gerdau said it was cooperating with police. The company said in a securities filing it had legally hired external experts for technical advise but had not engaged in a tax evasion scheme. Its shares closed down 4.7 percent in Sao Paulo trading.

Search and seizure operations were being carried out at Gerdau offices in the cities of Sao Paulo, Brasilia, Rio de Janeiro, Recife and the company’s headquarters in Porto Alegre, police said.

In addition to Operation Zealots, which is probing suspected kickbacks at dozens of companies, Brazil for the past two years has been gripped by the far-reaching corruption probe around state-run oil company Petroleo Brasileiro SA (PETR4.SA), known as Petrobras.

Dozens of executives at Brazil’s biggest construction companies have been arrested or charged with corruption in that investigation.

On Monday, police again searched offices of Odebrecht, Brazil’s largest engineering and construction conglomerate. Marcelo Odebrecht, the company’s chief executive, was jailed in June in connection with the Petrobras scandal.

Prosecutors have told Reuters they are inspired by the Petrobras investigation, seeing it as the end of long-standing corporate impunity.

“For the first time important executives who were jailed stayed in jail,” Silvio Luís Martins de Oliveira, a Sao Paulo-based prosecutor who last month announced charges of crimes against the financial system against Joesley Batista, chairman of JBS (JBSS3.SA), the world’s largest meat company.

JBS said it was not the target of the charges and that all financial transactions under scrutiny complied with regulations.

(Reporting by Reese Ewing, Anthony Boadle and Caroline Stauffer; Editing by Paulo Prada, W Simon and Leslie Adler)

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