Deutsche Bank struck a deal with the prosecutors and the city of São Paulo to indemnify the public treasury with US$ 20 million to be used to move values that, according to the prosecution, were misappropriated by former mayor Paulo Maluf (PP-SP) between 1993 and 1998.
The German bank agreed to pay compensation in exchange for the guarantee that it will not be subject to legal action. In one case, Deutsche Bank could be accused of negligence because the Maluf family circulated in bank accounts more than US$ 200 million that were diverted from public works, according to the prosecutor. Compensation is equal to 10% of this total.
The agreement stipulates that the money meant for the city should be used toward parks, daycare centers or other public facilities.
Maluf said in a statement that he is “not a defendant, nor is he cited in the case mentioned by the prosecutor.” He said that he “does not have and never had an overseas bank account.”
Compensation will be divided. The largest part (US$ 18 million) will go to the city. The state, which is in charge of a prosecutor, will receive US$ 1.5 million. Another US$ 300,000 will go to the Fundo de Interesses Difusos. The rest – US$ 200,000 – will be used by the prosecution to pay two shares of misconduct against Maluf.
The agreement must be approved by the Superior Council of the Prosecution and Justice.
According to the prosecution, the money was diverted to build Água Espraiada Avenue (now called Jornalista Roberto Marinho Avenue) and the Ayrton Senna tunnel (south zone) during Maluf’s administration (1993-1996) and the following two years.
From Brazil, the amount was remitted by moneychangers, in 1997 and 1998, to Safra bank in New York. From there, the money went to accounts belonging to two companies controlled by the Maluf family at Deutsche Bank in Jersey, a British tax haven.
Of the US$ 200 million, US$ 92 million will be returned to Eucatex, a company owned by the Maluf family, through a financial transaction by the bank.
In November 2012, the Jersey court sentenced the companies owned by Maluf and his family to return US$ 32 million to the city because it was the result of deviations.
It was the bank that advised the Jersey authorities of suspicious activity regarding the money in 1999, according to Marques. The Jersey court said that Maluf participated in the frauds that took place during construction projects in the capital city.
Now, the prosecution will seek agreements with three other banks where the embezzled money was circulated and it hopes to get another US$ 70 million in damages. The banks are UBS and Citibank of Switzerland and Safra from the US.