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Brazilian Feds target big law firms accused of corruption

. Sep 11, 2020
law firms brazil corruption Image: Mangsaabguru/Shutterstock

One of the most common legal strategies in Brazil is not taught in any law school and left out of the textbooks. It is known in Portuguese as “embargos auriculares,” something that could be translated as “close-to-ear appeal.” The expression is a derogatory way of describing a common practice in courts — when lawyers visit judges’ chambers and sweet-talk them into a favorable ruling. It implies that counselors use more than their words to get their way, offering some sort of under-the-table deal.

This week, Operation Car Wash launched a new set of charges against big law firms, suggesting that the hidden meaning of the expression “close-to-ear appeals” might be less of an urban legend and more of a common strategy.

</p> <p>Investigators launched Operation S $cheme (yes, with a dollar sign), targeting 15 big law firms accused of embezzling funds from the so-called “<a href="https://brazilian.report/business/2019/02/20/understanding-brazils-sistema-s/">Sistema S</a>” — a group of non-profit organizations run by the private sector (yet financed with public money), which promote educational and cultural activities across the country. According to prosecutors, law firms have become fronts for money-laundering schemes or for paying kickbacks to judges.</p> <p>The list of high-profile names targeted by the Feds includes the likes of Cristiano Zanin, Roberto Teixeira — both of whom represent former President Luiz Inácio Lula da Silva —, <a href="https://brazilian.report/power/2020/06/19/who-is-fred-wassef-jair-bolsonaro-shady-lawyer/">Frederick Wassef</a> — a shady lawyer who runs errands for the Bolsonaro family —, and relatives of members of high courts and even the Federal Accounts Court (TCU) — a sort of audit tribunal that monitors public spending and is supposed to act as a deterrent to corruption.</p> <p>Among the relatives of the judges being targeted is the son of Justice Humberto Martins, who presides over Brazil&#8217;s second-highest judicial body, the Superior Court of Justice (STJ).</p> <h2>Why the Feds are targeting big law firms</h2> <p>Part of the investigation was based on a plea bargain agreement made with Orlando Diniz, who for 20 years headed three branches of Sistema-S organizations in Rio de Janeiro. Mr. Diniz was arrested as part of the corruption ring run by former Rio Governor Sérgio Cabral — who has already racked up dozens of corruption convictions.</p> <p>According to investigators, at least BRL 151 million (USD 28.5 million) of the BRL 355 million paid by Mr. Diniz&#8217;s organizations to law firms was siphoned off as part of the scheme. So far, prosecutors have presented charges against 25 people —&nbsp;24 of whom are lawyers&nbsp;— for criminal association, embezzlement and influence peddling.</p> <p>Prosecutors are claiming that Lula&#8217;s lawyers formed the &#8220;core&#8221; of the criminal ring, representing Mr. Diniz since 2012. </p> <p>Cristiano Zanin <a href="https://www1.folha.uol.com.br/poder/2020/09/lava-jato-quer-tirar-meu-foco-da-defesa-de-lula-diz-cristiano-zanin-apos-ser-alvo-de-operacao.shtml">denies any wrongdoing</a> and says the accusations are a ruse to divert his attention from the former president&#8217;s case. Mr. Zanin represents the leftist leader at the Supreme Court, trying to overturn past convictions by claiming the case against <a href="https://brazilian.report/power/2020/08/05/with-some-delay-lula-gets-win-sergio-moro-car-wash-case/">Lula was biased against him</a>.</p> <p>The criminal group would also include Caio Rocha, son of former STJ Presiding Justice César Asfor Rocha, Tiago Cedraz, son of TCU member Aroldo Cedraz, and Eduardo Martins, son of incumbent STJ Presiding Justice Humberto Martins. The latter allegedly received BRL 77 million from Mr. Diniz&#8217;s organizations due to his political connections, in return for guarantees of favorable verdicts in cases of interest.</p> <p>Prosecutors claim the amounts paid for council were unreasonably high — suggesting they were actually payments for influence peddling. However, investigators add that there is no evidence that any of the justices associated with those lawyers were ever bribed.</p> <h2>Questionable behind-the-scenes relations</h2> <p>Some of the most exclusive law firms in Brazil are headed by former members of higher courts —&nbsp;or by their relatives. More than expertise of the law, they offer access to the chambers of pretty much any judge in the country. While having private conversations with members of the bench isn&#8217;t, in itself, illegal, Operation S $cheme shows that this spirit of camaraderie among judges can easily cross the line into <a href="https://crusoe.com.br/edicoes/124/o-ministro-e-as-empreiteiras/">criminal territory</a>.</p> <p>Former Supreme Court Chief Justice Joaquim Barbosa was one of the few judges ever to criticize that practice. &#8220;There are many [judges] who should be tossed from the bench. The collusion between lawyers and judges is pernicious and damaging to the rule of law. We all know that many decisions are based on friendships and absolutely out of bounds,&#8221; he said during a 2013 trial that convicted a judge for ruling in favor of his friends.</p> <p>Former Justice Eliana Calmon, who served as the ombudsman of the National Justice Council, went as far as talking about &#8220;criminals with gavels.&#8221; She said in an interview: &#8220;These are still boys —&nbsp;and all are millionaires! This is an old issue that has grown more problematic in recent years. This includes not only judges&#8217; sons and daughters, but also their spouses.&#8221;</p> <p>A couple of examples of this practice come from Rio. Disgraced former Governor Sérgio Cabral received kickbacks from government contractors and laundered money through his wife&#8217;s law firm — a scheme allegedly copied by current Governor Wilson Witzel (who has recently been <a href="https://brazilian.report/podcast/2020/09/09/explaining-brazil-podcast-rio-de-janeiros-descent-into-hell/">suspended from office and faces impeachment proceedings</a>).</p> <p>This umbilical relationship between big firms and members of the bench are one of the most deleterious features of Brazil&#8217;s legal system —&nbsp;leading 60 percent of Brazilians to <a href="https://valor.globo.com/politica/coluna/dos-embargos-auriculares.ghtml">distrust judges</a>.&nbsp;</p> <p>And we all know, the legitimacy of the courts depends on the people&#8217;s trust.

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Renato Alves

Renato Alves is a Brazilian journalist who has worked for Correio Braziliense and Crusoé.

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