A corruption scandal made possible by Brazil’s legal loopholes

Until his companies were put under the microscope by the Senate’s Covid inquiry, lawyer Marcos Tolentino was a complete unknown to the Brazilian public. In Brasília, however, he had gained some notoriety in the corridors of power as a skilled lobbyist and “good friend” of Congressman Ricardo Barros, the government’s House whip and the lynchpin of vaccine-related corruption scandals within the Health Ministry.

Mr. Tolentino’s proxies officially sign and assume liabilities for the companies that he de facto controls. On paper, he only claims to own a small television network based in São Paulo, but hard evidence collected by The Brazilian Report shows he will have much more to explain to senators on Tuesday.

The lawyer left anonymity when FIB Bank, a company linked to him, issued a letter of guarantee for a contract worth USD 300 million between the Health Ministry and Precisa Medicamentos to purchase 20 million doses of Indian-made coronavirus vaccine Covaxin. The company also issued a guarantee for a BRL 31.5 million (USD 6.05 million) government contract with Precisa to acquire female condoms from Indian firm Cupid Limited. 

More than a corruption scandal, the probe is part of a broader fraud scheme that was only made possible due to two unfortunate Brazilian traditions: legal insecurity and shady ownership rights. 

The Land of Make Believe

Despite its name, FIB Bank is not a bank per se — and has no Central Bank authorization to offer bank guarantees. It can only issue “personal” warranties, which are legitimate business models in Brazil. In these schemes, the issuer must take on financial commitments contracted by its client, as is the case in...