More Woes For Brazil As Authorities Uncover Massive $6B Tax Fraud At Finance Ministry

Brazilian authorities said they uncovered a massive tax fraud scheme on Thursday at the Finance Ministry’s tax appeals board that could have cost taxpayers up to 19 billion reais ($5.96 billion), Reuters reports.

The news of the alleged tax evading practices comes at a particularly troublesome time for the nation as it is still reeling from a multibillion-dollar corruption scandal which involves kickbacks at state-owned energy giant Petrobras.

In the latest case, federal police inspector Marlon Cajado said that companies had bribed members of the CARF, an offshoot of Brazil’s tax authority that hears appeals on tax disputes, to receive favorable rulings that reduced or waived the amounts owed, the report said.

According to the report, Cajado said that 70 industrial, agricultural, civil engineering, and financial companies — including banks — were being investigated on suspicion of bribing tax officials.

Cajado said that companies had paid bribes of up to 10 percent to “manipulate” rulings in cases that involved between 1 and 3 billion reais in taxes due.

Suspects will face charges of influence peddling, corruption, criminal conspiracy, and money laundering, which carry prison sentences of up to 50 years.

The Petrobras scandal has rattled President Dilma Rousseff’s government and has weighed on its fragile and stagnant economy, and this latest tax scandal will undoubtedly add to the woes  of her administration.

A recent poll that was released last Monday by polling firm MDA showed that the popularity of Rousseff’s government has dramatically fallen to a new low, with 64.8 percent of respondents rating it negatively and only 10.8 percent seeing it positively.

Prior to Rousseff’s narrow re-election in October, a MDA poll in September showed that 41 percent of respondents had rated her government as “great” or “good” and 23.5 percent as “bad” or “terrible.”

The poll released last Monday shows that 59.7 percent of respondents favor Rousseff’s impeachment, and 68.9 percent believe that she is responsible for corruption at Petrobras.