PCC, Faria Lima and Central Bank independence

The gravity, scope, and depth of the allegations involved in the recent actions carried out by various control and policing bodies within the financial system have caused enormous surprise among the public. During the first few days, the issue gained prominence in the major media outlets, but little by little, the leading newspapers, magazines, and television networks began to shy away from giving the operations the attention they deserved. In truth, the revelations only seemed new to those not deeply involved in the daily operations of companies operating within the so-called Faria Lima circuit.

One of the main reasons for this slowdown in the dissemination of information obtained from the operations lies in the fact that major economic interests have begun to be drawn into the eye of the storm. What initially appeared only as accusations that organized crime was operating through financial institutions is beginning to take shape and form as an articulated and organic coexistence between the Primeiro Comando da Capital (PCC) and the world of finance. It is widely known that the accumulation of capital by drug trafficking groups is very large. It is also widely known that this type of illegal and criminal activity requires elaborate and sophisticated mechanisms within the economic and financial institutions. This is the mechanism generically known as "money laundering," whose primary purpose is to legalize all this money and give an air of normality to a process of capital accumulation whose basis and origin are criminal.

Ziegler: Switzerland washes whiter.

The issue currently being debated in Brazil undoubtedly brings to mind the writer and activist for various progressive causes, Jean Ziegler. He is a Swiss citizen who, throughout his life, held several prominent positions within the United Nations. Among his best-known works is "Switzerland Washes Whiter," a book published in 1990 that openly and clearly exposes the involvement of the Swiss banking and financial system with organized crime. Thanks to the strict observance of secrecy and privacy of account holders and the assets involved, the banking system of that country has managed to maintain a high power of attraction for fortunes and assets spread across various continents of the globe.

Only in 2018 did the Swiss state decide to end banking secrecy rules and begin sharing information with other countries and international control agencies. Thus, what was already known to everyone in the sphere of internationalized finance became public. The system of the supposedly neutral country harbored billions and trillions of dollars originating from corruption, illegal activities linked to drugs and weapons, human and precious stone trafficking, as well as the proceeds of theft and smuggling, among many other items that make up the broad spectrum of international crime.

Em interview published in 2015Therefore, some years before the end of banking secrecy in Switzerland, Ziegler points out some central elements in the organization of relations between Swiss finance and resources originating from criminal activities of all kinds:

(...) “There is institutional corruption in Switzerland.In most countries, the body that regulates banks is a state entity. In Switzerland, it is a semi-private company that is paid by the banks. An agency that regulates banks, funded by the banks.” (...) [GN]

On the other hand, Ziegler never hesitated to openly and clearly disclose the origins of much of the money that arrived in Switzerland to be laundered and legalized. The small, hard-to-reach European country, located in the Alps and far from any seaport, had become, since the mid-18th century, a magnet attracting fortunes from around the world. The allegations made by Ziegler were so serious. He was eventually removed from his seat in the Swiss parliament because of the discomfort he caused among the financial elites there.

(...) “The root of this is still the role we played in the Second World War and the complicity with Hitler's regimeSince then, we have had the greatest fortunes in the world. Today, 27% of global wealth is in Switzerland. But how can we be among the top ten GDPs in the world in terms of per capita and live in a country without natural resources? Here, The raw material is called foreign money, which comes from international fraudsters, money from crime, or blood money, which is what I call the money of dictatorships..” (...) [GN]

The lessons to be learned from the terrible case of the institutional framework of the Swiss financial system, which for centuries accepted complicity with resources of criminal origin, have apparently not yet reached our shores. Although we have not incorporated absolute secrecy of bank investments into our legislation and judicial practices, the fact remains that our elites maintain a blind faith in the informal rules of impunity and the Brazilian way of doing things in the business world. This applies to blatant tax evasion, as well as to unorthodox and unethical methods of corporate tax planning. In one case, there is always a sham amnesty in the form of the routine and always anticipated tax debt refinancing program (REFIS). In the other case, it is always worthwhile to bet on decisions in favor of the tax evader, almost always obtained in the technocratic instances of the Administrative Council of Tax Appeals (CARF).

And what about the independence of the Central Bank? Faria Lima & PCC.

Current operations and investigations are bringing to light very serious revelations regarding the incestuous relationships that have been established between the elite of finance and organized crime. The company that presents itself as the largest independent fund manager has been denounced as receiving funds from the PCC (Primeiro Comando da Capital, a Brazilian criminal organization) and as operating these funds on behalf of the criminal faction. This is Reag Investimentos, which was immediately abandoned by... holding Reag Participações. The controlling group opted to put up for sale the unit that had become the focus of much media attention due to suspicions surrounding its management.

Furthermore, the Banco Genial conglomerate also found itself under the spotlight of the so-called "Operation Hidden Carbon" allegations. The banking and finance company enjoyed a certain prestige within the Faria Lima area, as well as a good image outside the financial world. It was one of the financiers of... Election and public opinion research under the Genial/Quaest brand.On the other hand, to reinforce the dangerous ties pointed out by ZieglerGenial is listed as one of the companies that systematically responds to the Focus survey questionnaire.Organized weekly by the Central Bank. It's crazy!

Now, if under the current conditions of the institutional model the Central Bank has done nothing, what can be imagined if the bank's full independence were in effect, as foreseen in... PEC 65The agency, currently headed by Gabriel Galípolo, has long been systematically complicit in this type of practice and has failed to take the necessary measures to prevent the toxic and criminal coexistence between the very space it should be overseeing and the world of organized crime. If we were under the legal aegis of near-total independence, as proposed by the elite of finance, then the consequences would have been even more serious. In pursuit of secure and high profitability, the managers of financial funds do not respect ethical or legal limits. This is the reason for the democratic and republican demand for rigorous oversight, solid legislation, and the conviction of those involved in illicit and criminal activities.

Society must have mechanisms to control the Central Bank. It is a public body with the powers and responsibilities to oversee and regulate the banking and financial market, as well as being responsible for monetary and exchange rate policy. This is why the government, legitimately elected by sovereign and popular vote, must have the power to define its composition and the policies defined there. An independent Central Bank would mean giving even more room for illegalities and criminal practices, as revealed by this scandal of the relationship between the PCC (First Command of the Capital) and Faria Lima (a major financial district in São Paulo).

* Paulo Kliass holds a doctorate in economics and is a member of the career track for Specialists in Public Policy and Government Management in the federal government.