Banco Rural officials are found guilty of mismanagement by two justices

In the first decisions by Supreme Court justices in the second phase of the trial of Penal Case 470, known as the mensalão (big monthly allowance; a reference to the alleged corruption ring that paid more or less regular bribes during the period 2003 to 2005 to members of Congress so they would vote with the government at the beginning of the first Luiz Inacio Lula da Silva administration), the relator, justice Joaquim Barbosa, and the revisor, justice Ricardo Lewandowski, both found the four former directors of the Banco Rural guilty of mismanagement at a financial institution (“gestão fraudulenta”). Kátia Rabello, José Roberto Salgado, Vinícius Samarane and Ayanna Tenório, according to the relator, simulated loans that had no financial backing or guarantee of repayment.

“The assets of the borrowers was not compatible with the loans they received,” sentenced justice Barbosa. The borrowers were the PT, and the advertising agencies, SMPB and Grafitti, owned by Marcos Valério. In the first phase of the trial, focused on the misappropriation of public funds at Banco do Brasil and the Chamber of Deputies, Valério and his partners in his advertising agencies were found guilty by nine justices of misuse of public funds (“peculato”) and active corruption.

According to justice Barbosa, the Banco Rural loans (“operações de crédito”) began with R$19 million and R$10 million, in 2003. “The main directors of the bank used fraudulent mechanisms to hide the fact that the loans were simulated. Then, there was no regulatory compliance (“critérios técnicos”), the risk involved was classified incorrectly and the lack of financial backing (“capacidade financeira”) at the advertising agencies was disregarded,” said the relator.

The objective of the fraud at the Banco Rural, explained Barbosa, was to hide the origin, the misappropriation and final destination of the money. As for the bank’s books, Barbosa said they underwent “accounting engineering.”

The second justice to read his opinion, the revisor, Ricardo Lewandowski, said the evidence showed “…deliberate action by the managers [Banco Rural] to mask the real risk of the operations, …which is an act of mismanagement (“gestão fraudulenta”) in a financial institution.”

 Note of explanation: there are two crimes that the managers in financial institutions could face in the mensalão case: recklessly assuming risk (“gestão temerária”) or mismanagement (“gestão fraudulenta”). The very highly paid lawyers defending the Banco Rural officials, among them two former ministers of Justice (the equivalent of Attorney General), have insisted that their clients may have committed reckless risk management, which is a lesser crime. As used in Portuguese, “gestão fraudulenta” encompasses fraud, malice, embezzle or swindle (“fraude, malícia, falcatrua”).