RIO DE JANEIRO, BRAZIL – The last two months have not been easy for the brothers José and Germán Efromovich, shareholders of Avianca Holdings. On July 14th, the courts decreed Avianca airline’s bankruptcy in Brazil. And on Wednesday morning, August 19th, the Federal Police arrested the brothers in an operation linked to Operation Lava Jato, unrelated to the aviation company.
The brothers were arrested in São Paulo for alleged fraud in relation to contracts signed by Estaleiro Ilha S.A (EISA), a shipyard belonging to the executives, with the state-owned Transpetro, a Petrobras subsidiary engaged in fuel transport and teh import and export of oil and derivatives. The investigators suspect corruption and money laundering in the purchase and sale of ships.
Transpetro is said to have suffered a loss of R$611.2 million (US$122.2 million) for contracts with EISA – controlled by the Synergy Group, linked to the brothers – among construction delays, debt suspension, agreement irregularities, irregular delivery of a Panamax ship hull, and failure to deliver three other ships.
It is suspected that the entrepreneurs paid R$40 million in exchange for an R$857 million contract to supply ships to Transpetro. According to the investigators, the bribes were deposited through several transfers to foreign bank accounts. In an attempt to conceal the payments, companies linked to the shipyard and the executive are said to have signed a false investment contract for a third foreign oil company, located in Ecuador, also owned by the Efromovich brothers, which provided for the payment of a R$28 million fine in case of termination.
The Federal Prosecutor’s Office (MPF) reported that the court had agreed to the arrest of the suspects; however, the order was then converted into house arrest because of the Covid-19 pandemic. The Federal Police also carried out six search and seizure warrants in Alagoas, Rio do Janeiro, and São Paulo.
The new Lava Jato stage emerges as a result of a denunciation by Sérgio Machado, a former president of the Transpetro who is now collaborating with the Justice Department. In 2016, Machado claimed that between 2008 and 2009, when he was president of Transpetro, he requested undue advantages from Efromovich, asking for two percent of the value of the contracts for the building of four ships, signed between EISA and the state-owned company.
According to Machado’s denunciation, Efromovich initially said that he would not provide “political support”, but instead offered an alternative so that Machado could have an equivalent or higher financial return. According to the statement released at the time, the shareholder of Avianca Holding said he would be willing to submit investments unrelated to the state-owned company, in which Machado could have a return of equal value. However, in the MPF document, he said that it was Efromovich who proposed an investment agreement for the company in Ecuador.
Machado himself stated in his denunciation that the deal was made in partnership with his son, entrepreneur Expedito Machado Neto, who would have undertaken an investment agreement in onshore oil fields in Ecuador. The MPF document also mentions the other son of Transpetro executive, Sérgio Firmeza Machado, who at the time was the number two of Credit Suisse in Brazil. In the denunciation, Machado states that his son Sérgio Firmeza only reviewed the terms of the agreement with Efromovich, having found nothing illegal.
In an interview with EL PAÍS in July this year, German Efromovich detailed the circumstances that led him to be mentioned in the denunciation. He stated that he never paid any kickbacks, but confirmed that on two occasions his business had crossed paths with the whistleblower’s two sons.
“Sérgio Machado has two sons. One of them was an executive of Credit Suisse in São Paulo,” he says. According to him, the bank executive enabled a deal, but without detailing what kind of deal was backed by an agreement with GE [one of the giants in the aircraft engine market]. “See, he was a banker. He made the deal. And do I need to know whose son he is?” As for Expedito, Efromovich confirmed that he had an investment fund that made a deal with his oil company in Ecuador. “It seems that they used the fund to launder money and other things that I was not aware of,” he added.
In a note, Transpetro reported that since the start of investigations it has cooperated with the MPF and forwarded all relevant information to the competent authorities. “The company reiterates that it is a victim in these proceedings and provides all the required support to the Lava Jato investigations,” it said.
Source: El País