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UPDATE 4-Brazil police raid offices in probe of Caixa loans
January 13, 2017 / 12:32 PM / a year ago

UPDATE 4-Brazil police raid offices in probe of Caixa loans

(Adds comments from JBS, Marfrig)

By Pedro Fonseca and Brad Haynes

RIO DE JANEIRO, Jan 13 (Reuters) - Brazilian police raided homes and offices on Friday in a corruption investigation of loans that state bank Caixa Econômica Federal extended to meatpacking, finance, toll road and real estate firms between 2011 and 2013.

Brasilia-based federal Judge Vallisney Oliveira issued an arrest and search warrant on grounds that a former minister to President Michel Temer allegedly colluded with a former lower house speaker to grant loans to several companies in exchange for bribes.

Oliveira wrote that the ex-minister, Geddel Vieira Lima, then vice president at Caixa, and former Speaker Eduardo Cunha allegedly steered loans to companies in a graft scheme including meatpackers JBS SA and Marfrig Global Foods SA .

Lima resigned from the cabinet in November amid allegations he had pressured another minister to approve a real estate project. His lawyers did not reply to a request for comment.

Shares of JBS, Brazil’s biggest meatpacker, fell 2 percent on Friday. Marfrig shares fell over 2 percent before rebounding to trade up 1 percent.

Representatives for JBS and Marfrig said their companies’ offices were not raided and they denied any wrongdoing.

Representatives for Marfrig said the company borrowed from Caixa at market rates without any special privileges.

Caixa said in a statement that the bank is collaborating with authorities. A presidential press representative declined to comment.

Police said a statement that the latest investigation followed from text messages discovered on a cell phone in a December 2015 raid on the home of Cunha, then speaker of Brazil’s lower house.

Cunha is now in prison on separate corruption allegations. His lawyers dismissed the latest allegations as “absolutely unfounded.”

The police raid on Friday was the latest case raising questions about investment protocols at Caixa, where politically appointed management has long held sway.

Federal prosecutors have previously said they were investigating Caixa for potentially corrupt investments at the Rio de Janeiro “Marvelous Port” development linked to last year’s Olympics.

That project is an 8 billion reais ($2.49 billion) makeover of the city’s dilapidated waterfront, including five 38-story office buildings to be built by U.S. President-elect Donald Trump’s real estate company.

The pension fund for oil company Petroleo Brasileiro SA’s employees called in December for an investigation of losses on investments managed by Caixa’s asset management unit.

Brazil’s federal audit court also blocked Caixa in August from selling bad loan portfolios due to alleged irregularities.

$1 = 3.22 reais Additional reporting and writing by Brad Haynes and Guillermo Parra-Bernal in Sao Paulo; Editing by Bernadette Baum and Leslie Adler

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