Crime infiltrates legal business and complicates investigations

The largest criminal organization in Brazil, the PCC is no longer a problem restricted to security authorities. It has also become a factor that hinders and distorts businesses in various sectors across the States.

Companies report difficulties in competing with businesses that receive “investments” from the criminal faction with the aim of laundering money and, in some cases, generating extra revenue for crime.

Other companies have changed routines due to the threat to the security of their operations in areas under crime control.

Recently, warnings about the penetration of organized crime into the formal economy were made by prosecutors, governor Tarcísio de Freitas (Republicans), the Minister of Justice, Ricardo Lewandowski, and even the president of the Central Bank, Roberto Campos Neto. Information also emerged about companies linked to crime being hired by public bodies.

Over the course of two weeks, the Market brought together reports from companies, lawyers, members of the Public Ministry, the Federal Police, deputies who had a career in the police and academics on the effects of organized crime on business.

Former owner of gas stations in São Paulo, a businessman who says he remains anonymous for security reasons says that what he paid to the distributor was often the price that stations close to his charged at the pump. According to him, many competitors with very low prices are “drug money laundries”. When I wanted to leave the business, one of those interested in buying the business was from outside the sector. He ended up selling it to another suitor.

The list of legal businesses that have become of interest to crime for money laundering includes hotels, motels, restaurants, butchers, beauty clinics, car dealerships, bakeries and even fintechs.

At the beginning of April, a Federal Police operation raided two companies in São Paulo that produce artists and funk parties, also identified as laundering channels.

“Organized crime moves a lot of drug money, which is its main revenue. It's money that needs to be laundered. Often, criminals start a company with money that needs to be laundered and suddenly the business emerges. We are not talking about small businesses, but about establishments that sell good products, where there will be a turnover of legal money mixed with illegal money and this makes investigations difficult”, says the regional delegate for the Judiciary Police of the Federal Police in São Paulo, Cristiano de Pádua . Other times, the crime is associated – through co-option – with already established companies, says the delegate. In this case, the business owner is able to increase his profitability, keeping part of the money laundered by crime.

Sometimes, crime enters a legal business through coercion. The owner of a bakery that was very busy in the capital of São Paulo received an offer to buy that he couldn't refuse, associated with an order for him to immediately accept the deal. Organized crime also takes advantage of one of the businesses that generates the most money: the cigarette industry.

“This is a subject that has become the subject of periodic discussions within the company’s management”, says the member of a cigarette manufacturer. Criminals linked to the PCC, Comando Vermelho, Os Manos (from Rio Grande do Sul) and other factions are seen by the industry as engines behind illegal cigarette operations. Another relevant player in the clandestine market, at least in Rio, are Jogo do Bicho operators.

Part of the Paraguayan brand cigarettes sold illegally in Brazil enters the country as contraband and is attractive due to its low price. They are legal brands in Paraguay, but not here.

Another part of illegal cigarettes has been produced domestically in Brazil. These are improvised factories that counterfeit cigarettes from Paraguayan brands, to reduce costs and risks in international logistics.

Last year, Brazilians smoked 108,7 billion cigarettes. Of this total, 36%, or 39 billion units, were illegal cigarettes, according to a study by Ipec, a market research company. The market share in the hands of criminals was around R$10 billion.

The contamination of private companies by the PCC gained prominence this month in São Paulo due to two cases. One of them, an operation that dismantled a scheme that involved directors of two bus companies in the capital of São Paulo with PCC criminals. Companies legally move millions of reais every year, with their own revenue and with transfers from the city hall. Public prosecutors pointed out that part of this money benefited the PCC.

Another operation attacked a fraud scheme in tenders in city halls and city councils in cities in the interior of São Paulo and which also benefited companies providing cleaning and inspection services that had members of the PCC behind them, according to prosecutors.

A lawyer who knows companies that provide cleaning services reports that the presence of the criminal scheme in cities in São Paulo is causing some entrepreneurs in the sector to simply stop seeking contracts in municipalities where crime is a direct competitor.

For legal companies, the environment of insecurity and competition with crime is fatal, says Edson Vismona, executive president of the Brazilian Institute of Ethics in Competition (ETCO) and the National Forum Against Piracy.

According to the National Confederation of Industry, losses in 14 sectors due to illicit activities went from R$100 billion in 2014 to R$410 billion in 2022.

The MP has already pointed out connections between PCC members and Social Health Organizations (OSS), which provide services for public health facilities.

Lincoln Gakiya and Fábio Bechara, São Paulo prosecutors, say that betting on entry into formal companies is often accompanied by schemes to circumvent control bodies, always with the aim of hiding the real beneficiaries.

Brazil: Losses and gains

When identifying losses caused by an action, we seek to demonstrate the losses in values ​​to facilitate the understanding and extent of the damages.

Thus, when estimating the impact of the illegal market; the size of informality and tax litigation, we extract figures that reflect the losses and, consequently, the gains if this space were occupied by legality, formality and rationality in the application of our tax system.

We have institutions that develop metrics trying to gauge the dimension of these deviations.

ETCO developed with IBRE/FGV the underground economy index carried out since 2003 and which in 2021 it reached the figure of R$ 1.3 trillion which represents 16,8% of the Brazilian GDP and with the consultancy EY sponsored an international study that found that the tax litigation, in administrative and judicial instances, reaches the astounding amount of R$ 3.4 trillion.

Concerning informality in Brazilian retail The IDV — Instituto para o Desenvolvimento do Varejo carried out a survey with the consultancy McKinsey & Company that indicates that tax evasion in physical retail is 25% to 34% and in digital retail it ranges from 33% to 37% of sales (which has continuous growth in the offer of illegal products and without invoice), with values ​​between R$ 95 and R$ 125 billion.

The National Forum Against Piracy and Illegality collects data from 15 productive sectors (clothing; fuel; personal hygiene, perfumery and cosmetics; alcoholic beverages; pesticides; pay TV; cigarettes; sporting goods; eyewear; PCs; software; cell phones; audiovisual; imported perfumes and toys) since 2014 and the survey for the year 2021 shows that these sectors had losses of BRL 205.8 billion, which added to BRL 94,7 billion (conservative estimate of an average of 46% of uncollected taxes) reaches the amount of R$ 300.5 billion. Compared to 2014, the illegal market (smuggling, piracy, counterfeiting and fraud) grew three times.

These figures of billions and trillions of reais related to the losses of industry, commerce and the formal economy make us wonder what would be the gain for the generation of jobs, revenue and impulse for our development and innovation. A simple example, adding the evasion of retail and industry indicated only in the IDV and FNCP surveys, it would be possible to finance 18 million family grants for more than 38 months with a monthly amount of R$ 300.

These projections are limited to numbers and what could be generated in gains for society as a whole, however these losses for society cannot be measured only in monetary values, as they have other consequences, whether for public safety, increased corruption and decreased productive investments.

Our police and IRS forces (federal, state and municipal) prove that criminal organizations are financed with these withheld resources, also encouraging drug and arms trafficking.

On the other hand, employment level is affected. Factories were closed and others are under threat, including the growth of persistent debtor companies that are structured to never pay taxes and, thus, erode competition. The fuel and tobacco sectors have suffered from this action, but the textile sector has also been shaken.

The various faces of illegality and the operations of persistent debtors form a criminal economic phenomenon, which has to be attacked by supply and demand. Offer, with repression, through integrated and coordinated actions of police forces and revenue.

The demand, on the other hand, is motivated by the price, which is lower in the illegal one thanks to evasion and must be faced with changes in the tax system. An example of what can be done is the recent simplification of the ICMS charge on fuels, defining the single-phase and single rate for all states, which should reduce the space for evaders.

In fact, we cannot underestimate the effects of the illegal market and the consequent tax evasion. The magnitude of the losses and what could be turned into gains for the whole society demonstrate that illegality must be permanently on the agenda of the productive sectors and the public power, which must act in cooperation in the fight against those who despise the law. . Os damages cannot be ignored, as they harm all Brazilians who bear their obligations and our expectations for the future.

Brazil loses R $ 287,9 billion to the illegal market

Brazil lost R $ 287,9 ​​billion to the illegal market in 2020, according to a survey that has been carried out since 2014 by the National Forum Against Piracy and Illegality (FNCP). The amount is the sum of the losses recorded by 15 industrial sectors (R $ 197,2 billion) and the estimate of taxes that are no longer collected (R $ 90,7 billion) due to this illegality. This average was made with the percentage of 46%, but there are products, such as cigarettes, in which the tax in Brazil can reach 90%.

The balance sheet shows a drop of 1,2% compared to 2019, when losses to the illegal market reached R $ 291,4 billion. The smuggling sectors that have the main illegality component decreased or remained at the same level in the last year - except for the cell phone sector where there was an increase.

This impact on the illegal economy is directly related to the confrontation of Covid-19 in the country and also in the countries where smuggling comes from, as is the case in Paraguay. The restrictive measures adopted to contain the spread of the virus - such as social isolation, which left the streets more empty, in addition to closed trade, the blocking of borders, as well as the rise in the dollar and the increase in seizures on the roads and highways of the country. country - affected the availability of the proceeds of crime. Cigarettes, the sector most affected by contraband, for example, lost R $ 14,2 billion last year. In 2019, it was R $ 15,9 billion.

According to Edson Vismona, president of ETCO and of the National Forum Against Piracy and Illegality, the pandemic affected all economic, legal and illegal activities. "We must be attentive to the resumption of the market and strengthen measures to combat the illegal by encouraging the legal market that invests in the country and generates jobs".

Sectors that suffer from the illegality generated within the country, for example, fuels, had a new increase, reaching the amount of R $ 26 billion - R $ 3 billion more in losses than in 2019. According to Vismona, this sector suffers mainly from illegal internal practices, such as “fraud, evasion, in addition to theft and fuel diversion in the pipelines”, says the president of the FNCP.

The FNCP survey has been carried out since 2014 and is based on data pointed out by the productive sectors themselves, which have their own metrics (research, market evaluation). The 15 segments covered by the FNCP study are clothing; glasses; cigarette; Cable TV; personal hygiene, perfumery and cosmetics; alcoholic beverages; fuels; audio-visual; pesticides; cell phones; imported perfumes; sports equipment; toys; software; and electronics (PCs, Servers, Networking, Printers / Toners / Ink Cartridges and Security Equipment).


In addition to economic losses, unemployment 

 A study by Oxford Economics pointed out that the consequences of illegality in Brazil go beyond the loss of taxes on production and on sales of the product, but also affect the generation of jobs. Only in the case of the illicit cigarette market, Brazil has stopped generating 173 thousand direct and indirect jobs, both in tobacco cultivation and in the manufacture and distribution of cigarettes. The study considered data from the national tobacco industry of 2019 - the last full year of 'normal' activity, unaffected by the impact of the coronavirus pandemic.

On the other hand, the study points out that the presence of a large and growing illicit sector may still represent an opportunity for Brazil: the replacement of the approximately 63,4 billion illegal cigarettes circulating in the country (Ibope Inteligência / 2019) by products products produced in Brazil would support an additional contribution of R $ 6 billion to GDP and support the creation of 173.340 jobs. The extra activity would also generate R $ 1,3 billion in additional tax revenue (tax revenue associated with employment and sustained activity).

Brazil loses R $ 291,4 billion to the illegal market

Brazil lost R $ 291,4 billion reais to the illegal market in 2019, according to a survey that has been carried out since 2014 by the National Forum Against Piracy and Illegality (FNCP). The value is the sum of the losses recorded by 15 industrial sectors and the estimate of taxes that are no longer collected due to this illegality.

The amount increases much more than the national Gross Domestic Product (GDP). While Brazil's GDP increased by 2019% in 1,1, the illegality market is growing. The loss of the sectors was R $ 199,6 billion, which added to an average of the tax evasion (R $ 91,8 billion) reached R $ 291,4 billion. This average was made with the percentage of 46%, but there are products, such as cigarettes, where the tax can reach 90%.

An estimate by the Latin American Smuggling Alliance (ALAC) also points out that, on average, the illegal market corresponds to 2% of the GDP of Latin American countries. In Brazil, this percentage is at least 7.85%. “The GDP does not grow significantly, it is stabilized, but illegality is increasing more and more”, says Edson Vismona, president of the FNCP.

For the entity, this annual survey is very important for the productive sectors, which thus demonstrate the billion dollar losses to the illegal market. “This action attests that the illegal economy is growing, the damage only increases and it is important to alert society and public authorities to the extent of this gap, emphasizing the need for coordinated and permanent actions to combat illegality, both in the physical and digital markets. , which erodes our development and makes it difficult to attract investments and generate jobs ”, says Vismona.

57% of cigarettes in Brazil are illegal

Cigarettes, the sector most affected by contraband, for example, lost R $ 15,9 billion last year. In 2018, it was R $ 14,4 billion. According to Ibope data, 57% of cigarettes sold in the country are illegal. The latest survey conducted by the institute showed growth in the illegal tobacco market for the sixth consecutive year: of the 57% illegal, 49% were smuggled (mainly from Paraguay). As a result, 63,4 billion criminal cigarettes flooded Brazilian cities - it is known that this product is used to finance militias and drug trafficking.

A study by Oxford Economics also found that the operations of legitimate cigarette manufacturers support 25,9 jobs in Brazil. The illegal cigarette market has stopped the tobacco industry from generating 27 jobs.

Another example of the expression of illegality is seen in the fuel sector, which reached the amount of R $ 23 billion. According to Vismona, this significant value occurred because the segment improved the data. "They added, in addition to losses due to fraud, also theft and fuel diversion in the pipelines", says the president of FNCP.

The FNCP survey has been carried out since 2014 and is based on data pointed out by the productive sectors themselves, which have their own metrics (research, market evaluation). The 15 segments covered by the FNCP study are clothing; glasses; cigarette; Cable TV; personal hygiene, perfumery and cosmetics; alcoholic beverages; fuels; audio-visual; pesticides; cell phones; imported perfumes; sports equipment; toys; software; and electronics (PCs, Servers, Networking, Printers / Toners / Ink Cartridges and Security Equipment).


Illegal trade is the world's second largest economy

The value of illegal trade is 8% to 15% of the world economy, according to a recent study by Euromonitor consultancy signed by Philip Buchanan and Lourdes Chavarria.

The highest estimate is $ 12 trillion in 2014, the same size as China's GDP, the world's second largest economy.

In 2013, 2,3 billion pharmaceutical products and 470 million electronic products were confiscated around the world. In the US alone, more than $ 1,7 billion in counterfeiting was retained at the border in the same year.

Counterfeit bags in New York's Chinatown neighborhood: the original version costs up to 100 times more. Photo by

Illegal trade is defined as the “production, import, export, sale and purchase of goods that do not follow the current legislation in any specific jurisdiction”.

They range from selling overdue medicines to counterfeiting famous brands or making alcoholic beverages at home.


Source: Exam (09/10)


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Without border operations, Brazil lost R $ 10 billion in taxes

Between 2011 and 2014, the federal government lost at least R $ 10 billion in taxes not collected because it allowed smuggled products into Brazil.

This is the point of an unprecedented study by Idesf (Institute of Economic and Social Development of Borders), released on Wednesday (16) in Brasilia.

Without border operations, Brazil loses an average of R $ 3 billion per year, according to a study
Avener Prado / Folhapress








Source: Folha de São Paulo Online (16/09)

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'New Computer Law increases smuggling in Amazonas'

The statement is from an analyst who points to the readjustment of national electronics prices as an incentive to purchase irregulars.

Disclosure Portal IN TIME (13/09)
Disclosure Portal IN TIME.

Products from different sectors enter the country illegally, without proper technical or health certification. They do not collect taxes and, in addition to harming the health of the population, it subtracts the employment of Brazilians, increases insecurity in cities and borders and attacks sovereignty and national defense.

The recent amendment to the Computer Law, which readjusted values ​​of electronic products by up to 10%, according to experts, increases the risk of smuggling products such as smartphones, tablets, modems, computers and notebooks also in Amazonas.

Source: Portal EM TEMPO (13/09)

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