With Brazil’s presidential election just weeks away, public security has become a defining campaign issue. In this week’s InSight Take, InSight Crime Co-director Steven Dudley and Investigator Christopher Newton explore how the US terrorist designations of the First Capital Command (Primeiro Comando da Capital – PCC) and Red Command (Comando Vermelho) are reshaping the political debate and what the reality of organized crime and security looks like on the ground.
Transcript
Steven Dudley: [00:00:00] Brazil has presidential elections next month, and surprise, surprise, public security is the defining issue of the campaign. It’s happening against a backdrop that no one really expected a year ago. In May and June, the United States designated the country’s two dominant criminal factions—the First Capital Command, known by its Portuguese acronym “PCC,” and the Red Command, which is known as the Comando Vermelho in Brazil—as terrorist organizations. It’s the first time that Brazilian groups are on these lists of terrorist groups, and it’s really reshaping the campaign as it goes along.
SEE ALSO: The InSight Take: PCC and Red Command— Who Loses From US Terrorist Designations in Brazil?
Steven Dudley: [00:00:53] I’m Steven Dudley, and I’m the co-director of InSight Crime, and I’m joined this week by one of our Brazil-based investigators, Christopher Newton, who’s going to help us dig into what’s actually happening on the ground in Brazil: you know, how this terrorism designation does and doesn’t impact Brazil and does and doesn’t impact the campaign, especially in a race where the central issue are these types of criminal groups. Chris, thanks for joining us.
Christopher Newton: [00:01:34] Good to be here, Steve.
Steven Dudley: [00:01:37] Let’s start with some numbers because, you know, this is supposedly what’s driving all of these designations. The PCC, as the United States says, at least from its designation, is now the largest transnational criminal organization in the Western Hemisphere. The Red Command is certainly powerful in places that are, you know, very high in the consciousness of United States citizens, places like Rio. Both of them are very prominent criminal groups for sure. You’ve got high levels of homicides, although, you know, homicide levels have been going down, but you’ve got things that are worrying; disappearances have hit a record high, from my understanding in the first half of this year. What’s your sense? I mean, is the kind of level of alarm that’s being sounded—not just by the United States, but certainly also by the candidates and obviously the general populace—is it proportionate to what you’re seeing and feeling on the ground in Brazil?
Christopher Newton: [00:03:00] Well, you see, Steve, these are based on real threats. I mean, the PCC is a massive criminal network. It spans not only across Brazil, but into a bunch of different countries in South America and Europe. And we see a big reach internationally, and it’s moving billions of dollars a year. The Red Command has dominated parts of Rio. It has also expanded throughout the country, and it’s in active conflict with other groups—the Pure Third Command militias. And it’s getting more sophisticated with these more militaristic approaches, using drones and car bombs. So these are real powerful criminal organizations that are threatening public security in Brazil. They are laundering a huge amount of money throughout the financial system, and they are causing a lot of violence, a lot of death. Now, when it comes to the designations, though, we also have to look at the politicization of it. I mean, this is landing in the middle of a presidential campaign, and so now everybody has to have an opinion on it, right? This is not something that anybody can ignore on the campaign. On the one hand, you have the leading candidate on the right, Flávio Bolsonaro, who is claiming that he himself is responsible for some of these designations, that he went to Washington, that he lobbied for this, told American politicians about the reality in Brazil, and that this is a result of his policy. But there’s also been a lot of backlash to that. And we see on the left with Lula, who’s running for reelection, and who’s the leading candidate on the left wing, a complete opposite.
Steven Dudley: [00:04:42] This is Luiz Inácio Lula da Silva, the current president and obviously former president as well. This is now his—what is it—his third or fourth term? He’s been in power for a long time and going for it yet again. Go ahead.
Christopher Newton: [00:04:58] Exactly. This is currently his third term and he’s running now for his fourth. And so, you know, these designations are a big thing. And you have the Foreign Ministry of Brazil saying in Congress this is a bad thing, that it is giving potentially the US an excuse to violate Brazilian sovereignty, which is a big deal to have the government signaling that. So what we’re seeing is that it’s getting a lot of attention and that, you know, it’s falling into the typical camps of whether you’re pro- or anti- this designation kind of aligns to your political allegiances. And it’s just taking a lot of the attention because of that, that other crimes such as environmental crime in the Amazon, for example, which is pretty urgent, isn’t really getting.
Steven Dudley: [00:05:52] Yeah. I mean, of course, it’s a bit of both. You know, these groups are real. These groups are dangerous. These groups are huge, relatively speaking. I mean, the PCC, when we did some work on the PCC a few years ago, there were estimates that it was some 30,000 members. That is a giant army of people. And those are the people who are just—those are the members, we’re not even talking about others who might be working with it. And this was a few years ago, so it might even be bigger now. The CV, you know, the Comando Vermelho, Red Command, I’m not sure it’s of comparable size, but it is, you know, also very, very prevalent across the country, including in the places that you mentioned, in the Amazon, and both groups are in the Amazon and involved deeply in environmental crime, among other criminal activities. So, on the one hand it is very, very real. On the other hand, you know, the United States has never really paid attention to Brazil in this way. It’s never really considered these groups as such a threat. Why do you think that is happening now? Do you think this is only political, or is there some kind of threat that people should understand to the United States, whether it’s a sort of physical threat of somebody being attacked or whether we’re talking about some kind of financial threat or they’re moving drugs into the United States—what is behind, what do you think the threat actually is?
Christopher Newton: [00:07:42] Well, in terms of how this is actually going to be applied, whether it’s just political or whether this is a new tool that the US government’s using in Brazil, I think we’re probably not going to have an answer until after the election. Is this something that, you know, the US government is doing to pressure Brazil and its politicians to try to get some favorable people elected or some favorable policies passed? Or is it going to be really applied? When we look at the threats to the US, they’re not terribly strong. We do have evidence that the PCC is laundering money through the US financial system, but it’s quite small in comparison to how much they’re laundering here in Brazil. And, you know, I think there’s a lot of other groups that are having more impact on the US financial system that are not getting the same kind of attention. When it comes to the Red Command, we don’t have any evidence of them really having a significant presence—or any presence really—in the US or that they’re significantly engaged in the financial system. So it’s a weird group to put on this list because there just isn’t much of a US connection. In fact, if anything, it seems to be going the other way. The biggest connection between the Red Command and the United States that we’ve seen has been US weapons flowing to Brazil to fund the group and their conflicts locally.
Steven Dudley: [00:09:07] Mhm.
Christopher Newton: [00:09:08] You know, the PCC, as we said, is a multinational group, but when we’re looking at drug trafficking, the routes that they dominate and the markets that they are operating in aren’t really going to the US. We don’t see a significant export of cocaine—which is the main criminal economy behind the PCC—flowing to the US. It’s mainly going to Europe. We see some emerging alliances in markets in Asia, Australia, a little bit in Africa, but Europe is the main destination for these groups and it has to do with routes and it has to do with allies. They have European allies with the ‘Ndrangheta and mafias operating out of the Balkans. They don’t really have strong connections to the US. We don’t see shootouts or PCC cells really growing and establishing control inside the US territory. We don’t see trafficking routes heading out of Brazil that’s controlled by these groups and heading up to the US at any significant scale.
Steven Dudley: [00:10:10] Yeah, I mean this is something to to I think really, really highlights that a lot of this is seemingly connected to just larger economic patterns. I mean, there’s just—it’s much easier to use the existing infrastructure to move drugs in this case to Europe because that is the flow of goods. The flow of goods is going to Europe, going out of places like Santos, which is the largest port in Brazil and one of the largest in the region. Do you think, just thinking about like the way in which this is—just sort of circling back to the elections—how is this playing out in the elections itself? I know you said that you sort of Flávio, is taking credit for really spurring this decision by the Trump administration to designate these two groups while Lula is sort of pushing back on this idea, maybe more on the sort of realm of sovereignty. Have you seen it play out any more than that? Is it a regular topic on the campaign trail, or is it just sort of a one-off and just kind of hovering in the background? And that if you are, you know, showing yourself to be fighting these groups, you’re going to have a better chance of working with the Trump administration, and if you’re not, then you’re not. I mean, how is this playing out in the campaign?
Christopher Newton: [00:11:49] This has become a major issue, and it has to be. In Brazil, security is a top priority. It is one of the main things that all the presidential candidates are talking about, that they’re campaigning on, and it’s something that’s going to come up in every single debate. It’s no longer something that can be ignored. One, from the strategy standpoint of, is this a good idea? Is this something that is going to actually have an effect? Is the US actually going to apply this in a significant manner that is going to affect the Brazilian financial system? Because that is the main threat of these designations, right?
Steven Dudley: [00:12:27] What are the candidates—how are the candidates answering that question?
Christopher Newton: [00:12:34] With Lula, primarily, it has become a point to fight back. It’s a way for him to resist the US imperialism, you know, typical rhetoric that you have seen coming from the left in Latin America, about standing up to the kind of bullying of the US administration. But Lula has also kind of started to separate who he’s really talking about with this. So he’s blaming Flávio, of course, that’s the main rival—and Flávio himself is taking credit—but he’s also separated Marco Rubio and Donald Trump. So Lula is really going after Rubio as having this kind of interventionalist standpoint towards Latin America, talking about the US actions in Venezuela as a warning of what can happen in Brazil if the Brazilian government does not stand up to the US and these designations, while also trying to appease Trump. And, you know, Lula, he’s one of the most successful politicians Brazil has ever seen. When he gets on the phone with just about anybody, they seem to come away with a charmed deal. And even though he’s on the opposite of the political spectrum from Donald Trump, when they have had one-on-one conversations, both sides seem to come out of it being really complimentary of each other and saying, you know, it was a great conversation. That’s not so much the case with Marco Rubio, and we’ve seen him a lot more combative, including Lula saying, I don’t want to talk with him, get me Donald Trump on the phone and we’ll talk it out, president to president. Now, of course, Flávio is trying to downplay the threats to sovereignty, the criticisms of these issues—of the US potentially interfering—while up-playing, how he is using this to, you know, stand up with the United States against these critical threats to our Brazilian security and play this off as a good tool that is going to increase the capacity that Brazil has against these organizations.
Steven Dudley: [00:14:40] Yeah. And it’s worth mentioning that Flávio is the son of Jair Bolsonaro, the former president of Brazil, who is in jail now for fomenting an overthrow of the previous election results in a manner very similar to what happened in the United States and has received quite a bit of support from the Trump administration for his case, in fact, certainly pushed back all the way to the judicial level from the Trump administration. So it’s something that goes beyond Flávio and certainly something that he is trying to play in his favor. I don’t know if it’s exactly a sort of MAGA-style movement that they’ve created, but certainly it’s something that is approaching that.
Steven Dudley: [00:15:31] I want to talk to you about some of the other candidates, though, and it’s in the same vein as Flávio, but a lot of them definitely seem to be pushing towards this idea of a more Bukele model. And when we say Bukele model, of course, we’re talking about Nayib Bukele, the president of El Salvador, who has implemented some very hardline measures to mass incarcerate, to a great extent, a huge number of suspects who are connected to gang activity— to the point where just a little bit over 1% of the population of El Salvador is incarcerated right now. And it’s had its success, this is the thing. I mean, it has lowered gang activity and, most notably, homicides. And we’re seeing candidates all over the region pick up this mantle. I want you to just tell us a little bit about how this is playing out in the Brazilian elections.
SEE ALSO: El Salvador’s (Perpetual) State of Emergency: How Bukele’s Government Overpowered Gangs
Christopher Newton: [00:16:39] Of course. And I think it’s worth pointing out that Brazil has a two round election system. So, right now we have all of these candidates that are all throwing their hats in the ring. And this is what is running up to the first round. So the top two, if nobody gets a majority, will then move on to a second round. And that’s why we talk a lot about Lula and Flávio, because based on the polls, it looks like they’re definitely going to be the top two. But we still have this first round. You know, there’s always the potential for an upset or for somebody to have a last minute surge, especially with all of the different controversies going around with different candidates. But the Bukele approach has been a really popular talking point among most of the other candidates as well. I think Bukele has started to become a brand—not only in Brazil but in Latin America—for this hard-on-crime, lock up the gangs, throw away the key approach. But there hasn’t been a whole lot of substance so far in terms of what it really means in Brazil. For example, Natuza Nery with the program O Assunto, interviewed a lot of these candidates who are really going for this Bukele approach.
Christopher Newton: [00:17:52] And for example, Renan Santos, when she went through Bukele’s policies point by point, it’s like, okay, so are you going to do this in Brazil or are you going to do that in Brazil? The answer was usually, oh, no, no, we’re not going to do that exactly. And when you dive into what they’re actually proposing, you don’t really see a whole lot of policy, just that, well, it’s going to be like Bukele, but without really saying what that means. And I think it’s because there’s not a lot of compatibility with what we see happening in El Salvador and Brazil. I mean, El Salvador is the smallest country in Latin America; Brazil is the largest. Putting 1% of the Brazilian population in prison, logistically, financially, it’s nearly impossible. They don’t have the budget to build that many prisons, that large of prisons. And then even if they did, you know, when we look pragmatically at the history of organized crime in Brazil, all of the largest criminal organizations—the First Capital Command, the Red Command, the Third Pure Command, I mean, we can go through all of these even smaller local groups—nearly all of them were born and raised in prisons where they were overcrowded and under-maintained.
Steven Dudley: [00:19:01] There’s a lot of irony in that, I mean, a lot of irony in the fact that all of these huge criminal organizations were born in prison, and now we’re going to mass incarcerate them. They’re already incarcerated. I mean, what are we doing here?
Christopher Newton: [00:19:19] All of the top leaders are in federal prisons, which are these maximum security—there’s only five in the entire country, but they are supermax. They are, you know, cell phone blockers. They’re isolated. They don’t have communication with the press. They don’t have communication with a lot of family. Often it’s only just a lawyer who can visit for very limited periods of time.
Steven Dudley: [00:19:40] Yeah.
Christopher Newton: [00:19:41] But the PCC and the Red Command have only, you know, grown and expanded.
SEE ALSO: The Rise of the PCC: Expansion in Brazil and Beyond
Steven Dudley: [00:19:46] And I think it’s worth mentioning also that they’re being held in state prisons around Brazil. I mean, you know, the majority of these guys are in state prisons. The majority of security policy runs through the states in Brazil. It’s a very federalized system. It’s not the sort of top-down, centrally controlled, you know, police forces and military forces of the type you find in Colombia or Ecuador, which those are national police services that are run, in the case of Colombia, for example, under the armed forces. Right? They’re literally part of the military. You know, you don’t have that in Brazil. Each state is really running most of its security policy.
Christopher Newton: [00:20:45] Exactly, Steve, which makes it a little bit interesting when you’re looking at the policies of presidents who are running on a security platform—what can they actually do as president? Constitutionally, the states have to control security unless it’s a federal crime, which basically means that you’re crossing either a state border or national border. So drug trafficking across the national border, okay, that’s a federal crime. You can get the leader, put them in federal prison. Money laundering across all these borders throughout the country, federal crime, can go into federal prison. But the guy selling drugs on the corner post, the local sell, that’s, you know, dealing out arms, these groups in Rio that are trying to control territory within the city itself, those are all state crimes. Those are all the responsibility of the governors to handle. Those are the civil and military police of Rio de Janeiro, São Paulo, to handle themselves. And so, when it comes to the on the street security, the violence, the things that we see with the Bukele model being the popular talking point, the whole, you know, lock them up to keep people safe, those are mainly state crimes where the president really doesn’t have jurisdiction. They can try to use budgets to try to kind of influence how the states are going to invest money in certain things, to try to push them towards certain areas, but they don’t have a whole lot of direct power to directly confront these when it comes to security. And then, you know, it’s going to come down to who the governor is, whether they’re politically allied with the president, whether they want to play ball, whether they want to, you know, strike back against the presidential security policy for their own political or ideological means. And, you know, we’ve seen that with a lot of governors who want to become president, that they kind of push back on one president to, you know, get their own name out there, or they align with one because they’re aligned.
Steven Dudley: [00:22:47] I guess we shouldn’t be too surprised—of course, we’re not going to be surprised, this is this is the center point and the idea that that, that they can resolve these issues by going after crime and really sort of targeting the lowest levels and mass incarcerating them is part and parcel, as you mentioned, of a sort of regional political movement. And in a way, that’s Bukeleism wrapped up in a very, very small package. Meanwhile, Brazil has really had a banner few months with a number of other cases, which are really pushing at the other end of the spectrum, which are the the elites, the economic elites, the political elites, the bureaucratic elites, and mostly represented in the judicial sector. These cases seem to be garnering much less attention. I’m thinking in particular of the famous one they called the Banco Master. Everyone talks about the Banco Master case in Brazil. I wonder if you could just talk us through what the Banco Master is.
Christopher Newton: [00:24:09] Yeah. So on the surface, Banco Master was this mid-tier bank in Brazil, but was really a pyramid scheme—at least that’s what it looks like, as the case is ongoing. So basically, they were promising these insane returns on your investment, getting mom-and-pop investors to put their money in with this bank, but then they didn’t actually have the investments to back up those returns, so they get other people to supply their money to pay off the original investors. You know, it’s a classic financial scheme. But what made it historic is that below the surface of this, it got so big and so complicated that, by current estimations, it was the biggest financial scheme in Brazil’s history. And Brazil has had some really big schemes, like, Lava Jato, which you know, it came back near the end of Lula’s second term, which was this huge corruption scandal that went through all levels of government, and still to this day, there are echoes of the case. Banco Master appears to be even larger in scale. And this was all going on under the surface because the executives of Banco Master are accused of having gotten really tight with elites in the government throughout pretty much every branch of government and across the political spectrum as well.
Christopher Newton: [00:25:37] So, I mean, this is ongoing. We’re still getting more and more developments every day. But just the court documents so far point to Jaques Wagner, who was Lula’s number one in the senate, taking bribes to try to push through good legislation to benefit Bank Master. We have Ciro Nogueira, who was Jair Bolsonaro’s chief of staff and who was a really important figure on the right for kind of unifying these various kinds of disorganized political parties and pushing through legislation—he’s also accused of accepting bribes to push through legislation. You’ve got the Bank of Brasília chief executives who are accused of laundering money and making fake credit to kind of support these operations. They were trying to buy out the bank to try to, you know, help, essentially let everybody get away with it all. And now we see a lot of drama in the Supreme Court itself, with different court justices appearing in text messages. And there’s still no accusations legally against any of them, but there’s a lot of mentions, and Vorcaro, it seems like he was connected with everybody.
Steven Dudley: [00:26:46] Yeah, to take it full circle, connected to the top two candidates’ families. I mean, Flávio himself is also connected, I understand. Explain a little bit about Flávio’s potential connection here. Or it’s actually real, I think it’s been fairly well established, isn’t it? That they talked about this.
Christopher Newton: [00:27:07] Yeah. So what we know has been published in a Revista Piaui and other media here in Brazil is text messages between Vorcaro and Flávio Bolsonaro, so they were at least friendly. And what we’ve seen is that Flávio Bolsonaro was trying to create a biopic about his father, Jair Bolsonaro, called Dark Horse, this film that is trying to portray him as a patriot who was trying to save Brazil, and his arrest and imprisonment was, you know, people trying to…anti-Brazilian forces persecuting him. And Vorcaro was funding this, and Flávio and Vorcaro had a bunch of back-and-forths to get more and more funding to try to support this film.
Steven Dudley: [00:27:54] Yeah.
Christopher Newton: [00:27:55] We’re seeing, you know, there’s a lot of money and there’s a lot of outstanding questions as to how the money was actually used, about it kind of going to the US and then coming back to Brazil. There’s a lot of questions there. And then there are also accusations that Eduardo Bolsonaro, who lives in the US, who’s Flávio’s brother and himself was a politician, that he was being kind of, his life was being subsidized by Vorcaro in the US.
Steven Dudley: [00:28:22] What about Lula? Because there’s also been chatter about Lula’s family. Is there any connection there, between Lula and the Banco Master case, or at least Lula’s family? Maybe his son?
Christopher Newton: [00:28:35] The biggest connection with Lula is through Jaques Wagner so far, his being the number one ally. So he was in a position in Brazil where the government has one person who is in the Senate, who is the point person between the government and the Senate, to try to communicate priorities and things like that. Now, his son has been in the media a lot, Lulinha, for other accusations of essentially taking bribes from lobbyists and trying to use his proximity to his father and elites to push through certain advantageous legislation on behalf of the lobbies. Now, you know, that’s ongoing, there are rumors. Same with Eduardo Bolsonaro, there haven’t been formal charges yet. But his son’s case, I’m not aware of being connected directly to Bank Master.
SEE ALSO: Who’s Who in Brazil’s Historic Bank Master Fraud Case?
Steven Dudley: [00:29:32] Yeah. You know, these cases are also increasingly—and this is a little bit also going full circle—also connected to, and you mentioned this before, some of the movement of money of the PCC in particular. This case, but also another case, which is referred to as the Carbono Oculto, you know, dark, dark coal or, you know, dark sort of petrol products really is what we’re talking about. Can you talk to us a little bit about the way in which, you know, these cases have really shed important light on the PCC’s finances and how they’re moving a lot of this money now increasingly through the more established financial networks.
Christopher Newton: [00:30:34] So this hidden carbon operation—and there’s been several others that have kind of followed as a result—I think really illustrates just how sophisticated the PCC is as a financial operation these days. The crux of this operation was that the PCC took over basically the entire fuel supply chain, from gas stations to the import to, you know, all of these different contracts, including contracts with police and the military to sell the fuel. And it was really just a major money laundering operation.
Steven Dudley: [00:31:15] These are largely sort of fuel additives, right? Things like naphtha and other things? Or were they actually moving gasoline itself?
Christopher Newton: [00:31:26] They were doing both. And then, with the gasoline specifically, they were also watering it down or adding some other things into it so that you have, you know, there’s a difference between how much you’re actually selling and what is on your records. And that gap between selling, you know, the watered-down version and then saying that they sold, you know, the pure version is where you have that space to launder money and put cocaine profits through it.
Steven Dudley: [00:31:51] So it’s both things really. I mean, they’re making money on it and they’re laundering money.
Christopher Newton: [00:31:56] Yeah.
Steven Dudley: [00:31:56] It’s a double business. I mean, it’s a really amazing scheme. And where, then, are the proceeds going from this scheme?
Christopher Newton: [00:32:10] So it’s bouncing all over the place really. And it goes to talk about the sophistication of the organization itself, and its structure. It is such this large network of operations.
Steven Dudley: [00:32:26] Mhm.
Christopher Newton: [00:32:26] And they’re putting this through all sorts of financial institutions. So we saw a big uptick when fintechs really came to Brazil, because previously the banking system in Brazil was dominated by a few really big kind of old school financial institutions. Fintechs, these new digital banks, had a lot less regulation and came in as this kind of new way to get competition, to break up kind of the old domination of the financial system, which on the surface might seem like a good idea, but because there was so little regulation, organized crime almost instantly jumped on them and started laundering money through the system and started to add more credibility to it. So you get into the fintech, you get into crypto, but then eventually you bounce it to a formal bank and it gets bounced around so many times that you get it through these different companies, and by the time it gets to the formal bank, it looks all good. It looks like it’s been legitimate coming through and it’s where following the money and looking at this trail becomes so complicated. And then once it’s in a formal kind of old-school bank, now it has even more credibility. So you transfer to other institutions, you keep breaking up the system. This is where we have seen a little bit going through transfers to the US.
Steven Dudley: [00:33:48] Yeah.
Christopher Newton: [00:33:49] So still, you know, a much lesser scale than all the transfers within Brazil.
Steven Dudley: [00:33:53] I mean it’s also.
Christopher Newton: [00:33:54] And it eventually comes back to the group.
Steven Dudley: [00:33:55] Yeah. I mean it’s also layered at the onset with these, what they call in Brazil, anyway, “laranjas,” the sort of third parties, who are literally mom-and-pops or cousins, brothers-in-law, sisters-in-law, friends, who are set up in these fintechs to have these accounts. And so like not huge amounts of money, this small amount of money that isn’t going to raise any red flags, even with the limited regulatory efforts around fintechs. You still have some, but you’re not going to raise any red flags if you’re moving small amounts of money. And really, in a way, the fintechs are kind of designed for this because you want more agility, you want more people who wouldn’t necessarily participate in the regular banking system to be in there. So it’s a really ingenious way of camouflaging the movement of money at the onset. And then, of course, on the backend, you have, you know, from what I’ve read in some of these court documents with this case and other cases, you know, moving it through these pretty, not super established, maybe sort of medium-established or low-level crypto platforms, even in the US—a huge amount going through the US. You know, close to, in one case that I was reading about, this one called 2GO Bank, it was close to $1 billion they were talking about in the court filings. And this was over a two year period. That’s just one case and, you know, that’s just a massive amount. And as you said, it eventually snakes its way back into— most of it—back into the Brazilian financial system and seemingly goes through some of the most established financial institutions in what would be considered the Wall Street of Brazil, the sort of, what do they call it? The Faria Lima area of Brazil, which is your Wall Street of Brazil. So, you know, I don’t know how this is playing out in the campaign, just to circle back to our main topic. Is this even a topic of discussion? Does anyone talk about this in any way?
Christopher Newton: [00:36:32] Yeah. You know, there are some mentions of these issues because they are big issues. We have, like you said, these little deposits—here, they call it smurfing—through family members and whatnot. The biggest one that’s come up lately has been the son of the First Capital Command’s main leader, Marcola, he’s being accused. And what we’re also seeing is a big increase in this operation with people who are making their money digitally. And the two areas where this is most coming up are influencers who have these online platforms who are, you know, often it’s kind of hard to show exactly where the money’s come from—they got a little bit from a promotion here or ad revenue there. And a lot of the biggest influencers in Brazil are now facing money laundering charges connected to specifically the PCC, and there’s some other cases with the Red Command, as well. But then the other one is these betting platforms. So a few years ago, Brazil legalized online betting, and the intention behind the legalization was to undercut illegal betting. Now illegal betting in Brazil goes back decades. And, you know, the most famous is the animal game, Jogo do bicho, which is controlled by these mafias, particularly in Rio, where it’s kind of most famous. But there’s been a lot of illegal betting for years. So the idea was that they’re going to make you register the site formally, with the government going to regulate it. But the practice hasn’t really held up to the promise. And we’re seeing a lot of connections between the betting platforms and organized crime, including some international connections, allegedly with China. And with these kind of digital interactions, the ability to kind of change the numbers, and creating another big source or ability to launder these proceeds.
Steven Dudley: [00:38:34] Again, it’s sort of double business, right? This idea of making money and you’re laundering it at the same time.
Christopher Newton: [00:38:41] Yeah. Casinos have never, you know, operated to lose money. Right? You’re doing this, the house always wins, and you get those legitimate profits. And we see with the PCC, they actually do have a very high amount of revenue from their seemingly illicit businesses, all built on top of these illegal proceeds that are eventually going in. So, I mean, it makes me wonder if there’s a scenario in the future of a legitimized PCC that goes into the formal economy. But, you know, going back to the election, these topics, particularly bets, are something that’s getting attention, that is being talked about, but they’re not the most politically interesting topics, i think for a lot of candidates. It’s not the gang members on the street. I think the victimization of people when it comes to financial crimes and money laundering, is a lot less visible because you don’t have the victim as easily identifiable as like a robbery, where it’s very clear what happened and how somebody lost money.
Steven Dudley: [00:39:51] Right.
Christopher Newton: [00:39:52] The other issue, I think, is when it comes to money laundering and these corruption schemes, going back to Bank Master, is that while we’ve got accusations against senators tied to presidents; we have, you know, kind of rumors about candidates; we have connections potentially to chief justices or top Supreme Court officials. How, politically, do you pass policies that are going to make a real impact on financial crime if the elites in the Senate and the president’s office and the court are themselves involved, protecting people, running these schemes themselves, taking bribes? I mean, politically, you’re kind of dinged two times: one by it not being as clear, as popular as photographable, photographic, photogenic as street crime and this kind of very simple, round them up and throw them in jail rhetoric; and two, you know, political donors, political allies, if they’re involved in this, you’re probably not going to see policies that are going to undercut that.
Steven Dudley: [00:41:03] Yeah. I mean, we’ve seen this in other places, too. The other thing is you certainly don’t want to hit your banks. You would definitely start to have an impact on the economy, and who wants to hurt their own economy with their policies. Not many politicians are up for that. So, you know, I think that’s a good place to end. Chris, thank you very much. And of course, we’ll be watching the vote in October, and obviously the runoff—the expected runoff. I think Brazil has had runoffs in the last six elections or so. So we would expect that again, in this case.
Steven Dudley: [00:41:48] If there’s a story or subject you’d like us to take apart, certainly you can reach out to us at flagship@insightcrime.org. You can find this and other InSight Takes on our website in the multimedia section or on YouTube and Spotify. So thanks for joining me. And Chris, thanks again.
Christopher Newton: [00:42:17] Thanks, Steve.
