Brazilian police and tax officials launched sweeping raids on Thursday targeting multibillion-dollar money laundering and fraud schemes in the country’s fuel sector. Authorities said the operation exposed deep ties between organized crime and the nation’s energy supply chains.
The Federal Revenue Service revealed that the schemes involved more than 10 billion reais ($1.84 billion) in fuel imports and 52 billion reais in domestic sales. From 2020 to 2024, some 46 billion reais in illicit financial transactions reportedly flowed through fintech companies.
Operation “Hidden Carbon”
The crackdown, known as Operation Hidden Carbon, brought together the federal police, tax authorities, and state prosecutors across 10 states.
- 350 search warrants were served nationwide.
- Over 1 billion reais in assets were frozen.
- Assets under investigation included a port terminal, ethanol plants, 1,600 trucks, and 100+ properties.
Andrea Chaves, Deputy Secretary for Oversight at the Revenue Service, said: “Evidence indicates the funds were used to conceal and shield assets, and suggests managers were aware of and contributed to the scheme.”
Organized Crime’s Role
Authorities confirmed the involvement of the First Capital Command (PCC), one of Brazil’s most powerful gangs. Analysts warn that the group’s penetration of the fuel and finance sectors represents a major security risk.
Robert Muggah, cofounder of the Igarape Institute, said: “By capturing strategic assets and exploiting regulatory blind spots, the PCC and its allies are not only draining public revenues; they are undermining trust in the financial system and governance.”
Companies Under Spotlight
Asset manager REAG Investimentos (REAG3.SA) was among the targets of the warrants. Its shares plunged 13.3% on Thursday after news of the raids. The company said it was “fully cooperating” with investigators.
Chemical firm GPC Quimica, owned by Dexxos Participacoes (DEXP3.SA), was also named. Dexxos said it “does not condone illegal acts” and pledged to cooperate with authorities. Meanwhile, Ultrapar, Raizen, and Vibra, three of Brazil’s largest distributors, saw their shares rise as markets anticipated a stronger position for legal operators.
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Parallel Operations
In addition to “Hidden Carbon,” federal police confirmed the launch of Operations Quasar and Tank, which targeted another 23 billion reais in fuel-related financial crimes. Brazil’s Instituto Combustivel Legal (ICL), an industry watchdog, said major distributors are likely to gain market share. CEO Emerson Kapaz stated: “The space they have in the market is expected to grow as fraud is curbed.”
