Paulo Maluf - Later Life and Money Laundering Indictment

Later Life and Money Laundering Indictment

However, one of the consequences of Pitta's disastrous administration in São Paulo, was that it left the São Paulo municipality mired in debt, as such drawing attention to Maluf's and his former protégé's management practices: in the words of a Brazilian professor at the end of Pitta's term, "Sao Paulo's corruption has been transformed into a public horror from the whispered-about horror it always was". That called eventually for judicial scrutiny of Maluf's policies, specially his public works, his relentless extension of "the city's unmitigating concrete sprawl". One notable example of the allegations of corruption that surfaced around Maluf was the Ayrton Senna tunnel, which passes underneath Ibirapuera Park and cost more, per kilometer, than the Channel Tunnel (it is alleged that the tunnel cost over US$400 million more than it should). Under dispute is Maluf's personal wealth, which critics attribute to his involvement in corruption scandals; supporters, conversely, point to a legitimate origin of such wealth in his family's companies – namely the mamoooth plywood trust Eucatex.

Maluf was also part of an extensive investigation, by a Parliamentary Inquiry Committee set up in 2003, regarding money laundering involving bank accounts held by him and his family in Jersey (one of the Channel Islands). He has been convicted of corruption multiple times, but only in 2001 was the sentence final, with no possibility of appeal. At the time, he was forced to pay approximately R$500.000 to the state. Many of his alleged crimes cannot be prosecuted, due to the nature of the Brazilian statute of limitations. Even if he were to be convicted, there would be serious questions about whether he would serve jail time, as he is over 70 years of age.

In early September 2005, Paulo Maluf and his son Flávio Maluf were temporarily arrested by the Brazilian Federal police, under the charge of intimidating witnesses of an ongoing investigation. They were only incarcerated for a few weeks. So notorious is Maluf's reputation that in Brazil the verb malufar was created, meaning "to steal public money". This verb is also sometimes used outside Brazil, with one example being the French newspaper "Le Monde".

In the 2006 elections, Maluf ran for a seat in the Brazilian Chamber of Deputies, being elected as the candidate for the federal legislature with a national record in terms of ballots cast personally for a candidate to the federal legislature in this particular election (739,837). He was reelected again in 2010, with something around 497,000 ballots cast for him. His 2010 bid for reelection was fraught with legal doubts, as a recent federal statute (Complementary Law 135/2010, commonly known as Lei Ficha Limpa or "Clean Record Act") allowed electoral courts to refuse to register the candidacies of people already found guilty by a higher, collegiate court (possibility of further appeals notwithstanding); however, as the Brazilian STF decided in March 2011 that the "Clean Record Act" didn't apply to the 2010 elections, according to the principle of anteriority (no offence being punished when defined by a non-previously existing law, and a Brazilian electoral law must be in force at least a year before the election is held), all charges against Maluf's registration and subsequent office-taking were eventually dropped.

On March 9, 2007, Robert M. Morgenthau of the Manhattan's District Attorney's office issued an indictment against Paulo Maluf for money laundering in relation to a kickback and inflated invoice scheme that allegedly stole $11.6m from a Brazilian road contract project totaling $140 million. From November 1997 to May 1999 the money passed through an account at the Safra National Bank of New York and was secretly controlled by Maluf. This indictment was maintained by a New York judge on April 25, 2012, who dismissed a petition from the Malufs, Paulo and Flávio, who sought a court order to toss the indictment.

Also refused by the same judge was the Malufs' bid for having lifted their March 2010 inclusion in the Red notice of Interpol, which makes them subject to arrest and extradition in 181 countries. As this arrest warrant is not valid in Brazil because the Brazilian Constitution does not allow for the extradition of Brazilian citizens, its practical meaning is that the Malufs are to be arrested if they travel outside Brazil.