By Guillermo Parra-Bernal and Tatiana Bautzer
SAO PAULO (Reuters) - Brazil's federal police accused Banco Bradesco SA (SA:BBDC4) Chief Executive Officer Luiz Carlos Trabuco and two senior executives on Tuesday of plotting to avoid a 3 billion-real ($828 million) tax fine, the latest episode of alleged white-collar crime in Latin America's largest economy.
The office of Brazil's Prosecutor-General said that a police report seeking formal charges against Trabuco and the executives was received earlier on Tuesday. In a statement, Bradesco vowed to fight the accusations against Trabuco in court, saying the bank had been acquitted in prior rulings.
Bradesco said Trabuco did not participate in any meetings aimed at eliminating the fine that Brazil's Tax Revenue Service had imposed on the bank.
According to a source briefed on the matter, the police also named Chief Financial Officer Luiz Carlos Angelotti and Senior Vice President Domingos de Abreu in the report. The three executives face accusations of influence peddling, corruption, racketeering and money laundering, the report said, without specifying which applied to Trabuco.
The accusations against Trabuco, one of Brazil's most influential power brokers, came in the midst of a sweeping corruption scandal at state firms that has rattled Brazil's political establishment and accelerated a Senate decision to put President Dilma Rousseff on impeachment trial.
Bradesco's most widely traded class of stock posted its steepest plunge in almost seven months on the news.
Bradesco preferred shares (SA:BBDC4) shed as much as 7.3 percent to 22.23 reais, the biggest decline since Nov. 11. Voting shares (SA:BBDC3) fell 3.4 percent, while Bradesco's New York-traded stock (N:BBD) fell 5.5 percent to $6.275.
The police investigated negotiations between Bradesco and government tax auditors over the elimination of a 3 billion-real ($828 million) fine that the country's Tax Revenue Service had imposed on the bank. The incident is part of a broader probe of fraud at the Finance Ministry's tax appeals board unveiled in March 2015.
'OPERATION ZEALOT'
The tax probe, known in Brazil as "Operation Zealot," alleges that some of Brazil's largest companies bribed members of the CARF, a Finance Ministry body that hears appeals on tax disputes, to get favorable rulings that reduced or waived the amounts owed.
The cases under investigation came before the CARF board between 2005 and 2013. The Zealot probe is worsening the political climate as a larger corruption scandal known as "Operation Car Wash" and a two-year-long recession are hampering the country.
Apart from Trabuco, the tax probe has ensnared other prominent executives such as André Gerdau Johannpeter, the scion and CEO of steelmaking giant Gerdau SA (SA:GGBR4) and Joseph Safra, the world's richest banker and owner of Banco Safra SA [SODEPB.UL].
Since taking over the top job at Bradesco late in 2008, Trabuco, 63, has presided over Bradesco's rapid growth in consumer financial services and the bank's largest acquisition ever - the $5.2 billion purchase of HSBC Holdings (LON:HSBA) Plc's Brazilian unit in August.