UPDATE: Wachovia Securities May Be Under Brazilian Tax Probe
Thursday July 3rd, 2008 / 22h22
(Update with comments from Wachovia.) By Evelyn Juan Of DOW JONES NEWSWIRES Wachovia Securities has closed its offices in Brazil but it may be under investigation by federal police looking into whether the Wachovia Corp. (WB) unit has aided affluent Brazilians in evading taxes, according to a Wachovia employee. Christy Phillips-Brown, a Wachovia spokesman, said the firm isn't aware of any investigation of its offices in Brazil or any of its employees. Wachovia's offices in Brazil oversaw almost $1.4 billion in client assets. Around 80 employees were affected by the shutdown of the Brazilian unit, which involved relocation of its financial advisors to Montevideo, Uruguay. "They abruptly left the country last Friday and some officers flew to Montevideo to operate there," a Wachovia employee said, requesting anonymity. Wachovia said it shut its Brazil operations in Sao Paulo and Rio de Janeiro amid companywide cost-cutting measures as the bank faces mounting losses from souring mortgages. A Wachovia manager in Brazil declined to comment. Brazilian police over the past two years have been investigating charges that major investment banks and financial institutions have aided locals to evade taxes. In April, Brazilian authorities arrested a Credit Suisse (CS) executive, Christian Peter Weiss, in Rio de Janeiro for allegedly funneling money overseas for affluent Brazilians seeking to avoid taxes. Credit Suisse denied wrongdoing and said its Brazilian operations "always act under the most rigorous legal and ethical principles." In 2007, police detained a group of executives from other institutions, including UBS AG (UBS), on similar allegations. In 2006, police arrested 20 people, including two bankers from Credit Suisse as well as bankers from UBS and AIG Private Bank. All of those arrested in 2006 were eventually released. Brazil has among the hemisphere's highest tax rates. The left-wing government of Luiz Inacio Lula da Silva has stepped up enforcement of white-collar crimes, including tax evasion, that long thrived under previous governments that counted the nation's ultra-rich elites as core constituents. -By Evelyn Juan, Dow Jones Newswires; 416-306-2025; evelyn.juan@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=YR4uBIqxai%2BnNiEwRngPJQ%3D%3D. You can use this link on the day this article is published and the following day.
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