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Our resident Brazil expert Lime Slime (who fills in for Otto’s knowledge gap on the country so well he should take over the whole blog, frankly) is back with another dispatch from tudobemlandia. No further ado here, handing over to Lime Slime:

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Pyramids, scams and laundering

Edemar having a bad day

Come over to Brazil today for a little history lesson that might be useful in the context of the L’Affaire Madoff and the teetering Stanford International Bank. A few years ago, Edemar Cid Ferreira, a Brazilian financier who overnight turned a small bank into a big commercial lender and trading house, was arrested for fraud. What was never reported in the media was that he had ties to the port operators in Santos, who are sleazy, corrupt and cut corners on everything: from paying taxes, to moving contraband, to laundering money. And his bank had all the red flags of a scam: robust deposit growth during a period of economic stagnation, crap oversight, concentrated ownership structure, a couple of poorly explained offshore units. It fit, in other words, Alex Dalmady’s definition of a financial duck.

But it gets worse. Edemar, usng phony accounting and dirty cash, insinuated himself into Brazil’s cultural elite, bankrolling big art shows and expositions, to make himself look legit and upstanding. The truth is, according to somebody I know who was deeply involved in the investigation, he was stealing deposits and instead of buying financial assets, was buying art. Most of the art has never been recovered because, well, you can get people to paint fake replicas of the stuff you own to hand over to the police, or just roll up paintings, stick them in a suitcase and, voila, a traceless crime.

So, I ask you, how much of owner Allen Stanford’s $1 billion in personal wealth was really just, hum-hum, taken from Stanford Bank’s supposed $8 billion in assets? And was the $100 million odd slush fund for garish cricket matches, and a polo-focused lifestyle, financed by him or depositors? Just askin’. Edemar and Allen have something in common, ya see, an obsession with the high-brow life and the desire to appear respectable that just doesn’t fit with garbage accounting, murky management and fast money.

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