Brazilian refineries sold more than 100 million liters of naphtha to a company investigated for alleged involvement in a fraud scheme involving the criminal faction Primeiro Comando da Capital (PCC), according to a source close to the case and documents seen by Reuters.
One of the main suppliers was Riograndense, a refinery in Rio Grande do Sul controlled by Petrobras, Braskem and the energy conglomerate Ultrapar, documents from the oil regulatory agency ANP show.
Solvent producer Petrodansk, which received the naphtha, is accused by the Public Ministry of the State of São Paulo of diverting it to gas stations in a fuel smuggling and money laundering scheme linked to the PCC, according to a source close to the investigation.
The ongoing investigation into Petrodansk and its supply chain highlights the risks to key players in Brazil’s vast energy sector arising from a new measure by the United States to crack down on the criminal faction and its alleged sources of income.
The , paving the way for harsher penalties for companies that work directly or indirectly with the group, although these stricter consequences do not apply to activities prior to the terrorism designation.
According to ANP documents, Riograndense sent most of its naphtha shipments to Petrodansk between 2023 and 2024 without the chemical marker required by the regulatory agency to prevent fuel fraud. Riograndense claims that the irregularity in loading was an unintentional operational failure, which has already been corrected.
Petrodansk did not respond to requests for comment. In a post on social media, the company denied any irregularities, adding that ‘at the appropriate time, all 🏽clarifications will be provided’.
Petrobras and Ultrapar stated that Riograndense is managed independently and that they were not notified of any investigation by the São Paulo Public Ministry. Braskem did not respond to a request for comment.
Riograndense stated that it blocked sales to Petrodansk in October 2024, after a due diligence process identified potential signs of non-compliance, which were not detailed. The company added that the legal and regulatory authorizations necessary for Petrodansk’s acquisition of the product were valid and in force at the time of supply.
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Mass money laundering
Formed three decades ago in a São Paulo prison, the PCC has become the largest drug trafficking group in South America, with money laundering operations throughout the formal economy, including in the real estate, financial technology startup and fuel sectors.
‘Unfortunately, in today’s Brazil, the risk of companies inadvertently doing business with clients linked to the PCC is very real,’ said Ligia Maura Costa, coordinator of the Center for Studies in Ethics, Transparency, Integrity and Compliance at FGV EAESP.
In 2021, the US Office of Foreign Assets Control (OFAC) added the CCP to the list of ‘Specially Designated National Groups’, meaning that companies risk violating US economic sanctions if they transact with the CCP in a way that has a connection to the US.
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The new terrorist organization designation exacerbates the consequences of such commercial ties by expanding jurisdiction, increasing the risk of criminal prosecution and civil liability in the U.S. for material support, and including the potential forfeiture of assets, said Matteson Ellis, head of Latin America at U.S. law firm Miller & Chevalier.
“Civil forfeiture is a power that the U.S. government regularly exercises,” Ellis added. He mentioned the recent seizures of two ships heading from Asia to Mexico, which the US said were carrying precursor materials for cartel production of methamphetamine.
Last year, the US closed two commercial banks and a brokerage due to their links to Mexican cartels designated as terrorists.
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Exposed fuel sector
While experts have widely warned of new risks for Brazilian financial institutions, which depend on the US for access to global markets, Brazil’s vast energy sector has also become a hotbed for money laundering by narco factions.
In August, a criminal investigation in Brazil targeted fraud schemes linked to the PCC involving around R$52 billion in fuel sales.
One of the targets was Caldic, a global chemicals distributor owned by US private equity firm Advent International, which is now under investigation by Brazilian authorities, Reuters reported in April.
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Another series of police operations last month targeted fintechs and companies involved in a naphtha smuggling scheme, including Petrodansk, according to court documents seen by Reuters.
Because naphtha is taxed less than gasoline, criminals often mix the two illegally to increase profits at faction-controlled gas stations, which can damage car engines.
Naphtha by itself is virtually impossible to detect when mixed with gasoline. To combat illegal mixtures, Brazil requires that naphtha be marked with a chemical compound that the ANP can detect through testing.
However, according to an ANP document, the Riograndense refinery did not include this chemical marker in 116 million liters of the 139 million liters of naphtha it sold to Petrodansk between February 2023 and September 2024.
By sending naphtha without identification, Riograndense made it impossible for the ANP to verify whether the solvent was arriving illegally at gas stations, said a source close to the investigation.
In 2024, Riograndense recognized a flaw in its marking system, according to a company statement. After an internal investigation, it was reported that the absence of marking was unintentional, resulting from an operational failure.
Riograndense said it had restructured its marking system and strengthened its due diligence procedures.
While the refineries are not currently under investigation, that could change if evidence emerges that Riograndense intentionally sold unmarked naphtha, according to the same source.
Determining whether the violation committed by Riograndense was intentional represents a ‘huge challenge’ for investigators, the source added.
Riograndense stated that it was not notified of any investigation.
Selling fake solvents
The investigators presented a more accurate picture of what, according to them, Petrodansk did with the naphtha it received from Riograndense.
Petrodansk is accused of carrying out a ‘systematic diversion of petrochemical naphtha to gas stations in the metropolitan region of São Paulo’ between June 2023 and May 2026, according to a court document presented by the Public Ministry of São Paulo.
According to investigators, Petrodansk issued false receipts for the sale of solvents to dozens of shell companies throughout Brazil, while, in reality, it sent naphtha to fuel distributors who mixed it with gasoline sold at gas stations.
Several companies that allegedly received the solvent do not exist, investigators said. In one of the cases, the buyer of 4.7 million liters of solvent was a company without employees, managed by a person convicted of drug trafficking who received social assistance in Sergipe.
By tracking vehicle license plates, investigators discovered that trucks allegedly loaded with solvent for other states remained in São Paulo, where Petrodansk and the gas stations under investigation are located.
