Brazil uncovers multibillion-dollar tax fraud

Dozens of Brazilian firms, including industrial companies and banks, are under investigation amid allegations they paid $5.9 billion in bribes to tax officials, police said Saturday.

Brazil is already reeling from the biggest graft scandal the country has known, a $3.8 billion scam involving inflated contracts between construction companies and state oil giant Petrobras, causing a storm after dozens of politicians were implicated.

The new scandal, dubbed Operation Zeal, comes following a federal police probe into an alleged scam at CARF, an offshoot of Brazil's tax authority that oversees appeals on tax disputes.

According to police, the body managed to obtain tax appeals board rulings in the companies' favor by either cutting penalties or waiving them altogether.

In return, officials allegedly received bribes from some 70 companies believed to have benefited from the scheme.

"The investigations, begun in 2013, showed the organization acted within the body sponsoring private interests, seeking to influence and corrupt advisors with a view either to securing the cancellation or reduction" of penalties from tax authorities, a police statement explained.

Police said the scam could have netted the companies as much as 19 billion reais ($5.9 billion) but evidence uncovered so far amounts to around a third of that amount.

Federal police organized crime chief Oslain Campos Santan said the total sums could end up being "as much" as that involved in the Petrobras scam, which has left the government of President Dilma Rousseff reeling after dozens of political allies were implicated and charged.

The firms involved in the latest allegations are said to have used a series of front firms to conceal their actions, along with laundered cash.