The Federal Police (PF) has stepped up its crackdown on suspects in a $1 billion fraud that harmed retirees and pensioners through unfair discounts. This Thursday, he arrested former INSS president Alessandro Stefanutto, who was sacked after the scandal broke. He is accused of taking action to remove discounts in favor of the National Federation of Agricultural Workers after objections from the INSS public prosecutor’s office, and of accepting bribes from one of the organizations investigated. (The defense called the arrest “totally illegal” and argued that Stefanutto cooperated with the investigation.)
- editorial: PF operation reveals negligence in INSS management
Operation PF, in cooperation with the Federal Comptroller General (CGU), executed 10 arrest warrants and 63 search and seizure warrants in 14 states and federal districts. Among the targets were Bolsonaro’s Minister of Labor and Social Security José Carlos Oliveira (who must wear an electronic ankle bracelet), federal lawmaker Euclides Pettersen (R-MG), and Maranhão state lawmaker Edson Araujo (PSB). Crimes such as entering false data into public systems, establishing criminal organizations, social security fraud, active and passive corruption, concealment and vandalism of property are the subject of investigation. The measure was approved by Minister Andrés Mendonça, the rapporteur of the case at the Supreme Court.
- editorial: Combating INSS fraud must be a national action
The federal government began compensating victims in July, but compensation does not end the crimes committed. It is important to identify all those responsible for the fraud and understand how the fraudulent discounts were approved by INSS. Because the monthly discount was relatively low, many retirees were unaware that they were being ripped off.
Authorizations offered by labor unions were generally fraudulent. According to the CGU, 70% of the 29 entities allowed to operate at a discount did not submit the required documentation to INSS. These robberies occurred between 2019 and 2024, but have exploded under the current administration. INSS estimates the refund of the wrongfully withheld amounts at R$2.5 billion. Warnings from the governing body about the abnormal increase in union income were ignored. This episode led to the ouster of Kalos Lupi, then Minister of Social Security.
This crime is also being investigated by the INSS CPMI, but unfortunately its work is influenced by the political situation. In October, a government base blocked the summons of José Ferreira da Silva, known as Fray Chico. He is the younger brother of President Luiz Inacio Lula da Sila and vice president of the National Union of Retirees, Pensioners and Older People, Forsa Syndical, one of the organizations monitored by the authorities. He is not officially being investigated, but like anyone else, he could contribute to the investigation. Protecting allies will not move the committee forward.
A Senate-approved project to ban automatic deductions from affiliated organizations on the payroll of retirees and pensioners is welcomed as a fraud prevention measure. The document, which is expected to be approved by Lula, was submitted in 2024, but has only gained momentum in the wake of the scandal. This is the right move, given the shamelessness with which unscrupulous trade unions forge authorizations. It is unfortunate that action was not taken sooner to prevent the robbery of beneficiaries and that the negligent government still had to pay the reimbursement bill.
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