Chemical giant probed in Brazil methanol racket

Global chemicals distributor Caldic, majority-owned by U.S. private equity firm Advent International, is under investigation in Brazil for its alleged involvement in a vast methanol smuggling operation. This operation is believed to be linked to a $10 billion fuel fraud scheme orchestrated by the First Capital Command (PCC), South America's largest crime syndicate.

Investigators are examining Caldic's role as a primary source of the methanol in question. While evidence of Caldic or Advent's direct knowledge of sales diversion is currently lacking, the investigation highlights potential entanglements with criminal elements within Latin America's economy. Prosecutors aim to bring charges by June, potentially leading to civil suits against Caldic and criminal charges against its employees.

Brazil's fuel regulator, ANP, has initiated its own administrative proceeding into Caldic's subsidiary, Quantiq, and has already restricted its methanol sales. ANP documents indicate that many of Quantiq's methanol sales raised red flags, with declared buyers linked to the PCC not being operational or having no clear use for the purchased volumes. The regulator also found that Quantiq failed to implement adequate compliance protocols, contributing to the illicit methanol trade.

The PCC, founded in a Sao Paulo prison, has expanded its influence into various sectors of the formal economy. The group's activities have also become a point of diplomatic tension, with the U.S. urging Brazil to classify it as a terrorist organization.