OCCRP | 2 May 2023
Ignoring warnings signs, US retirement manager TIAA bought farms from alleged land grabbers with Brazilian sugar giant
by Eduardo Goulart (OCCRP), Eli Moskowitz (OCCRP), Vinicius Madureira (OCCRP), Bill Alpert (Barron’s), and Rafael Oliveira (Agência Pública). Photographs by Isabella Finholdt
It was late in 2016, and executives at a major U.S. retirement fund manager were worried. A media report had appeared in a Brazilian newspaper that threatened to drag them into a long-running battle over stolen land.
The Teachers Insurance and Annuity Association of America (TIAA), which handles billions of dollars’ worth of retirement funds for teachers and civil servants, had bought a disputed farm in 2010 through a joint venture with Brazilian sugar company Cosan S.A. The 7,000-hectare property, known as Parceiros, was one of their first purchases on Brazil’s northeastern plains, an area long known for land grabbing.
Two claimants had been locked in a long-running legal battle over who owned the land that made up Parceiros. But that hadn’t stopped TIAA and Cosan’s joint venture, Radar Propriedades Agrícolas S.A., from sitting down with the two men and agreeing to buy the disputed property — from both of them at the same time.
Radar had initially taken “comfort” from signing deals with both parties, Duane Nelson — then the executive vice president of TIAA’s farmland management business — wrote in an email obtained by OCCRP. But then a land registry office canceled one of the titles, saying it was based on a fraudulent document, and the dispute between the two sellers started heating up again.
“Accusations have appeared in a São Paulo newspaper and it may only be a matter of time before Radar’s name appears in that newspaper as having dealt with an alleged land grabber,” Nelson wrote in an email to other executives in late November.
Another senior TIAA executive, Justin Ourso, replied to Nelson, warning that the Parceiros deal had been touted to investors as an example of “how we can bring strong structuring acumen to resolve complex issues.”
“I know the group is aware of the sensitivity around ‘land grabbing.’ TIAA cannot be surprised regarding these accusations again. Do we need to go through more historical deals to uncover other potential issues?” he asked.
It’s unclear from the email exchange if TIAA or its co-investor, Cosan, looked into any problems with their joint land purchases. But an investigation by OCCRP, drawing on data leaked from inside Cosan, shows there were plenty more to find.
The leaked documents give an unprecedented glimpse into the pair’s Brazilian property portfolio. One spreadsheet of their rural land holdings lists more than 1,000 entries, with details of plots of land that their companies bought between 2008 and 2018. Among the largest of the farms on the leaked spreadsheet, which together cover more than 30,000 hectares, were properties bought from two people accused of taking over vast swathes of Brazil’s northeastern plains through fraud or violence.
This included one of the men who sold the Parceiros farm to Radar, José Valter Dias. The legal dispute over who owned that land set off an investigation into what prosecutors say was a massive scheme to bribe judges for favorable decisions in property disputes in Bahia state. In 2019, Dias was charged with corruption and money laundering, along with a number of local judges. (The investigation is ongoing.)
Monica Orbe, TIAA’s head of business communications, said the company was aware that the ownership of Parceiros was disputed when it was bought, but thought the matter had already been laid to rest by a court decision. She said TIAA and Cosan’s joint ventures currently own 55 farms in Brazil, though it’s unclear if these include all of the 1,000 entries in the spreadsheet of land holdings.
TIAA, whose motto is “financial services for the greater good,” has always insisted it invests responsibly. Though the difficulty of accessing land records in Brazil meant reporters couldn’t determine how many of the properties bought by TIAA and Cosan’s companies were disputed, documents in the leak show they ignored a litany of red flags when buying Brazilian farms — even from people who had already been publicly accused of stealing land.
While the leaked documents provide only a limited picture of how TIAA acted in Brazil, they undermine the investment manager’s insistence that its joint ventures with Cosan invest responsibly. When nonprofits — including OCCRP’s partner, the Network for Social Justice and Human Rights — published reports showing these companies had bought properties from land grabbers, TIAA always said they had carried out thorough due diligence.
Orbe said TIAA takes land grabbing allegations “very seriously” and has tightened its due diligence procedures for buying Brazilian farms since issues were first raised by nonprofits in 2015. OCCRP could find no evidence of Radar buying land from problematic sellers after 2016 in the leak.
Cosan did not respond to requests for comment.
TIAA has faced a growing backlash over its farmland investments from its own pensioners. Last year, hundreds of academics wrote a formal complaint urging the fund to divest from assets that drive pollution and deforestation, or involve illegally acquired land.
“Professors have absolutely zero desire to support land grabs in Brazil, which result in deforestation and displacement of traditional communities,” said prominent U.S. environmentalist and academic Bill McKibben, whose retirement funds are managed by TIAA.
“I don’t want my money doing terrible things,” said Caroline Levine, a professor at Cornell University and a coordinator of the TIAA Divest campaign to get the fund to drop its unsustainable investments.
TIAA and Cosan used a complex network of companies to make their Brazilian land purchases, according to documents in the leak. The companies had first teamed up in 2007, over the years setting up several joint ventures to buy properties, most notably Radar Propriedades Agrícolas S.A, Tellus Brasil Participações S.A., Janus Brasil Participações S.A., and Radar II Propriedades Agrícolas S.A. These spawned dozens of smaller “special purpose vehicles,” through which TIAA and Cosan owned their growing portfolio.
The leaked documents — which include legal analyses, audits, and corporate records — illuminate how this complex structure worked. Experts who reviewed some of the documents say it helped TIAA and Cosan’s companies to slash taxes and bypass Brazilian laws limiting foreign ownership of farmland.
Even though TIAA had teamed up with Cosan to satisfy these laws, the leaked documents indicate the U.S. investment manager had significant control over much of their Brazil property portfolio. Paperwork from 2016, when the pair overhauled Radar’s corporate structure, shows TIAA had veto power over its major investments and could buy Cosan out of the partnership “at any time.”
Orbe dismissed any accusations that TIAA had skirted tax or ownership laws as “baseless,” saying the investment manager complied with all local regulations and adhered to strict ethical guidelines.
From Savanna to Soybean Farms
On the plains of northeastern Brazil, fields of soybean stretch as far as the eye can see. Hours of driving can go by with nothing more than the occasional tree or tractor to break the line of the horizon.
Soy production in the region has expanded rapidly in recent years as vast swathes of these plains have been brought under the plough. Crops grown here are bought by major commodity traders, then exported as far afield as Europe and Asia.
They are located in a region called Matopiba — named for the four states that meet there — which is known as the “new frontier” for Brazilian agribusiness.
Once, this entire region was Cerrado scrubland, the planet’s most biologically rich savanna, but successive waves of settlers have dismembered it into huge farms. The formerly wild savanna is now a patchwork of properties — some so large they could swallow entire countries — but in many cases their ownership remains disputed.
In some places, feuds stretch back decades; in others the violence is more recent. On one ranch near Parceiros, armed men drove off a local community as recently as 2019.
For years, the region’s top land baron was José Valter Dias. Court records show the former tractor mechanic amassed an estate larger than Luxembourg in western Bahia state, which farmers accused him of taking over by forcing hundreds of smallholders from their homes, where they had been living for decades.
After a judge approved Dias’ takeover of 340,000 hectares of land, the farmers turned to the National Council of Justice to get the order canceled. They next tried to resurrect a lawsuit to reclaim the land, but again a local judge granted an injunction giving Dias possession of the property.
“There are dozens of appeals, complaints, writs of mandamus, appeals that are not being judged in the name of an agreement that farmers have to pay for land that they have owned for years,” one farmer, Getulio Vargas Gomes da Fonseca, said in a statement to police.
That lawsuit is still grinding on today, and it’s unclear when it will ever be resolved. But it spawned another probe with much bigger implications.
Federal prosecutors examined some of the decisions related to the case, over what an indictment described as concerns that judges were “interfering with the work of other members of the Bahia court.” The probe led to Operation Far West, a wide-reaching investigation into an alleged scheme in which judges were bribed to produce favorable rulings in land disputes. Fifteen people, including seven judges, have been charged in the case, which related to over $240 million worth of farmland.
“The investigation uncovered evidence of a criminal organization, with direct involvement of judges and court officials, who ensured the success of the criminal activities through at least six different court decisions,” said the indictment.
Among the accused is appellate judge Maria da Graça Osório. Citing wiretaps and bank transfers, prosecutors allege she received hundreds of thousands of dollars in return for a “manifestly illegal” ruling that let Dias break up the estate he had allegedly grabbed into more than a dozen smaller farms that he could sell.
These included Parceiros and another farm named United — together covering nearly 10,000 hectares — which he sold to TIAA and Cosan’s joint ventures, Radar and Tellus, in 2010 and 2014, respectively.
The indictment alleges that Dias’ company, JJF Holding de Investimentos e Participações Ltda., was used as a “mechanism of dissimulation and concealment” to channel millions of reais in bribes. Cosan’s spreadsheet lists a company with the same name as the seller of the Parceiros and United farms to its joint ventures with TIAA.
Little public information has been released about the investigation since Dias, his son, and 13 other people were charged in 2019. Operation Far West is so sensitive that reporters could only access limited information about it, through both official and unofficial sources.
A lawyer for Dias and his son denied they were involved in any criminality or land grabbing, saying he was a successful businessman who was able to “expand the already considerable area of land that already belonged to his family” through profits from his engine repair business.
The lawyer, Fabiano Vasconcelos, told OCCRP the judicial bribery case was in its early stages, adding that neither of the men had “any relationship with any of the judges under investigation,” though he declined to give more details due to restrictions on discussing the case.
A few months after Osório’s ruling allowed Dias to break up his estate, his son, Joilson Gonçalves Dias, was overheard in a bar saying he had paid off a female judge. The man who heard him, Genivaldo dos Santos Souza, filed a public complaint, which prosecutors say indicated that Osório had received bribes.
Osório’s lawyers denied she had been part of any corruption scheme, calling the accusations “groundless … absurd and unfounded.” In a statement sent to OCCRP, they questioned the strength of the prosecution’s case, saying it “lacks justification and supporting evidence.”
After years of legal wranglings over who had owned the United and Parceiros properties, Radar sold both of them to a local farmer in 2021, according to a TIAA spokesperson. TIAA and Cosan’s joint ventures do, however, still own at least a dozen properties that were bought from a man who has been dubbed “the largest land grabber in Piauí.”
Tainted Water, Tainted Deeds
In the south of Piauí state, in the heart of Matopiba, the costs of industrial farming are plain to see. Pesticides, fertilizers, and genetically altered crops from the area’s massive soybean farms have wiped out swathes of Cerrado vegetation. Locals say the land and water have been poisoned by chemicals.
"We feel like we’re drinking water tainted with pesticides,” said Geraldo João Pessoa, a farmer who lives nearby.
Signs proclaim that several farms in the area belong to the De Carli group, once owned by Euclides de Carli. De Carli arrived in southern Maranhão and Piauí states in the 1980s, where he gained a reputation as a powerful businessman — and a major land grabber.
By 2016, prosecutors in Piauí said de Carli had taken control of more than 124,000 hectares, much of it through fraud, in what they described as “perhaps the largest [land grabbing] case in the state.” Outside the courtroom, lawmakers, academics, and dispossessed farmers have all accused Carli of using violence and arson to drive people from their land.
De Carli’s men allegedly began attacking the hamlet of Baixão Fechado in the late 2000s, according to victim accounts included in a study commissioned by the Federal Public Ministry and a legal complaint cited in an academic article published by one of Brazil’s top universities. (OCCRP was unable to obtain the original complaint.)
Raimunda, a subsistence farmer, told reporters who visited the community late last year that de Carli’s gunmen set upon her husband and other farmers as they were building a shed in 2010.
They pushed the tractor inside and “set it on fire,” Raimunda, 65, said in an interview inside her thatched-roof home, where she lives with her sister and husband.
A spokesperson for the De Carli Group denied that Euclides de Carli had ever taken over land using violence, saying he had acquired his farms legitimately and should be seen as a “trailblazer” in the agricultural development of the region.
“The De Carli Group rejects any allegation of ‘land grabbing’ and stresses that it has always acted within the limits of the law, producing and selling grain in the states of Maranhão and Piauí, acting in perfect harmony with environmental rules,” he added in a statement to reporters.
While TIAA and Cosan were not responsible for any violence, experts say foreign investors drive land grabbing by purchasing large tracts of land from figures like de Carli. A government fact-finding mission to southern Piauí state found TIAA and Cosan’s joint venture, Radar, had benefited from the environmental destruction in the area.
“TIAA and its affiliates may not be directly involved in land-grabbing and ecocide … because others do the ‘dirty work’ for them,” said the report, written by the Federal Public Ministry.
“Radar expropriates and opens up new areas, preparing them to be the target of investments, playing a central role in expropriation… Together with TIAA, these actors … specialize in seeking out and attracting new investors to the land business.”
Orbe said the report had also noted TIAA’s efforts to tighten its due diligence procedures after 2015.
De Carli was first publicly accused of violent land grabbing in 2009, when a Brazilian media outlet reported he had deployed armed men to seize land in southern Maranhão. Two years later, a state lawmaker accused de Carli of killing two people in his quest to take over a million hectares.
But the accusations didn’t stop Radar and Tellus from buying multiple properties from de Carli, according to records in the leak. Between 2010 and 2015, they made four separate deals to acquire more than 30 farms from him, his wife, and companies they owned in Alto Parnaíba, Gerais de Balsas, and Tasso Fragoso, the very districts where the state lawmaker had accused him of stealing land.
(In 2012, Tellus also bought several farms from a company owned by three of de Carli’s lawyers, two of whom now hold prominent positions in various state authorities.)
But although the leaked documents contain due diligence reports and environmental assessments related to land deals with de Carli, none of them mention the land grabbing accusations against him.
One report on a proposal to buy 14 farms as part of a 2015 deal named Flórida does, however, describe multiple other issues, including that de Carli’s company had not produced the title deeds to the farms, and that at one point it had sold and rebought them on the same day. The firm also noted two outstanding environmental complaints against him. Yet, Radar bought the properties just a week later.
Orbe confirmed that TIAA and Cosan’s joint ventures had bought land from de Carli, though it was unclear if they matched the deals detailed in documents from the leak. Today, she said, their companies own five properties made up of 12 farms that were bought from de Carli.
Despite the issues, Radar praised one of its deals with de Carli as an example of its sustainable approach to investing. In a presentation to the Spanish bank Santander in late 2018, Radar held up one of the farms purchased from him, Sagitário, as showing how it used high standards of environmental and social due diligence in its investments.
Asked to comment, a TIAA spokesperson said the company still considered the Sagitário purchase to be “an example of our multifaceted due diligence process, related to legal, financial, social, local community impact, deforestation, [and] environmental impact,” despite the fact it was bought from de Carli.
Orbe, the head of communications, said TIAA had always adhered to industry standards for due diligence when buying Brazilian farmland, but had introduced stricter checks in areas with a history of land disputes after land grabbing issues were raised in 2015. Sellers are now screened for their involvement in legal cases outside the area where the farms are being bought, and due diligence also includes a detailed background check.
“We hold ourselves accountable to high standards of responsible investing because we care about the communities we invest in,” she said.
Elsewhere, de Carli’s reputation was harder to hide. In 2016, the year after Radar clinched the Flórida deal, a judge in Piauí froze the 124,000 hectares of land he was accused of occupying illegally. Prosecutors argued de Carli had claimed the land using forged documents, with the help of local notaries. (It is not clear if the land included any purchased by Radar.)
“First, the forger falsifies the registration … Then he goes to court” to get the document registered, explained the judge in the case, Heliomar Rios Ferreira. “That’s how the whole land grabbing starts.”
De Carli died in 2019. Two years later, another judge unfroze the lands he was accused of stealing, saying that otherwise the case could drag on “indefinitely.”
‘Against the Spirit of the Law’
Foreign investment in farmland remains a sensitive issue in Brazil.
Late last month, the Supreme Court ordered the suspension of all legal proceedings involving foreign-owned Brazilian companies buying Brazilian farmland, though the decision still needs to be confirmed by the court. Brazil’s Bar Association brought the case to clarify the laws around foreign investment in farmland after “multiple divergent decisions” on the topic.
TIAA started buying up Brazilian agricultural properties in 2007, as the U.S. mortgage crisis was gathering pace. As stock markets tanked and food prices soared, the fund was among a wave of investors that turned to farmland as a safe bet.
Although TIAA had teamed up with Cosan to get around Brazil’s strict foreign ownership laws, their joint purchases did not go unnoticed. In 2019, the National Institute for Colonization and Agrarian Reform (INCRA), which regulates land issues, argued that Cosan, Radar, and the “special purpose vehicles” they used to buy farmland comprised a single “economic group” funded by foreign money.
Apparently to head off such charges, the two companies had already reshuffled Radar’s shareholding structure in 2016. Under the new arrangement, Cosan held a majority of the voting shares of both Radar and Radar II.
While TIAA held more shares than Cosan, because they were mostly “non-voting” shares the fund appeared to have less control over Radar. But the leaked documents show TIAA could veto major investments, provided 60 percent of the capital, and was entitled to 97 percent of profits. One document notes that TIAA’s Brazilian holding company could buy Cosan out of the partnership “at any time.”
Gustavo Oliveira, a professor at Clark University in Massachusetts who researches Brazilian agribusiness, said the documents show that TIAA exploited loopholes in foreign ownership laws, which limit how much land foreign companies can own. Oliveira said TIAA and Cosan’s setup, while not illegal, appeared designed to skirt those rules.
“This shows explicitly how and why the technically legal nature of their deal is really against the spirit of the law,” he said.
INCRA said it had concluded that Radar qualified as a Brazilian entity last year after analyzing documents provided by the company, though it’s unclear if these included the records obtained by OCCRP. A former head of INCRA’s land management unit, Richard Torsiano, said the agency doesn’t have the capacity to investigate complicated corporate structures like Radar’s.
A spokesperson for TIAA said the investment manager complies with all of Brazil’s foreign ownership laws and ”any suggestion that TIAA has engaged in improper business practices is without merit.”
TIAA and Cosan owned farmland through Radar, Tellus, Janus and dozens of special purpose vehicles. Because each was treated as a separate entity, they could calculate their taxes individually using a method reserved for smaller companies. While larger companies would have to pay 34 percent tax on both farmland sales and rental income, the special purpose vehicles were able to reduce their tax burden to a little over three percent on sales and 10 percent on rentals.
Radar, Tellus, and Janus appear to have organized their land portfolio to keep using this methodology. One internal legal analysis proposes different ways of breaking up revenues to keep them under the threshold. Another presentation lists the vehicles they own that still have “room” for more revenue.
Eugenio Celso Gonçalves, a former Brazilian tax auditor, said the leaked documents described “aggressive tax planning mechanisms” that bordered on illegal but are nonetheless common given the substantial tax benefits for smaller companies.
A spokesperson for TIAA said it complies with Brazil’s tax laws, and “any suggestion that TIAA or Nuveen has engaged in improper practices is baseless.”
Oliveira from Clark University, who himself has a TIAA retirement plan, said more needs to be done to regulate the flow of foreign capital into Brazil’s farmland.
“A lot of debate has taken place in Brazil in the past 15 or so years about how to regulate foreign ownership of land, but this shows that it is capital flows that really need to be targets of regulation and the center of the debate,” he said.
AidEnvironment contributed data analysis for this story, along with Romina Colman (OCCRP) and Eric Barrett (OCCRP).