By Lisandra Paraguassu

PORTO ALEGRE, Brazil (Reuters) - Brazil's Forjas Taurus SA, the largest weapons manufacturer in Latin America, sold guns to a known Yemeni arms trafficker who funneled them into his nation's civil war in violation of international sanctions, according to charges in court documents reviewed by Reuters.

Federal prosecutors in southern Brazil charged two former executives of Forjas Taurus <FJTA4.SA> in May with shipping 8,000 handguns in 2013 to Fares Mohammed Hassan Mana'a, an arms smuggler active around the Horn of Africa for over a decade according to the United Nations.

The handguns were allegedly shipped by Taurus to Djibouti and redirected to Yemen by Mana'a, according to court documents.

Alexandre Wunderlich, a lawyer for the two former Taurus export executives, Eduardo Pezzuol and Leonardo Sperry, said the accusations in the sealed indictment "do not reflect the facts of the matter."

Yemen has been consumed since early last year by a brutal civil war killing thousands of people as Iran-backed Houthi rebels challenge a Saudi-allied government.

Mana'a, who served from 2011 to 2014 as governor of Sa'dah, a Houthi stronghold, could not be reached for comment.

A Brazilian court issued a public summons for Mana'a in May as part of a case citing him, Sperry and Pezzuol as defendants.

Taurus declined to answer detailed questions on the weapons case due to legal confidentiality but said it was "helping the courts to clarify the facts."

The case, currently sealed by a judge in the southern city of Porto Alegre, near Taurus' headquarters, may draw legal scrutiny to the company, a major supplier of firearms to Brazil's police and military and one of the top five makers of handguns in the U.S. market, where it sells nearly three-quarters of its production.

Brazil is the world's fourth-largest exporter of small arms.

Prosecutors say the two former Taurus executives were negotiating another shipment of 11,000 guns with Mana'a last year when police uncovered the plot and raided the company's offices in November.

Prosecutors have not brought charges against Taurus but said evidence seized in the raid included dozens of emails showing it knew of U.N. sanctions against trading arms with Mana'a and Yemen but sought ways to skirt them.

"Taurus clearly made use of a notorious international arms trafficker to triangulate its merchandise to other countries, especially Yemen," the documents said.

"There is no way Taurus and its employees can claim to be unfamiliar with acts attributed to Mana'a, since Leonardo Sperry testified it is standard for Taurus to do an internet search on people they invite to Brazil," they said.

Sperry and Pezzuol gave testimony to federal police in October 2015 as the investigation got underway. The executives left Taurus late last year, according to their LinkedIn résumés.

"All of the acts covered in the case were carried out entirely within the company and within legal limits," their lawyer said in an email. He declined to answer other questions, citing the confidentiality of the case.

FUELING WAR

Prosecutors said ties between Taurus and Mana'a stretch back to 2007, without elaborating in the court documents.

They said the relationship went quiet for a couple of years after the U.N. Security Council leveled sanctions against Mana'a in 2010 for violating an arms embargo in Somalia.

The U.N. sanctions banned any weapons sales or financing for Mana'a, and ordered an asset freeze and travel ban for him and others suspected of selling arms in Somalia's civil war.

U.S. President Barack Obama also named Mana'a and ten others in a 2010 executive order banning business with individuals and groups accused of contributing to unrest in Somalia.

Yet prosecutors said the sanctions did not stop Taurus from re-engaging with Mana'a as violence broke out in Yemen.

Yemen's 18-month old conflict has drawn in regional powers and killed at least 10,000 people, including nearly 4,000 civilians, according to the United Nations.

In an undated email cited by prosecutors, who did not name the recipients, Pezzuol wrote that "if Taurus decides to sell to Yemen, the path appears to be through Mohamad Manaa," adding that he had set up a route through Djibouti, just across the Mandeb Strait from Yemen.

Taurus got authorization from Brazil's army in October 2013 to ship 8,000 weapons to Djibouti's defense ministry but prosecutors say in documents that Mana'a redirected the arms to Yemen using companies such as Al Sharq Fishing and Fish.

Mana'a paid Taurus $2 million for the weapons, according to court documents, which cite regular payments from the Yemeni to the company since 2013. The documents did not indicate who had received the arms in Yemen.

"Djibouti was a false way point for exportation," prosecutors wrote in their charges. "They made use of fraud to disguise the real destination of the weapons and to hide the involvement of Fares Mana'a."

Prosecutors say the fraud extended to the identity of Mana'a, who came to Brazil in January 2015 to visit the Taurus factory despite the U.N. travel ban.

On behalf of the company, Sperry and Pezzuol asked Brazil's foreign ministry to extend a formal invitation to the arms dealer, but the request was denied on the grounds of economic restrictions with Yemen.

The executives then discouraged Mana'a from traveling to Brazil under his own name and tried unsuccessfully to obtain a passport from Djibouti for his use, according to prosecutors.

They said Mana'a eventually entered Brazil on a passport with a false name and birth date.

Just two months later, Mana'a and Taurus were arranging for another shipment of guns through Djibouti, according to the charges, disregarding the U.N. arms embargo for Yemen passed in April 2015.

Prosecutors say that shipment of 11,000 handguns would have gone through to Yemen if police had not broken up the scheme.

Afterwards Sperry wrote an email to Mana'a suspending the shipment "due to recent contact with Brazilian authorities."

In May, a federal judge overseeing the case called for the notification of Brazil's foreign ministry, along with Interpol, the United Nations and the Saudi Arabian, Egyptian and U.S. embassies in Brasilia, court documents showed.

But Taurus won an injunction from an appeals court two days later blocking that decision, arguing it would cause the company "economic losses."

(Reporting by Lisandra Paraguassu; Writing and additional reporting by Brad Haynes; Additional reporting by Maria Pia Palermo; Editing by Daniel Flynn and Kieran Murray)