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Health & Stealth & Wealth | The Ghost NGOs of Duque de Caxias

Ever since the “bloodsucker” case of 2006 — shameless skimming from a budget line item intended for the noble purpose of universalizing the availability of ambulance services — it has been apparent that the Brazilian federal government needs to lean more closely over the shoulders of state and municipal recipients of federal aid.

The founding of the CGU — the audit authority of the federal executive — in 2001-2 was a step in that direction, and came to be used more aggressively during the Lula years.

Controversy remains, however, over who to hold responsible, and when, and why, as well as how to investigate and prosecute. Ticklish constitutional issues abound.

Take the example, of presidential candidate and former São Paulo governor José Serra, Cardoso’s health minister at the time, who was photographed at an ambulance-christening event in a frontier state in the company of several “bloodsuckers.” There was no evidence linking him to the scheme, but arguments raged about where the buck should stop.

In recent years, it was a failed 2007 congressional inquiry — The CPI of the NGOs — and then the current federal president who introduced the topic of “ghost NGOs,” in the most recent case amid a minor scandal in the Ministry of Sports and elsewhere in the permanent bureaucracy.

As another current case of “ghost NGOs” at work indicates,

More than one third of funds funneled to the conspiracy came from the federal government. Federal prosecutor finds lack of effective oversight and cost controls.

Reported by: Raphael Gomide

Duque de Caxias is a city of some 900,000 in Rio state, by the way.

iG has discovered that the federal government contributed at least R$ 237 million to the “máfia of the Ghost NGOs,” which federal and Rio state prosecutors say embezzled R$ 700 million from the public health service of Duque de Caxias, in Rio de Janeiro state.

The scandal is curiously underreported by the national media, judging from nothing more than the dollar amounts allegedly involved. More curiously, it fails to make the connection between this and closely related methods of filching.

If, for example, I pay your PR firm $R10 million for services and you allocate that money to service providers who provide no services and pass all payments along to a second outsourcer, you are basically  practicing the «monthly payola» scheme.

Ditto for the liberties taken with federal cultural subsidies for Rock in Rio — the funds ended up greasing political campaigns. Ditto for expending money on a vast scale for ambulances.

The funds were transferred by SUS, the national health care system, to the city government located in the Baixada Fluminense, which oversees their use. Prosecutors insist that the job of auditing the use of these funds belongs to the federal Ministry of Health.


A study performed by the MPF and MP Rio shows that one-third of the total received by the nonprofit organizations Associação Marca and IGEPP came from federal contributions to municipal health services, which were managed by mayor José Camilo Zito.

Skip to the end for a political profile of the Zito family. Zito was sentenced to three years and 6 months in prison in August for criminal mismanagement.

Camilo Zito is a defendant in an administrative action along with former city health secretary Danilo Gomes and the state’s attorney for Duque de Caxias, Francisco Rangel.

The reference is to Operation Assepsia, a related case filed earlier this year.

On Thursday, the state judicial police served search warrants at various addresses in the city and state, including the home of Zito.

Read more: Health ministry to audit donation of R$ 237 million to OSCIPs in Caxias

According to the MP, the leaders of the conspiracy are (1) Tufi Soares Meres – chief executive of IGEPP, aka the Informare Institute and Salute Social, the brains behind the scheme referred to by the others as “the boss” — ; (2) Rosimar Gomes Bravo e Oliveira, and (3) her husband, Antônio Carlos Oliveira, aka Maninho, at the head of Marca.

The sum actually transferred is probably much greater. The data discovered by the Folha covers the period 2009-2011. Data for 2012 are not yet available. During this period, budget allocations grew exponentially.

According to prosecutors, “the federal government has a concrete interest in the case, given that the members of the conspiracy appropriated a sizeable portion of SUS money, including federal money, thus compromising the three-source system of public health in the state.”

Budget allocations to OSCIPs grew continuously since 2009. In 2009,the city government passed along R$ 135.7 million to the OSCIPs, of which R$ 73.29 million involved federal funds. In 2011, the OSCIPs received the largest amount ever: R$ 254 million, of which R$ 88.5 million was federal in origin.

According to data compiled by the MP and MPF, Associação Marca has received R$ 485.5 million to date in 2012, while Informare Institute– the same organization as IGEPP — received R$ 73.4 million and IGEPP received R$ 206.6 million,for a total of R$ 765 million.

“Potemkin villages”

The investigation discovereed that these OSCIPs were nothing more than “Potemkin villages” — mere facades … The investigation concluded that “Associação Marca was nothing more than a private sector company which assumed the form and governance rules of an OSCIP in order to facilitate the awarding of contracts without competitive bidding by the city government.

Telephone wiretaps from another police operation, in Natal (Rio Grande do Norte) which investigated another aspect of the same scheme, Rosimar told relatives that Marca was “nothing more than a company dressed up to look like an OSCIP and thereby benefit from the differential treatment afforded to nonprofits in bidding on public works, robbing the public coffers in the process.”

These “ghost” OSCIPs — all of them registered at the same physical address — mere post office drops, with no employees — received money from the city government of Caxias in return, supposedly, for management of the city’s health system. The state, meanwhile, was in a state of “chaos.” The receipts for the allocations were issued in the name of OSCIPs and private companies in the same group, and the scheme was nothing more than a method of lining the pockets of partners with public money.

OSCIPs are legally defined as nonprofit organizations. In the case of Duque de Caxias, however, the funds wound up in the pockets of the partners in crime.

A court suspended the contracts and ordered the city to name an outside administrator under the supervision of SUS, the national health system.

The judge ordered “the suspension of any and all transfers” to the OSCIPs in question and barred the city from awarding new outsourcing contracts. The city was ordered to deposit R$ 10.6 million and R$ 8.6 million, respectively, in escrow accounts related to the two ONGs.

The MP is asking for the return of the funds to the public treasury. It calls for the loss of political rights of those involved and loss of the right to bid on public works projects, all of which are sanctions provided for by law.

O iG sent an e-mail to the Duque de Caxias government but received no response.

The ministry says it does not hire OSCIPs, but merely repasses the funds to the contracting authority [at the state or municipal level]. The Health Ministry was contacted on Friday. The ministry’s press office said the ministry is not responsible for the hiring of these OSCIPs. It merely forwards the budget allocation to the cities, which administer and manage them.

Denasus director Adalberto Fulgêncio — the national auditor of SUS — says that the Health Ministry will perform an audit in the Duque de Caxias case.

The ministry also said that it does not oversee receipts for services rendered for services outsourced by cities. It only does so in cases of suspected fraud. The ministry said it had no knowledge of irregularities prior to the police operation.

The ministry spokesperson said that due to the lateness of the hour it was not possible to verify whether any audit was underway involving the R$237 million, or whether the money might be returned.

A significant political figure in the Baixada Fluminense over the last decade, Zito was mayor of Caxias between 1997 and 2004 and was reelected to the post in 2008.

In 2000, he elected his ex-wife, Narriman, and his brother, Valdir, as mayors of two other cities in the region: Magé and Belford Roxo. His daughter, Andreia, has a seat in the federal lower house. Another ex-wife, Claise, is a state lawmaker. All adopted the surname Zito and entered politics with the aid of Zito.

Adminstrative chaos and suspicions of irregularities in trash collection, as well as the embezzling of funds from public health, have undermined the political prestige of Zito, who began as a member of the tiny PTR, joined the Socialists (PSB) for a time, moved to the Social Democrats (PSDB), and ended up in the Progressives (PP).  

In 2002, Zito was absolved of murder charges in the execution of a municipal secretary in Caxias in 1993, after having been jailed twice in the course of the investigation and trial.

Source: Cenário da Notícia em Lucas do Rio Verde e Região.