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Kassab and the Vehicular Inspection Racket

Everyman Kassab rides the Metrô

Everyman Kassab rides the Metrô

As limited as my understanding of local politics is, something told me this day would come: I predicted that ex-Mayor Gilberto Kassab would eventually come to grief over issues of public morality.

After all, among his first official acts was the nomination of his two brothers to head New Projects on the Metrô and to run SPTrans, the metro bus service.

The story received very little press coverage, but represents yet another opportunity for the incoming mayor, Haddad, to seek out bureaucratic dysfunctions and set them straight.  Will technocrats prevail over patronage? It will be interesting to see. People like result-oriented politics — leave bus fares alone, build more housing, install more sewers, and thank you very much for the break on our electricity bill.

But on to today’s clipping. Source: Estadão.

Former mayor Gilberto Kassab (PSD) is now a defendant in a criminal proceeding. He is accused of violating the law governing public tenders when he hired the firm Controlar to administer vehicle inspections in Brazil’s largest city. According to the state prosecutor, the contract cost taxpayers and motorists R$ 1.1 billion.

In a brief ruling, Judge Djalma Rubens Lofrano Filho … accepted the indictment and ordered the commencement of criminal proceedings against Kassab and business owner  Ivan Pio de Azevedo, ex-CEO of Controlar. The two suspects could receive up to four years in prison and pay a fine.

“The indictment does not imply any irregularity in the Controlar contract,” said Kassab attorney Pierpaolo Bottini.

Azevedo’s attorney, José Luis Oliveira Lima, called the allegations against his client “transparently  groundless.” …

Judge Lofrano Filho defended his decision, saying, “I have verified that the evidence underlying the criminal charges establishes the materiality of the criminal acts and is sufficient to establish their authorship. This is not a case for an injunction.”

The alleged wrongdoing by the mayor is not detailed.

The judge ordered the defendants to respond in writing to the charges within 10 days, as provided in Article 396-A of the Code of Criminal Law. “Following standard procedure, we examine prior criminal records and testimony, if any.”

The charge against Kassab, filed by prosecutor Marcia de Holanda Montenegro, was presented last October to the 14th Criminal Court, a division of the state high court.

At the time, Kassab was mayor of São Paulo and therefore had a legitimate claim on having the case tried before the state high court.

When he left  Anhangabaú Palace on December 31, 2012, he lost the privilege of special forum and the case file was forwarded to a court of first instance.

“This file consists of records sent down by the state high court, which has jurisdiction over this case because Kassab held office until the end of 2012,” the judge noted, adding that at the end of his term as chief executive of the city, the prosecutor was obliged to recognize that his right to a privileged forum had ended. …

Kassab and Azevedo are formally accused of crimes defined in Article 92 of Law No. 8666/93 — the Law of Public Tenders — which prohibits the acceptance or receipt during the bidding process.

The state prosecutor says that the contract signed by the city government in 1996 — during the Maluf administration — with Controlar was designed to expire in 10 years. The contract was frozen until Kassab revived it in 2008.

The indictment goes on to say that at the moment the contract was signed,  Controlar not only lacked the technical capabilities required but also charged 20% more than the price deemed reasonable for an automobile inspection. To make matters worse, the company presented phony financial guarantees in order to win the bid.

In November 2011, the state prosecutor filed a civil suit against the mayor alleging administrative misconduct. At one point, Kassab’s assets were frozen by court order for 40 days.

Along with Kassab, the ex-municipal secretary for the environment, Eduardo Jorge, is also the target of a civil lawsuit in which prosecutors questioned the renewal of Controlar’s contract for 10 years … the prosecutors wanted the contract to be voided and a new public tender be held to award the contract for vehicular inspection in the city. The courts have yet to judge this pleading on its merits. Controlar denied taking part in a fraudulent scheme.

In a related story — Exame magazine, November 28, 2012, Controlar personnel have been arrested  for bribe-taking. This is an experience me and the Mrs. can attest to personally, by the way.

The inspection performed by by Controlar is an obligation of every car owner in the city. Motorists must pay R$ 44.36 in order to schedule the inspection and then show up at the agreed-upon time. Those failing the test must pay a fine of R$550, as well as the cost of necessary repairs before submitting the vehicle to a follow-up inspection.

São Paulo has seven million cars = R$ 310 million per year.

GAECO — the organized crime division of the state judicial police — began investigating six months ago after receiving an anonymous tip about a scheme in which Controla employees were taking bribes from motorists who failed the test. GAECO tapped the phones of several intermediaries in this scheme, gathering evidence that incriminates these suspects in an ongoing criminal enterprise involving active and passive corruption.

Waiting for corrupt politicians to leave office: Is this a fresh strategy for anti-corruption police operations? The «privileged forum» mechanism — in which only higher courts can judge elected officials still in office — is deeply confusing and time-consuming, and what is more creates a giant loophole — the Maluf Conundrum, in which the corrupt ex-official ensures favored treatment by continuously occupying some elected office. Maluf — whom Kassab served as planning secretary — is the master of this dodge, holding off Interpol from his seat in the lower house of the federal congress.

And as to the «monthly payola» case, assigned for trial to the Supreme Court. How does a defendant in such a case appeal a ruling against him or her? There is no higher court than the Supreme Court, which seems to find itself in the position of exercising judicial review of its own finding and sentences. To complicate matters further, three justices are about to retire. How will the new justices approach the case?