«No To Veja in The Classroom»

Source: Diário do Centro do Mundo.

The Education division of the Editora Abril has a strategic problem.

The Civita family at the opening of the stock market, 2011.

A reader of this Diário recently commented as follows: “I would never allow a child of mine to study in a school [using educational materials supplied by] Abril.”

I had recently read the story of the acquisition of yet another school by Abril, in a transaction strategically vital to the company. With its magazine business, the traditional source of its considerable fortune, waning rapidly, Abril is focusing on education.

And lobbying hard to influence educational standards required by the federal ministry of education. 

São Paulo | New Songs About Buildings and Food

Source: Artur Rodrigues | O Estado de S.Paulo

To expedite procedures and reduce corruption, Haddad disbands Aprov

Change. The agency, which became known for the scandal involving its former manager, Hussain Aref Saab, was retired yesterday, together with Contru, by the new city Secretary of Licenses, which faces the task of catching up on 25,000 applications.

Whatever happened to Hussain Aref Saab? I thought it was remarkable how little coverage was devoted to his ties with Mayor Kassab and his party.  Then I thought again.

Six months into his mandate, Fernando Haddad (PT) has instituted the Municipal Secretary of Licenses and given it the mission of acting on a backlog of at least 25,000 applications. The first official act of the new agency, headed by architect Paula Maria Motta Lara, is to put an end to Aprov, the Building Approvals office, and Contru, a zoning authority, both of which have suffered  accusations of corruption over the  years.

The closing of these offices comes as part of a restructuring program that plans to staff up with civil servants from two underused city departments, Parsolo (…) and Cadastro Setorial (…), which are also being dismantled.

The objective is to divide these human resources among specialized coordinating agencies: Residential Use (Resid), Institutional Services and Uses (Servin), Industrial and Commercial Usage (Comin), Public Housing (Parhis) and Special Activities and Security of Usage.

Although she explains the changes in terms of operational considerations, the incoming secretary says she is happy to do away with Aprov, which gained fame from the scandal involving its former chief, Hussain Aref Saab, who accumulated a fortune of 125 real properties during his tenure.

“With everything that happened, Aprov became synonymous with the worst possible scenario. Our decision was to say, “There will no more Aprov, forget that story because now there is a new municipal secretary.”

As a weapon against corruption, Paula will rely on reducing procedural delays, and said she had found cases lying around unattended since 2002. “What you saw in the cases (of corruption) we discovered were promises to expedite paperwork. “At present, it is normal to see cases that have waited five years or more. There is a mountain of paperwork. The atmosphere lacks the urgency of an office with people waiting,” she adds. Her goal is to comply with the Código de Obras — The Building Code — which provides for finalization of applications within 90 days.

Regarding the six month delay in establishing the new structure, Paula blamed bureaucratic issues: It was necessary to approve the enabling legislation for the creation of the new office, which was part of a legislative package with 11 other topics. In the meantime, Paula worked out of the office of the housing secretary, with no support except for a driver, and says the number of procedures stuck in the system at Aprov decreated  from 7,500 to 4,600,

With the new coordinators, Paula knows that the mayor will be keeping a sharp eye on the approval of «social interest housing» — the mayor has promised to build 20,000 units. Another bottleneck is the lack of a licensing program for night clubs. On Sunday, the Estado reported that, of 58 party spots  it monitored, 30 were operating without a license.

[…]

Electronic processing. Another mission to accomplish by year’s end is to reactive the electronic system adopted by ex-Mayor Gilberto Kassab, which had many problems and was suspended. For the time being, the process remains a pen and paper affair. The incoming secretary says she is also organizing amendments to the 1992 Building Code. The idea is to assign more responsibility — and punishment — to those responsible for construction projects …

It will be nice it if works out. Earlier administrations, now in the opposition, provided significant bureaucratic relief in some areas with the Poupatempo program. Haddad is an ambitious technocrat with a briefcase full of master plans. We shall see how well he can cope with the fractious municipal assembly and the state, the latter of which belongs to the national opposition.

Siemens Turns State’s Evidence

Source: Folha de S.Paulo

Here is a story broken by the FSP that has yet to break internationally. It sits atop the list of most read articles this morning.

Siemens denounces cartel in São Paulo subway bidding

German multinational Siemens has denounced to Brazilian antitrust authorities the existence of a cartel — of which Siemens itself was a member — in public tenders for the purchase of railway equipment, construction and maintenance of railway and subway lines, and the São Paulo and Federal District subway systems.

The enormous engineering firm has been found guilty before of crimes against free and impartial competititon.

The Folha de S. Paulo has discovered that the scheme denounced by Siemens involves subsidiaries of such multinationals as Alstom,  Bombardier, CAF (Spain)  and Mitsui.

These companies and Siemens are the leading candidates to assume the vast government bullet train project that will link Rio and S.Paulo. That auction is scheduled for August.

Illicit coordination among bidders can result in contracts with prices superior  (10% to 20%, by some estimated) to those produced by normal competitive bidding.

At the beginning of July, The Superintendent-General of the antitrust agency CADE served search and seizure warrants at the officers of the companies in question. “Operation Crossed Wire” — Linha Cruzada — executed bench warrants in São Paulo, Diadema, Hortolândia and Brasília.

According to Siemens, the cartel operated during at least six auctions, but the real size and scope are unknown, as is the period during which the cartel operated and the damages caused.

Plea Bargain

Upon admitting its participation,  Siemens signed a a leniency agreement that could exempt the company and its officials from liability in the event the cartel is confirmed and those responsible condemned.

Administrative and criminal immunity is granted when one participant denounces the cartel, suspends the illegal activity and cooperates with authorities, all before the government begins its own investigations.

If convicted, the cartel is subject to a fine of as much as 20% of gross earnings of the cartel member in the year prior to the filing of the case with CADE.

In the late 1990s, Siemens experienced a change in command in the wake of bribery scandals in various countries. The company was punished for formation of a cartel.

As the NY Times noted at the time (December 20, 2008), in a case involving “well-placed officials around the globe, from Vietnam to Venezuela and from Italy to Israel”:

The Siemens case is notable for its breadth, the sums of money involved, and the raw organizational zeal with which the company deployed bribes to secure contracts. It is also a model of something that was once extremely rare: cross-border cooperation among law enforcement officials.

In its settlement last week with the Justice Department and the Securities and Exchange Commission, Siemens pleaded guilty to violating accounting provisions of the Foreign Corrupt Practices Act, which outlaws bribery abroad.

The Guardian (March 12, 2012) ran a cheerful backgrounder on the Siemen group’s professed determination to raise its level of regulatory compliance.

What will CADE, which has become a much more aggressive agency in the past several years, do if all of the bullet train contractors are disqualified? What will be the political fallout for authorities who negotiated the suspect contracts?

Analysis of the material seized will take as much as three months. If evidence of cartel formation is found, CADE will bring charges against those involved. The criminal conspiracy allegedly included seven other companies, according to the preliminary investigation: TTrans, Tejofran, MGE, TCBR Tecnologia, Temoinsa, Iesa and Serveng-Civilsan.