Picking Up The Check | Cartel Presents R$ 425 Million Taxpayer Tab

Source: ISTOÉ Independente

Trains and Subways overbilled by 30%

Analyzing documents obtained from Siemens, a company that took part in the cartel that diverted funds from the trains and subways of São Paulo, Cade and the MP have concluded that the public coffers has been shortchanged by at least R$ 425 million.

By Alan Rodrigues, Pedro Marcondes de Moura and Sérgio Pardellas

A Pipeline of Bribes

According to members of MP and Cade — the public advogate [MP] and the federal antitrust  authority — six commuter train and metro projects investigated were overpriced by 30%.

Last week, ISTOÉ published neve- before-published documents that brought to the MP’s attention the voluntary deposition of an ex-employee of the German multinational Siemens.

According to the revelations, the scheme established by companies in the rail transport sector in São Paulo in order to win and profit from public tenders during sucessive PSDB governments over the past 20 years counted on the assistance of officials and civil servants and fed a so-callled, million-dollar “Pipeline of Bribes” that diverted money from public works to PSDB politicians.

All ofthe documentation, including a [self-castigating] report by the German firm on its illicit conduct, is now in the hands of the anti-trust authority, CADE, to which Siemens — a confessed participant in the crime — has been reporting since May 2012 on cheating and fraud with respect to the the train and subway projects. In return, it received civil and criminal immunity for itself and its executives.

Last week, however, it was not yet known how profitable this cartel had been.

Digging deeper into the case in recent days, CADE and the MP were surprised by the quantity of irregularities discovered in contracts between the contractors and the PSDB governments in the process of buying trains and constructing Metro and commuter rail lines.

One of the officials involved in the investigation went so far as to refer to the scheme as a “fantastic fable” featuring an assault on the public coffers, with a plot dominated by key administration officials– among them Metro and CPTM directors — with a special appearance by PSDB politicians, the main beneficiaries of this longest of the long con.

During the investigation, it became clear that the outcome of this Grimm’s fairy tale is not going to be a happy one for São Paulo taxpayers. The investigation reveals overpricing of every project by 30% This is the same thing as saying that the Toucan governments threw away R$ 3 out of every R$ 10 collected as taxes.

Exactly 16 contracts corresponding to six projects have been analyzed. According to MP and Cade, losses endured by the pubic treasury in this limited sample alone amout to RS 425.1 million. These sums, say forces close to the investigation, should grow as other winning contract bids in São Paulo by the cartel members … are reviewed.

One of the contracts in which Cade found flagrant overpricing has to do with the furnishiing and installation of rail lines as part of Phase One of Line 5-Lilac of the S. Paulo subway system. The tender was won by the Sistrem-led group, a joint venture of Alstom and Siemens, together with ADtranz (a division of Bombardier) and CAF of Spain.  It rendered a total of R$ 615 million.

According to witnesses heard by Cade and the MP, this contract produced a 7.5% commission to PSDB politics and directors of the state-owned firm.. This adds up to R$ 46 million in bribes alone.

“Alstom coordinated a grand scheme with all the players, making this sort of overpricing possible,” a Siemens employee told the MP. … Prior to the bidding, Alstom, ADtranz, CAF, Siemens, TTrans and Mitsui defined a strategy for maximizing profits from the deal. The companies that worked together to practice crimes are the principal owners and suppliers of the technology used to provide the services contracted for.

The person responsible for establishing the scope of production and the prices to be assumed by the other participants was the executive Masao Suzuki, of Mitsui.

His firm, however, was not the principal beneficiary of the competition. Most of the contract for Phase 1 of Line 5 of the subway went to Alstom, which commanded the scheme during the voting process.

All the participants, however, contributed to the bribe collection box.

Every company had its own method of paying the commission negotiated with members of the S. Paulo PSDB, according to an informant and ex-Siemens employee who spoke to this magazine in its last edition.

In this particular contract, Alstom and Siemens made use of the lobbyists Arthur Teixeira and Sérgio Teixeira as consultants. Documents in our possession since last week showed that these men operated through two offshores, located in Uruguay: Leraawy Consulting S/A and Gantown Consulting S/A. To leave no trace of the bribe, both made use of Swiss bank accounts, according to the investigation.

CPI Called For

The leader of the PT in the state legislative assembly, Luiz Claudio Marcolinois is working to establish a legislative inquiry.

In the contract for the Metrô Line 2, the overbillling discovered so far amounts to an estimated R$ 67.5 millions lost from the city coffers.

The auctions investigated were won by the Alstom-/Siemens JV and the Metrosist consortium,in which Alstom also has a share. The contract executed called for the furnishiing of engineering services and the installation of systems designed for the westward extension of Line 2-Green.

Recently budgeted for R$ 81.7 million, this contract alone has been readjusted 13 times since its signing in 1997. The French multinationals and the German were responsible for the executive plannning of systems along the Ana Rosa/ Ipiranga line.. Asltom and Siemens received at least R$ 143.6 miillion to execute this project..

The overpricing by 30% was also applied to contracts between companies belonging to the cartel and the state-owned CPTM. Among these was a 2002 conttract for preventive and corrective maintenance on ten trains of the 3000 series.

Siemens prevailed with an original bid of R$ 33.7 million. Shortly thereafter, the German conglomerate subcontracted MGE Transportes for services never performed. .

MGE, in truth , was a funnel through which Siemens could pay a 5% bribe agreed upon with public officials and Metro and CPTM directors. The value of this commission -– nearly R$ 1.7 million in this single deal — was once against destined for the senior ranks of the state-owned company and politicians with ties to the PSDB. The bribe was distributed, accordidng to testimony to Cade to which we had access ,by CPTM director Luiz Lavorente.

Along with MGE, Siemens also used the Japanese Mitsui to serve as go-between in bribe payments. Another indication of how close the cartel members were is that, in theory, they should have competed among one another for the lucrative public contracts in the rail transport sector.

The result of this battle of giants in the sector seemed clear when another 12 contracts celebrated by the CPTM in reference tto maintenance of series 2000 and 2100 model trains and the Boa Viagem project, which had already been studied by CADE. In these 12 contracts, an overpricing in the amount of $163 million was detected.

It is no accident that authorities responsible for investigating the case refer to the scheme maintained by the PSDB governments of S. Paulo as “a fabulous story.” The constant overbilling of services contracts and offers of products to Sao Paulo state-owned companies and the Companhia Paulista de Trens Metropolitanos [CPTM] surpass even the calculation of the mean value of such crimes. OCDE calculations, for example, point  to a diversion of 10% to 20% percent from public coffers. In the case of the 16 contracts, the setting of prices in advance and the directing of bids to companies participating in the scheme led to a remarkable 30% loss to the city coffers.

Given these accusations, mext week the PT and other parties willl move to establish a CPI into the case. “Governor Geraldo Alckmin says he wants the charges with respect to Metro and CPTM cleared up.” “This means that the leader of your faction in the state assembly should vote for a CPI, for once.”said Luiz Cláudio Marcolino. “It is obvious the contracts need revising. We need to be transparent with public money, not mingling public funds with party assets,” he said.

The PT legislator is having a laugh at the expense of his colleague, whose party assumed the moral high ground during the “monthly payola” case that so castigated the PT but remains a common practice nevertheless.

If the state PT does not manage to approve the CPI, for lack of lack of votes, it may raise the matter in the federal congress. “We cannot allow a matter this serious to pass without asking questions.. Especially when it deals with such powerful accusations of misuse of public funds,” said Devanir Ribeiro (PT-SP). What we already know is plenty to instruct a parliamentary commission. After all, this is a million-dollar diversion of funds from the principoal public works of the most populous city in Brazil, with the largest stake in the government budget. Getting to the bottom of this story of a 30% bribe paid out from public cofffers could lead to other fabulous revelations.

Shredding the Documents

A yellow folder with some 200 pages located in the First Criminal Bar of the Court in Itu, in rural São Paulo, exposes an aspect even more somber to the investigations into the embezzlement of milllions from public transport works during PSDB governors in São Paulo over the past 20 years.

The folder holds Case No. 9900.98.2012 which investigtaes an arson fire that in course of five hours consumed 15,339 boxes of documents and 3,001 tubes of technical drawings.. The paperwork was part of the archives of the Metrô for three decades..

Among the paperwork reduced to ashes were contracts signed in 1977 and 2001, as welll as technical evaluations, HR contracts … as well as regular reports on contracts signed between 1968 and 2009.

A secret warrant was obtained so the inestigation could be reopened by the MP, given the new revelations about the case as published by this magazine. It may lead to new elements inaddition to the evidence already in possession of CADE and obtained from Siemens, regarding the Metrô S. Paulo case.

After all, the actions of the criminals may have been used to conceal the distribution of bribes, overbilling of projects and services and the acqusiition and purchase of maintenance of subway equipment.

The magazine is shifting in contrary to fact conditional mode, indicating it has run out of editorial steam.

According to the charging papers, early on July 9, 2012, nine armen, hooded men invaded the wareouse of PA Arquivos Ltda, in Itu, 110 km from the state capital. They controlled the two guards, stole 10 used computers, splashed gasoline from atop the 5,000 square meters and set fire to the scene. Nothing was left.

Four months after registring the crime, Incident Report No. 1435/2012, the police concluded that the fire was nothing more than a common crime. “The investigations went nowhere”, admits police officer Civil Milena, who insisted in talking about the complainant using only her first name.. “The men wore hoods and were not identified,”” said the police officer. who Investigated the case basically as a disappearance of antique paper, the fire now looks like a potential burning of the archive.

The incident took place 50 days after the Access to Information Law went into effect. This law obliges public agencies to furrnish copies of any document requested, except those protected  by legal privacy. In this case, A period of four months transpired between Siemens’s talks with Cade, iin which charges of fraud are made. “We can not discount that the intention of this crime was to hide evidence of corruption,“ said Luiz Cláudio MarcolinoPT leader in the ALESP.

Along with the highly suspicious circumstances of the fire, official government documents, embodied by GAO — Gerneral Accounting Office — document No. 360, makes clear that the circumstances are more than suspicious. The warehouse to which the archive of the metro was moved lacked the most rudimentary  conditions for document storage. Established in a rural zone in Itu, among rabbit hutches and clumps of cattle, the warehouse lacked any security measures. It could easily be accessed through the side or from under the foujndations.

According to documents to which ISTOÉ had access, the state govvernment knew full well the precariousness of the faccility when it transferred files there. An auditor recorded that on April 20, 2012 — two days before the signature of a contract between Governor Alckmin and PA Arquivos — the warehouse remained classified as coonstantly under construction and “tthe company was not suited to prepare to receive the Metrô documents.”

An internal government communication adds to the story, According to the GAD audit, “the company lacked adequate istallations to guarantee the preservvation of the documents.” There was not even climate control, which is fundamental to services of this kind.

The building burned down just a few days after the transfer of the requested material to the space. “I don’t want to talk about this crime,” said one of the owners of th establishment on the day of the fire, Carlos Ulderico Botelho. “I quarreled with my partner, I left the partnership and lost a lot of money.”

“That fire was weird.. That is why I prefer to remain silent. ”. Another anomaly of the crime was that the incident was recognized by the state only after six months had passed. ” In 16 pages pf tje Diário do Diário Oficial, he said the papers had “vanished.”

Not long after the official report was released, PT state deputy Simão Pedro, current Services Secretary for the city government, has filed suit against the Governor do Estado and the state Public Ministrry. “I believe that the bandits set the fire because of the documents stored there,” he said.

The lawmaker says that “this event is more than just a theory of robbery accompanied by arson, this is this deliberate destruction of public documents,” said Simão, last December. Sought by ISTOÉ, senior officials of the Metrô de SP did not wish to make a statement..

The time will come when ISTOÉ will have to put names to numbers. They seem to be closing in on solid humint here. But Serra, Alckmin and the late lamented Mario Covas tend to be forgiven for collateral keeping of bad company.  The Celso Pitta-Maluf years are another story …

Abril and Anti-Ideological Education: A Note

Source: Brasilianas

[Veja magazine columnist] Reinaldo Azevedo wrote an article in 2008 titled “Towards a school without a party,” in which he commented on an article in the magazine that had mocked a professor for questioning the logic of capitalism during a class session.

Now, in 2013, Veja has been ordered to pay this same teacher R$ 80,000 for having published an article based on “distorted facts, taken out of context.”

What is worrisome about this is that Abril, which publishes Veja, is investing heavily in the education market, buying one educational company after another.

See also

1. Abril | Acquisitions in Education.
2. Abril Wises Up | Educational Content Consolidates

Can it be that they really aspire to “schools without a party,” or would it be more accurate to call them “fascist schools”?

I have not read any of the materials in question, but without throwing insulting names around, I can easily imagine the publisher doing a brisk business in Ayn Rand.

There is even a well-designed Web site about the initiative .

The question is whether these young people who make life hellish for their parents, or spend all their income on fashionable clothes, and say they believe that Bolsa-Família recipients should not vote  — we saw several picket signs advocating this last month —  are not already indoctrinated enough — by the magazine and a variety of other media — by the capitalist point of view

Sources for this debate:

1. Reinaldo Azevedo, 2008
2. Article on the law suit 
3. Article illustrating the extent of Abril’s education holdings

The result, to be honest, does not strike me as reason to celebrate — were it not for the fact that Abril itself makes frequent use of this sort of SLAPP suit  — strategic lawsuit against public participation –against its own detractors.

The most interesting aspects of these sorts of debates over curriculum design hardly ever appear in moveable type or Moveable Type — I am talking about the process of curriculum selection and development, studied in a comparative fashion.

Portuguese curriculum development is the function of the DGE, for example … In Brazil, MEC is the Big Brother of  bureaucracy and the target of heavy lobbying by publishers who seem to object to (1) diversity and (2) cultural nationalism.

The audience for Abril educational materials, for example, will likely be students at something like a charter school, if only standards and practices could be achieved that make this model lucrative to private investors.

The governmment, meanwhile, wants to spend education dollars — reais — on literacy programs guided by egalitarian assumptions.

And an end note: A fellow reader of Luis Nassif notes a youth-oriented propaganda-advertising campaign by Wise Up, an English-language school now part of the Civita empire.

 Wise Up … was a financier of the June protests on the social networks. With the support of the ex-owner of the school, AnonymousBR exhibited ithe school’s advertising videos on Facebook. It was at this point that the protests based on the Free Pass public transport subsidy veered to the right and morphed into the famous “nonpartisan” message.

As I remember the chant, it was something like: “The people, united / have no need of the State”

It takes us back to the famous Marx-Bakunin rift, in which the latter argued that anarchosyndicalist structures should supplant the state as the method of realizing socialism.

Colombia | Letters From the Kremlin

El Tiempo has adopted the bright, variegated color scheme of other clients of Innovation International Media Consulting — a Web design powerhouse

Observatório da Imprensa reprints a Portuguese-language version of a fascinating article on the heroic age and the current evolution of the Colombian press — one of the most technically competent and editorially courageous press corps in the world, given the constant threat to the physical safety of its professionals.

Semana, El Tiempo, El Espectador — all remarkable publications, as TV and Radio Caracol are excellent broadcasters.

Unfortunately, the English original is situated behind the FT paywall, and the article is too extensive to translate fully — you don’t want to haggle with the FT over fair use. I will reuntranslate a selection detailing concentration of media ownership that Brazilians should find familiar, so to speak.

Translation: Jô Amado

Rewrite:  Larriza Thurler

Author: John Paul Rathbone [“The history and politics of Colombian media,” Financial Times, 4/6/2013]