The Return of Passe Livre

Source: Viomundo

The Free Pass Movement — Movimento Passe Livre  (MPL) — has announced that it will take to the streets again on August 14.

The group will hold a demonstration in partnership with the Metrô Workers of  São Paulo and is motivated by the bribery scheme embodied in the contracts of subway and metro rail public works, which may have cost the public coffers as much as R$ 400 million. The scheme, which functioned during [successive] governorships of the PSDB, was denounced by the multinational Siemens.

“Our position is that it is absurd for public money to be funneled out of the transportation budget. R$ 400 million was diverted. This amount would be sufficient to lower the standard fare to R$ 0.90,” said Matheus Preis, an activist from the  MPL São Paulo chapter.

MPL is a very capable pressure group.

Alckmin The Invisible

Source: Brasil 24/7

Over the past two weeks,  Istoé magazine dedicated its cover story to the scandal of the São Paulo subway. In the first edition, it obtained the testimony of a former Siemens employee, who revealed how bribes were paid during PSDB state governments. More recently, it reveals that projects were overbilled by a total of  R$ 425 million.

How many seconds do you think the Jornal Nacional dedicated to this story? How many lines in the Estado de S. Paulo? How many in the Folha, which broke the story in the first place?

Answer: None. Why do you think that is?

247 – Two weeks ago, on July 14, the Folha de S. Paulo introduced Brazil to the   Siemens affair.” It reported that the German engineering giant had admitted to taking part in the formation of a cartel in an auction for subway equipment, and has now accepted a plea bargain to reduce its liability.

In the days that followed this scoop, the Folha, oddly, removed its team from the field and published no more stories on the topic.

Istoé, published by Editora Três, has dedicated its most recent two covers to the topic. The magazine obtained a statement from an ex-employee of  Siemens, who revealed the name of the company that received the bribe: MGE, which said it acted in the name of the PSDB governors (more here).

In exchange for the bribe, it was of course possible to sell the equipment at a higher price. In its latest cover story, Istoé estimated the loss to S?o Paulo taxpayers and subway riders of R$ 425 million o (enough to support any number of  ”payola” schemes. )

With that, some interesting questions come to mind.

1. Why did the Folha not follow up on the story?
2. Why did competing papers, such as the Estado or Globo, decide not to follow the story?
3. Why did the Jornal Nacional not dedicate a single second to the story?

Each news organization adopts its own criteria. But the fact is that S. Paulo governor Geraldo Alckmin was successfully  shielded thanks to the mainstream media. And why might that be?

A selection from the IstoÉ report follows.

MGE was frequently used to pay bribes. In this case, as was customary, MGE was in charge of paying a bribe  of 5% to the directors of the CPTM, as the source told the state prosecutor and the Siemens ombudsman.  According to this testimony, one of those involved in the schme was MGE director Ronaldo Moriyama, whom the whistleblower described as “well known in the railway sector for his aggressive approach in matters of bribes paid to people from the S. Paulo subway and the CPTM.” Also involved: Carlos Freyze David and Décio Tambelli — ex-president and ex-director of the S. Paulo Metrô, respectively — as well as Luiz Lavorente, ex-operations director at the CPTM, and Nelson Scaglioni, former maintenance manager for the Metrô.

Scaglioni, said the witness, “has been on the MGE payroll for ten years.” “He controls various auctions, such as the lucrative deals for renovating the Metrô`s traction motors … In charge of receiving bribe money and funneling it to authorities was Lavorente. “He himself said that the sums were paid exclusively to PSDB politicians and members of allied parties.   The MO Siemens used based on MGE Transportes was also practiced by another firm, Mitsui of Japan, the witness said.  …

Along with subcontracting companies to simulate the provision of services and serve as a funnel for public funds, money from the bribery scheme in force in S. Paulo during the PSDB governorships flowed from offshore transactions. In this aspect of the scheme, the bribes circulated among the accounts of persons and companies in fiscal paradises before reaching the payee. In one such deal …  lobbyists  Arthur Teixeira and Sérgio Teixeira were involved through their respective companies — Procint e Constech  — and their  Uruguayan offshore subsidiaries — Leraway Consulting S/A e Gantown Consulting S/A. In this particular case, the bribe was paid because Siemens, in partnership with Alstom  and one of the members of the cartel reported to CADE, won the bid to build Line G of the CPTM. The deal involved a 5% rake-off to the lobbyists and a 7.5% payment to PSDB politicians and railway executives. “Siemens AG (Germany) and Siemens Limitada (Brasil) signed a contract with the offshores, Leraway and Gantown providing for the payment of a commission,” the whistleblower said.. The meetings at which distribution of bribes were discussed, he adds, were held at fancy S. Paulo night spots.  Allegedly, the cartel was to include  Alstom, Bombardier, CAF, Siemens, TTrans and Mitsui. It was up to Mitsui, director Masao Suzuki to keep the document that established the scope  of the deal and the prices that would be proposed during the auction.

Once the cartel was formed, the members began to negotiate prices among themselves and conditioned the defeat of one group on latter‘s victory in a future auction. Another strategy was the condition that the winner determined beforehand would subcontract one of the losers.  So shameless were these deals that they were often executed during meetings at the headquarters of one of the companies and forwarded by e-mail.

Early this month, Cade organized a search and seizure operation in the offices of the companies involved. [Operation Crossed Wire] served warrants in several cities near S. Paulo and Brasilia. At one site, the PF agents spent more than 18 hours collecting documents.

When Siemens outed the scheme, it signed a kind of plea bargain agreement that may confer immunity on the company and its executives if the case is prosecuted successfully. … The CADE deal has been in talks since May 2012. Since then, the antitrust agency has demanded that the German firm cooperate by supplying details of the price manipulations.

Taking into account just two of the deals looked at by CADE  … Siemens and Alstom jointly took in R$ 12,6 bilhões in  2008.

”The Toucans have a sense of permanent immunity. We have been denouncing this practice for decades. I am going to file a complaint for administrative misconduct against the governor, Alckmin,“ says PT state deputy João Paulo Rillo.

Rarely has a corruption scheme survived during so many consecutive governments of a major Brazilian city, but now the defendants have confessed — in this case, through employees of the companies that colluded with Siemens — and there exists solid evidence from depositions taken in Europe and Brazil, which have resulted in at least 15 cases brought by the Sampa state prosecutor.

What is needed now is a thoroughgoing probe of the web of corruption spun by PSDB governments in S. Paulo. In the Bandeirantes Palace, governor Geraldo Alckmin has said he expects rigorous investigation and that he will seek to return the funds diverted to the public coffers. 

Market Forces on the Morro | Brasil de Fato

Source: Brasil de Fato

Militarized police state and the incursion of market forces generate new tensions in the slums

By: Gláucia Marinho e Katarine Flor

The story reminded me of the Peruvian economist Hernando de Soto Polar of the Institute for Liberty and Democracy.

De Soto`s main thesis speaks to the means of introducing workers and small entrepreneurs in an informal  economy to a formal system of legal commitments and guarantees, unleashing, he says, “an astonishing ability to wring a profit out of practically nothing (Wikipedia).”

I have always been drawn to this way of thinking — I suppose that makes me a liberal of some sort.

The problem with this model is that in real life, public agents — such as the military police who moonlight as members of militia groups — play a game of public-private arbitrage, subjecting those under their “protection” to redundant fiscal tribute to what amounts to a parallel state.