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Siemens & The Grand Solution | Folha de S. Paulo


The Folha de S.Paulo has taken criticism for failing to follow up on its coverage of the Siemens cartel scandal.

It follows up today with an infographic-driven story that advances the plot somewhat, with the introduction of a fresh levy of documents. Other major news organizations continue to lay off the story.

German multinational Siemens has presented Brazilian officials with documents in which it affirms that the government of São Paulo knew of and gave its official guarantee to the formation of a cartel in auctions for railway projects in the state.

The negotiation with representatives of the states, Siemens said, is represented in “diaries” which the company delivered to Cade, the antitrust authority.

Last month, the engineering giant blew the whistle on  the existence of a cartel — in which it took part — for the purchase of railway equipment and the construction and maintenance of commuter rail and subway lines in S.  Paulo and the federal district.


In exchange, the company signed a plea bargain document that could grant it leniency in the event the cartel is confirmed and punished.

The formation of a cartel for Line 5 of the S.Paulo subway, Siemens says, took place in 2000, when the state was  governed by Mário Covas, who died the following year.

Cade says that the collusion continued through the governorship of  Geraldo Alckmin (2001-2006) and the first year in office of José Serra, in 2007.

Secretary of transport during the Covas administration, between 1995 and 2001, Cláudio de Senna Frederico stated he had no knowledge of the formation of a cartel, but that he did not discard the possibility. “I don’t remember a genuinely competitive bidding process,” he said.

The Alckmin government said that, if the cartel is proven, he will call for the punishment of those involved. Serra could not be located for comment.

The Siemens document reflects an alleged guarantee by the government in favor of a an arrangement among the companies to divide up the Line 5 project, which involved a stretch currently in service.

Known as the  “grand solution,” the proposed joint action, according to the Siemens papers, was the secretary of transportation”s preferred outcome because it offered “peace of mind  in the competition.”

The scheme consisted in forming a single consortium in order to win the bid, which would then subcontract to losing bidders. This is, in fact, what actually happened.

In the document, dated February 2000,  Siemens execs describe planning meetings  for the scheme.

In one such meeting, it is reported that “supplying  the train cars was organized as a ‘political’ consortium, so the price was very high.”

“A consortium agreed upon beforehand, then, is a very good thing for all parties,” says one Siemens exec.

Siemens said that an illicit accord allowed it to inflate by 30% the price paid in another auction for maintenance of commuter rail trains of the CPTM.


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In the meantime, Veja columnist Ricardo Setti pleads with the news media not to turn the case into a “high-tech lynching” of the innocent.

This case is important as well because so long as generic accusations are floated about criminal misuse of public funds during the Covas and Alckmin government — who might be perfectly innocent of all of this — theirs will be the only names in the spotlight.

Coming from Veja — the Ku Klux Klan of media lynching — this is truly rich. As Edu Guimarães writes,

It is scandalous how the tone of this column constrasts with what the same columnist wrote about the “monthly payola” and the PT.

This is cynical in the extremee. Since when have the honorable public lives of José Dirceu or   Lula protected them from “lynchings” and “whisper campaigns” launched by this man’s big boss after the “payola” case emerged?

Lula, who has not a single ethical misdeed to his name, is treated by Setti and company as a criminal. Dirceu, not once involved in any scandal prior to the “payola” affair in 2005, was treated as guilty by Veja & Co. from the very start.

The worst thing is the way in which Setti’s modst plea for justice continues to cover for Serra, who belongs to that select group of PSDB governors who, over the past 20 years, oversaw the shameless plundering of the State and who ought to be made to answer apply the same “dominion of the fact” applied to Dirceu.

But Setti has forgotten about the “dominion of the fact”; in the case of Toucans, he calls for solid evidence while braying, “Lynching! Lynching!”

“Dominion of the fact” is a controversial legal principle used to convict Dirceu in the recent trial of AP 470, in the Supreme Court. Basically, it implies that administrative supervision of persons who misbehave makes the supervisor liable for those bad acts. Or something like that.