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Siemens | Line 5-Lilac and The Uruguayan Connection


The principal ledes this morning on the Siemens affair are the vehement denials of the State government that it knew anything about a public transport cartel operating in São Paulo state from 1998 to 2008.

This is Folha’s top right-hand story and carries over into the Cotidiano section rather than being amplified on the Poder page, page A4, as usual for high-profile stories. In the back of the book, the paper presents an excellent infographic summarizing the story so far on page C3.

The Estadão, on the other hand, says it has access to new documents in the case.

By: Bruno Ribeiro e Marcelo Godoy

The [state] government allegedly spent 30% more than it could have on five auctions subject to fraudulent dealings, according to documents obtained by the Estado. The first contract divided up among subway contractors was Line 5 of the S. Paulo Metrô [above]

The governments of  São Paulo and the Federal District may have spent up to 30%, or R$ 577.5 million, more than necessary on five contracts suspected of formation of a cartel by domestic and foreign companies. The alleged fraud was reported to CADE, the antitrust authority , by Siemens. Documents obtained by the Estado show how these contracts amounted to a R$ 1.925 billion in current values.

The  Estado contacted the companies for comment, but only 9 of the 20 responded. In a note,  Siemens said that since 2007, it has made an effort to improve its management and cooperate fully with investigations. In all, 44 executives  — ranging from to managers — of  11 countries were accused of participating in the preliminary talks held to prevent the dispute over contracts from leading to lower prices than those offered by the companies.

According to the documents to which the Estado had access, the group considered itself “bulletproof” with respect to at least one of its contractors: the Companhia Paulista de Trens Metropolitanos (CPTM). The suspicion is that civil servants received bribes in order to overlook the formation of the cartel during the Toucan (PSDB) governments of Mário Covas (1995-2001), Geraldo Alckmin (2001-2006) and José Serra (2007-2010).

The Siemens papers show that one of its executives kept a diary in which he wrote, on July 8, 2002: “So long as Alstom maintains a price higher than the price offered by Siemens, and the CPTM blocks any attack,  Siemens will emerge the winner.” This is a direct reference to the negotation over the awarding of a maintenance contract for Model S2000, S2100 and S3000 trains.

In addition, the list of corrupt bidding processes includes the supply of material to the subway’s a Line 2 between Ana Rosa-Ipiranga; For Line 5 between Largo 13 and Santo Amaro; for the maintenance of Model  S2000, S2100 e 3000 trains; for the maintenance of trains in the CPTM Boa Viagem project — worth R$ 276 million — and for the maintenance of subway trains in the Federal District.

In a sixth case — the maintenance of trains for CPTM Projects 320 and 64 — the cartel did not succeed because CAF of Spain, one of the companies accused in the scheme, did not come to an understanding with the cartel and won the auction with the lowest price.

Employees. The cartel’s activity also incuded Line 4 of the São Paulo Metrô. The talks among the contractors began after Siemens hired two employees of the French multinational, Alstom.

According to a document in the possession of CADE, on of these employees  “had technical training in the maintenance of commuter rail and subway and, at the time of the bidding process worked in maintenance on the Federal District subway, a service provided by Alstom, IESA e TCBR”.

Because the public notice of the auction demanded “that the winning bidder present qualification,” which these two employees possessed, Alstom had to come to terms with Siemens. In exchange, Siemens was subcontracted for the work on Line 4.

The agreement among the companies was that two consortia would dispute the contract. They were to offer prices between 94.5% e 95.0% of the sum expected by the Distrito Federal. The winner would subcontract the loser by as much as 48% of the contract, worth R$ 77.3 million (R$ 103.4 million in current values).

Compromises. Along with e-mails and the executive’s diary, CADE and state and federal have in their hands the depositions of six Siemens execs,  who confessed the formation of a cartel between 1998 and 2008.

The first contract divided up among the companies was Line 5 of the CPTM. The planning of the operation was carried out in meetings at the offices of Mitsui and TTrans, in São Paulo. Between June 1 and June 6, 2000, the Sistrem consortium was established. Sistrem included all the companies that had be pre-qualified by the CPTM to furnish railway materials to the state government.  These companies  decided the amount that each of them would bid.

The same method was used in the first train maintenance contract: The winners were the Cobraman consortium (Alstom, Bombardier and CAF), which obtained the contract for the Model S2000 trains; Siemens (Model S3000); and the Consmac consortium (S2100), comprising Alstom and CAF, which subcontracted Bombardier,  Mitsui and Temoinsa of Chile.

Serra Denies Knowledge

Former São Paulo governor José Serra (PSDB) issued a press release on Friday regarding accusations of a supposed cartel composed of suppliers of the Metrô subway and the  Companhia Paulista de Trens Metropolitanos (CPTM) metro trail sytem in the public tender of projects realized by these companies during PSDB state administrations.

Serra said … that his government (2007-2010) was never aware of any cartel, “much less giving it official backing.”

The Toucan politician endorsed the statements of the state government, which on Friday accused antitrust authority CADE, an independent agency with ties to the Ministry of Justice, of practicing “selective leaking” of information on a current investigation  …

SIemens Denies Leaks

According to Globo, SIemens denies being the source of any leaked information on the case, while CADE says that only the interested parties have had access to the documentation.

More Details

The Agência Estado — ESP’s answer to Reuters and the AP — offers a little more detail. Why am I not reading this in my home-delivered copy of the ESP? The Folha, which we get delivered on the weekends, just  bugs me.

The São Paulo state prosecutor has in its possession documents indicating the alleged payment of bribes to the directors of the São Paulo subway and commuter rail line. The documents were created by offshore corporations in Uruguay: Leraway, Gantown and MCA. The three companies were allegedly used by  Siemens AG and  Alstom in order to obtain contracts with the São Paulo government.

An Alstom director for  the transport sector and his colleagues at Siemens reportedly participated in the negotiations. The companies say they are cooperating with authorities …

The commissions paid to civil certains amounted to 8% of the value of the contract to building the subway system’s Line 5-Lilac. There are reports of supposed payoffs in a contract to renovate CPTM cars that counted on the participation of the another supposed participation in the cartel denounced by Siemens and CADE.


Source: Folha de S. Paulo

CPI Called For

The minority in the state assembly is trying to get enough signatures to open a CPI — parliamentary commission of inquiry — on the case.

Of the 94 state assembly members, most support governor  Geraldo Alckmin while only 24 act in opposition.

“We are now collecting signatures. We have 25 and we need 32,” said the party leader in the state assembly. The main obstacle to the probe are the house rules, which permit only five CPIs to function at the same time. This number has been reached. The assembly is busy with CPIs such as “predatory fishing,” “abusive telemarketing” and the “cartelization of auto part.””.

To get around this formal obstacle, the PT also plans to introduce a draft resolution amending the house rules to allow a sixth CPI. The plan has run aground due to opposition by the governor’s political base in the assembly, which enjoys the majority.