A draft-quality translation of a modest text by Nassif. I expect he will update it shortly.
To understand the Siemens case — accusations that the company paid bribes in auctions held by the subway companies of São Paulo and Brasília — the first step is to properly identify the actors in the case.
At practically every level of government — from the federation to the townships — obscure relations between suppliers and the government continue to exist, and their protagonists are readily identifiable.
The first important player is the operator of a public service, the civil servant who knows how to exploit loopholes in the law to the advantage of the government of the moment.
The second most important figure is the lobbyist, a figure outside the political machine who interfaces with the civil servant (or elected official) and the company that serves as the corrupting influence.
The third player is the bribe payer, the company that pays to obtain advantages in the determination of public contracts.
The fourth player is the political operator — the representative of the government responsible for negotiating the final details.
The fifth player is the minister of state, governor, or mayor in office at the time, along with their respective secretaries.
The existence of a cartel operating in São Paulo has been known for years. In 2008, the state accounting tribunal (TCE) questioned a purchase of trains, with a competitive auction, by the metro rail company CPTM. The winner was the Spanish firm CAF. In order to exempt itself from the auction, CPTM presented a report on the syndicate of the railway construction sector. The reort was approved by all the major competitors.
In any advanced economy, accords of this kind, sanctioned by an industry syndicate, would be taken as prima facie evidence of the operation of a cartel. At the time, however, the state prosecutor considered the document legitimate and sufficient to cancel the bidding. The TCE apparently agreed.
With few prosecutors assigned to these cases — most of the charges were archived — and with a sluggish TCE, together with a captive legislative assembly and the major newspapers closing their eyes to these goings-on, the scheme went further than prudence would advise.
The German firm Siemens and the French Alston had been pressured by authorities in their home countries to institute “compliance” — that is to say, a set of practices that would permanently do away with illegal activities abroad. In the U.S, other structures were instituted in order to inhibit corporate malfeasance.
This adjustment of corporate conduct emerged after it was learned that both companies were encouraging their foreign affiliates in emerging nations to pay bribes to obtain major projects. These practices generated a mountain of scandals and both companies were obliged to promise, in court, that they would do away with this practice.
But they didn’t do away with it.
Caught red-handed once again, there began an internal investigation into who was responsible. The first to fall was Siemens Brasil president Adilson Primo, suspected of abusing the lack of accounting oversight for his own ends.
In trouble again, Siemens sought out officials from the antitrust agency CADE and proposes a leniency contract — a type of plea bargain.
It was at this point that the investigations resumed.
Filed under: Brazil