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Tuesday, December 6, 2016

Brasil Probes Alleged Bid Rigging Of Football Stadium Contracts

Brazil probes alleged bid rigging of football stadium contracts

Construction groups investigated over contracts at sites leading up to 2014 World Cup
Brazil’s antitrust watchdog is investigating allegations that a cartel comprised of the country’s leading construction groups rigged the bidding for billions of dollars of stadium contracts for the 2014 World Cup
The competition regulator, Cade, said it had signed a leniency agreement with one of the alleged cartel, Andrade Gutierrez, in return for the construction company revealing details of the group’s activities. 
“At least five tenders in relation to civil construction [and] projects for the modernisation and/or renovation of football stadiums were the objects of anti-competitive conduct,” Cade said in a document outlining the alleged offences. 
The alleged misconduct follows mass protests ahead of the World Cup by millions of Brazilians against public spending on the event given the lack of adequate government services in the country, especially schools and hospitals. 
The mass protests contributed to the fall of former leftist President Dilma Rousseff, who was impeached in August for manipulating the budget, by undermining her once soaring approval ratings. 
Last month, police placed former Rio de Janeiro governor Sérgio Cabral under preventive arrest, alleging that he had received as bribes a percentage of the total cost of works to improve the Maracanã stadium where the 2014 World Cup final was held. He has denied wrongdoing.
At least five tenders in relation to civil construction [and] projects for the modernisation and/or renovation of football stadiums were the objects of anti-competitive conduct
Cade, competition regulator
Anger over the World Cup has also hardened resentment of the country’s political classes, with up to 400,000 people in São Paulo and other cities protesting at the weekend over lawmakers’ attempts to pass a law shielding them from corruption investigations. 
Cade alleged that construction companies involved in the bid rigging also included Carioca Christiani Nielsen Engenharia, Construções e Comércio Camargo Corrêa, Construtora OAS, Construtora Queiroz Galvão and Odebrecht Investimentos em Infraestrutura. 
The five stadiums included the Maracanã in Rio, the Arena Pernambuco in the northeastern city of Recife and two other unnamed stadiums. The group allegedly had designs on a fifth, the Mineirão in Belo Horizonte, site of Germany’s 7-1 win over Brazil, but were forced to abandon them when the tender conditions changed. 
Cade said the investigation originated from a bigger probe into corruption at state-owned oil company Petrobras, in which politicians allegedly colluded with construction groups and former company executives to extract bribes and kickbacks. 
The cartelisation of the World Cup projects took place in two phases, Cade alleged. First, on the country winning the right to stage the event in 2007, big construction groups jostled to divide the works in each city between themselves, often agreeing to form consortiums. 
Cade described this as the “preliminary anti-competitive agreement”. 
“It’s worth highlighting that the preliminary agreement depended on the political influence of each company with the authorities of each state of the federation that had the power to decide the winners of the tenders,” it said. 
In the second phase, they allegedly established unofficial agreements, specifying how the cartel would work, with one company or consortiums putting in a winning bid and others putting in “dummy” bids. 
For example, Cade described how Andrade allegedly put in a dummy bid for the Arena Pernambuco while Odebrecht lodged the knockout bid. Odebrecht did the same for Andrade in another unnamed stadium tender. 
Cade said Odebrecht and Andrade also occupied the same office building in Rio de Janeiro, “facilitating direct contact between staff of the groups without necessitating prior appointment”. 
OAS declined to comment. 
Camargo Corrêa said it had signed agreements to co-operate with the public prosecutors’ office and Cade and “reiterated that it did not participate in any stadium project for the World Cup”. 
Queiroz Galvão said it did not comment on investigations while they were under way.
Odebrecht and Carioca did not respond to a request for comment.