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Brazil Eyes World Cup Stadium Bid Rigging

Thursday, December 8, 2016

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Two years after Brazil hosted the World Cup soccer tournament, regulators in that country say a “cartel” of large construction contractors colluded to fix bids and inflate contracts for the building and renovation of stadiums used for the event.

Maracana Stadium
By Daniel Basil, CC BY 3.0, via Wikimedia Commons

The bid-fixing allegedly included jobs related to work done on Rio de Janeiro’s Maracana Stadium, originally built in 1950 and used in that year’s World Cup.

According to Financial Times (subscription), an antitrust regulator called CADE made a deal with one large construction firm, Andrade Gutierrez, in which the agency promised leniency if the company shared information about the dealings. CADE said in a filing that “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.”

Large Firms Named

Other firms named as alleged participants in the scheme include Carioca Christiani Nielsen Engenharia, Construções e Comércio Camargo Corrêa, Construtora OAS, Construtora Queiroz Galvão and Odebrecht Investimentos em Infraestrutura. Odebrecht allegedly had offices in the same building as Andrade Gutierrez, making direct meetings between the two firms possible.

The bid-fixing allegedly included jobs on Rio de Janeiro’s Maracana Stadium, originally built in 1950 and used in that year’s World Cup. Maracana was also used for the opening and closing ceremonies at this year’s Olympic Games. Also reportedly involved were contracts related to Arena Pernambuco, in Recife.

Investigation Stems from Petrobras Scandal

The revelations came from an investigation related to corruption allegations at Petrobras, Brazil’s state-owned oil company. Some of the same firms, including Andrade Gutierrez, were fingered in that scandal, and some of their executives have faced jail time for it.

Arena Pernambuco
By Portal da Copa/ME, CC BY 3.0, via Wikimedia Commons

Also reportedly involved in the collusion were contracts related to Arena Pernambuco, in Recife.

In the Petrobras scheme, similarly, construction companies were said to have colluded with one another and with Petrobras officials to inflate bids, with money from the contracts shared by Petrobras and government officials in addition to the contractors. One Petrobras official made $100 million through the kickback system, reports said.

Fines Possible

The alleged World Cup bid-rigging took place between 2007 and 2011, in the lead-up to the 2014 tournament. Several of the companies accused have told media outlets they could not comment on the investigation; one, Carmago Corrêa, told the Financial Times that it was cooperating with the investigation and that it did not participate in any World Cup stadium projects.

According to reports, if the companies are found by CADE’s antitrust court to have engaged in wrongdoing, they could be fined up to 20 percent of their gross earnings.

   

Tagged categories: Construction; Contractors; Contracts; Criminal acts; Ethics; Stadiums/Sports Facilities

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