Now Is the Opposition’s Turn to Get Involved in a Corruption Scandal in Brazil

São Paulo governor, Geraldo Alckmin

São Paulo governor, Geraldo Alckmin After the mensalão (big monthly allowance) case rocked Brazil’s ruling party, the Workers Party (PT), it seems it’s now the turn of the Social Democrats (PSDB), the main opposition party. The Attorney General’s office and the police are investigating the allegations against the PSDB and if its leaders received kickbacks from a scheme involving the maintenance of train and subway lines in São Paulo.

German company Siemens has accused former São Paulo governor José Serra and current Governor Geraldo Alckmin, figureheads of the PSDB, of allowing companies building and maintaining train and metro lines in São Paulo to form a cartel that defrauded the state of hundreds of millions of reais.

Former governor Mário Covas, under whom the cartel allegedly formed, died in 2001 and is considered an exemplary political figure in Brazil.

Serra ran twice as a presidential candidate: first against former president Luiz Inácio Lula da Silva and then against current President Dilma Rousseff. He lost to both in runoff votes. Serra has denied wrongdoing and said he knew nothing about the alleged cartel.

Alckmin, meanwhile, has said his state government is the first that has tried to investigate the claims made by Siemens.

Representatives of the PSDB told reporters that the accusations are politically motivated and believe the ruling Workers’ Party (PT) is behind them. But any evidence of wrongdoing would complicate the efforts of Alckmin to hang on to the state next year, and might divert the party’s attention away from the national campaign.

The PT, meanwhile, is battling its own corruption case, the mensalão, or monthly payments to members of Congress. Twenty five top party officials and private businesspeople have been sentenced to prison terms for organizing a vote-buying scheme during Lula’s first term in office.

The leaders of both parties exchanged accusations this week and the PT threatened to create a parliamentary commission to investigate the claims against Serra and the PSDB.

This new corruption scandal, locally known as the “metro cartel” scheme, emerged as massive protests engulf the country’s main cities. Protesters are demanding political reform, including more transparency in the way parties finance themselves.

Rousseff’s presidency has suffered considerably. A poll by Ibope showed her approval rating went from 63% last year to just 42% this month. But even with this drop, she still looks likely to win a second term in office.

Alstom Bribes

French power company Alstom paid millions of dollars in bribes to secure lucrative contracts in São Paulo state in 1998, a Brazilian newspaper reported this week. The Estado de S. Paulo cited federal police documents as saying Alstom executives were among 10 people facing charges in connection with the scandal.

Two ex-state secretaries, two heads of the state energy firm EPTE also faced prosecution, according to the report. Alstom did not comment directly on the specific allegations but insisted the firm continued to “follow a rigid code” of ethics.

The report comes five years after Brazilian federal prosecutors and authorities in France and Switzerland investigated Alstom for alleged payments of bribes to win contracts for metro equipment between 1995 and 2003.

Press reports at the time said Alstom paid 6.8 million dollars to win a 45 million dollars contract for extending the São Paulo metro.

According to the federal police documents, Swiss authorities seized €7.5 million in alleged bribe money from a joint account in the name of Jorge Fagali Neto and Jose Geraldo Villas Boas, two officials linked to the São Paulo state government and the Brazilian Social Democratic Party (PSDB).

O Estado said the bribe money was paid through offshore companies based in Uruguay and one in Brazil. The money was then laundered through accounts in Switzerland, Luxembourg, New York and Lichtentstein.

The newspaper said Fagali was specifically charged with money laundering, tax evasion and racketeering while Alstom officials were charged with active corruption, money laundering, tax evasion and racketeering.

Federal Deputy Duarte Nogueira, a senior PSDB member, flatly denied that the party, in power in São Paulo state at the time as well as now, received payoffs for public contracts, according to Estado do São Paulo.

The daily said the Alstom case had the same ingredients as those in a railway price-fixing cartel in São Paulo and Brasília, recently brought to light by German engineering giant Siemens.

Local media said that in a deal with Brazilian authorities to avoid criminal proceedings, Siemens voluntarily gave details of the price-fixing cartel.

Siemens, Spain’s CAF, Japan’s Mitsui, Bombardier of Canada and Alstom were allegedly involved in rigging prices for construction and maintenance of metro trains in São Paulo and Brasília.

São Paulo state Governor Geraldo Alckmin and his predecessor Jose Serra, both PSDB members, have been linked to the Siemens case but have denied any wrongdoing.

Mercopress

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