Development: Fernando Cavendish and Carlos Pacheco, the owner and director respectively of Brazil’s construction giant Delta Construções, stepped aside from the company on 25 April. The same day, the federal police, acting in conjunction with the federal public ministry in the state of Goiâs, arrested and threw in jail a former company director, Claudio Abreu, and issued detention orders against several other company members, civil servants and politicians in the states of Anápolis, Goiâs, São Paulo and the federal capital district of Brasília.
Significance: Delta Construções, which has 100% of its contracts with the public sector (federal, state and municipal), looks as though it could sink under the weight of the corruption and bribery allegations seeping out of the scandal involving an imprisoned businessman, Carlos Augusto Ramos (‘Carlinhos Cachoeira’, or 'Charlie Waterfall'), who is the subject of a new parliamentary commission of enquiry (CPI) into his political links. The federal police claims to have evidence that Delta was deeply enmeshed in graft through Cachoeira’s illegal gambling mafia, the proceeds of which may have been used for political bribery. Ominously for the ruling coalition, the Rio-headquartered Delta has close links both to the ruling Partido dos Trabalhadores (PT) and its main government partner, Partido do Movimento Democrático Brasileiro (PMDB), which runs Rio de Janeiro via Governor Sérgio Cabral, a very close personal friend of the 49-year old Cavendish.
Key points:
• ‘Carlinhos Cachoeira’ was arrested by federal police on 29 February on charges of running an illegal gambling/gaming hall mafia, money laundering, smuggling and active and passive corruption.
• Fernando Cavendish is one of Brazil’s best known and most powerful businessmen; Delta Construções is the biggest recipient of public works contracts/funds under the US$350bn national infrastructure scheme known as the Growth Acceleration Program (PAC). Under the PT, the company’s business with the federal government has increased an incredible 1,653%, according to calculations by the opposition weekly Veja.
• Currently, the company has an estimated 195 public works contracts in 23 states, plus the federal district. It employs 30,000 people in total (25,000 directly and 5,000 indirectly). Most of its contracts are big infrastructure projects in Rio, in preparation for the 2014 World Cup and the 2016 Olympic Games. This is not the first time that Delta has been tainted by graft allegations, though never before has it been the subject of such intense official scrutiny. According to a local NGO, Contas Abertas, which independently monitors federal government expenditure, Delta has been awarded PAC contracts worth R$4.3bn (US$2.28bn) in the past two years, of which R$3.0bn (US$1.6bn) has been disbursed to date. Contas Abertas estimates that the firm has already received R$151.6m (US$80.6m) from the union to date in 2012.
• Delta last week abandoned the consortium working on the refurbishment of the famous Maracanã football stadium in Rio. The remaining stakeholders, Odebrecht Infrastructure (49%) and Andrade Gutierrez (21%), will likely assume Delta’s remaining 30% share and the works should not be affected. Local press reports suggested that Delta was forced to withdraw due to debts it racked up from involvement in part of the illegal gambling mafia run by ‘Carlinhos’.
• Depending on the outcome of an internal company audit and an official investigation by the federal comptroller general (CGU) into Delta’s activities in nine states (the state governments in Rio and Goiâs have also mounted their own investigations), the firm may be obliged to step aside from some of the other PAC works schemes, which include the construction of the TransCarioca rapid transit bus line and the Comerj petrochemical complex, both in Rio. Due for completion ahead of the 2014 World Cup, TransCarioca will link Barra da Tijuca with Galeao international airport, while Comperj is being built for the state oil firm Petrobras. With Brazil already under intense pressure to get the works for the World Cup and the 2016 summer Olympics delivered on time, this is the last thing it needs. And after the Rousseff government spent its first year mired in corruption scandals, neither it nor Brazil need the negative attention and lousy PR.
• Carlos Alberto Verdini, an engineer, takes over from Cavendish. Edyano Bittencourt replaces Carlos Pacheco. Verdini said yesterday that he would personally submit documentation to the CPI. The company later issued a statement saying it would honour all its contracts. However, the future for Delta is clearly in the balance.
Pointer: The former president and honorary PT president, Lula da Silva (2002-2010), spent four hours in talks with his successor, Dilma Rousseff, yesterday as part of efforts to formulate a united PT position ahead of the CPI. The PT governor of the federal district, Agnelo Queiroz, may be implicated with ‘Carlinhos’. Another worry is the relationship between ‘Carlinhos’, Delta and the former director of the national department for infrastructure and transport, Luiz Antônio Pagot. Pagot was forced out in July last year amid bribery allegations. In a press interview last week (20 April), Pagot said he was forced out to protect ‘Carlinhos’ and Cavendish.
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