High cost, corruption claims mar Brazil World Cup

By Bradley Brooks

Associated Press

Published: Sunday, May 11 2014 11:49 p.m. MDT

This April 7, 2014, photo show a wiew of the Mane Garrincha stadium, in Brasilia, Brazil, April 7, 2014. No World Cup project has been as criticized as Brasilia’s stadium. It’s the only arena of the 12 being built or renovated that’s not using financing from the national development bank. Every cent of the $900 million price tag comes from the coffers of Brasilia’s government. It’s that type of spending that helped send enraged Brazilians into the streets for massive anti-government protests last year, demonstrations that erupted around FIFA’s Confederations Cup soccer tournament.

Eraldo Peres, Associated Press

BRASILIA, Brazil — The cost of building Brasilia's World Cup stadium has nearly tripled to $900 million in public funds, largely due to allegedly fraudulent billing, government auditors say. The spike in costs has made it the world's second-most expensive soccer arena, even though the city has no major professional team.

Mane Garrincha stadium, which boasts 288 imposing concrete pillars holding aloft a high-tech self-cleaning roof, has become the costliest project related to Brazil's $11.5 billion World Cup. Critics call it the poster child for out-of-control spending and mismanagement, or worse.

Now, an Associated Press analysis of data from Brazil's top electoral court shows skyrocketing campaign contributions by the very companies involved in the most Cup projects. The lead builder of Brasilia's stadium increased its political donations 500-fold in the most recent election.

The financial links between construction firms and politicians add to deep suspicions among Brazilians that preparations for soccer's premier event beginning next month are tainted by corruption, raising questions about how politicians who benefit from construction firms' largesse can be effective watchdogs over billion-dollar World Cup contracts. Anger over perceived corruption helped fuel huge protests last year, and there are fears more unrest could mar the Cup.

"These donations are making corruption in this country even worse and making it increasingly difficult to fight," said Renato Rainha, an arbiter at Brasilia's Audit Court, which is investigating the spending on Brasilia's stadium. "These politicians are working for those who financed campaigns."

In a 140-page report on the stadium, the auditors found $275 million in alleged price-gouging — and they have only examined three-fourths of the project. They forecast that fully one-third of the stadium's cost may be attributable to overpricing, the largest single chunk of $500 million in suspect spending auditors have flagged in World Cup construction projects so far.

Federal prosecutors say as yet no individuals or companies face corruption charges related to World Cup work, but it could take years for official audits to be finalized and judged by civil courts, a required step before any criminal charges are filed. There are at least a dozen separate federal investigations into World Cup spending.

"Is there corruption in the Cup? Of course, without a doubt," said Gil Castelo Branco, founder of the watchdog group Contas Abertas that campaigns for transparency in government spending. "Corruption goes where the money is, and in Brazil today, the big money is tied up in the Cup."

The price of building or refurbishing the 12 arenas alone has nearly quadrupled from initial estimates, helping make Brazil's World Cup the priciest of any yet.

Funding for Brasilia's stadium relies solely on financing from the federal district's coffers, meaning every cent comes from taxpayers. The auditors' report found instances of what appears to be flagrant overpricing.

For instance, the auditor's report says transportation of pre-fabricated grandstands was supposed to cost just $4,700 — but the construction consortium billed the government $1.5 million. The consortium is made up of Andrade Gutierrez, a construction conglomerate, and Via Engenharia, an engineering firm.

The steel to build the arena represented one-fifth of total expenses — and auditors say wasteful cutting practices or poor planning added $28 million in costs, the single biggest overrun uncovered so far.

The audit questions why the consortium had to discard 12 percent of its steel in Brasilia when Andrade Gutierrez, using the same cutting methods, lost just 5 percent of steel at another stadium it helped build in the Amazon city of Manaus and virtually none at a Cup arena in Cuiaba.

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