KEIR RADNEDGE REPORTING —- The opportunities offered by the World Cup for bribery and corruption have been illustrated starkly by the whirlwind of scandals spinning FIFA at breakneck speed towards threatened self-destruction.
The 2014 World Cup was a case in point. Brazil did not need 12 venues; eight or nine at most. The original local organising president, notorious Ricardo Teixeira, did not need to send matches north-west up into the Amazon Basin to Manaus or to Cuiaba in the far east.
He did not need to send the finals draw to a luxurious but out-of-the-way resort an hour’s drive north of Salvador.
Yet he did all that. The under-the-table deals which sent fans from all around the world traipsing all around what is, effectively, a continent in its own right, have yet to be revealed.
For FIFA, how the Brazilians chose their venues and – more to the point perhaps – why they chose those particular venues, was immaterial. That was Teixeira’s business.
His old friend Jerome Valcke, FIFA’s secretary-general but the man who had been handsomely rewarded for preparing the bid book in a previous life, was happy to leave him carte blanche.
That was either short-sighted or worse. The more venues Brazil chose the more FIFA would struggle to kick local work along. But then, that would be all the fault of the Brazilians, not FIFA.
In the meantime the manner in which money and business were laundered at the next stage down the greed-feed chain has been set out – among other scandals – in the latest book from Brazilian journalist Jamil Chade of Estadao.
Cynics might say it’s not so much a story of the murky side of football business as a miscrocosm of how Brazil works, or doesn’t work (or both).
Chade, a former chairman of the Foreign Press Association in Switzerland, has drawn on his unique role as a journalistic bridge between Brazil and ‘FIFA-land’ in Politica, Propina e Futebol (Politics, Bribes and Football) published only (so far) in Portuguese by Objetiva.
Chade examines the always-evident white elephants from Brasilia to Manaus, the financial albatross hanging around the neck of even Maracana and the kickbacks and subsequent arrests and police raids visited upon the likes of Natal, Recife and Salvador and the virtual construction monopoly enjoyed by Odebrecht.
The trouble is, as Chade notes, once the World Cup circus has left town the world focus moves on. Now it’s all about Russia and Qatar. Brazil? That was yesterday’s game.
From Politica, Propina e Futebol*
Chapter 13: The Day After
July 26, 2014 – Mané Garrincha Stadium, Brasilia
A few days after the final of the World Cup, the most expensive stadium in Brazil and the third most expensive in the world received another event: one hundred couples held their wedding party at the stadium which had served as one of the main stages for the World Cup.
The event was broadcast by TV Globo, which paid part of the World Cup rights and erased any criticism of the event. In the report, the TV insisted that the collective marriage had been a “great emotion” and that the stadium had created new opportunities.
With only two teams and both playing fourth division of Brazilian football – Brasiliense and Luziânia – the Federal District became the image of the World Cup scandal and his non-existent legacy.
Months after the World Cup Final, the lack of games at the stadium obliged the government to transfer part of its bureaucracy to the Mane Garrincha and occupied the rooms with their different departments.
Outside, the place was turned into garage for city buses. One year after the World Cup, the deficit of the stadium was more than R$3.5m.
The reality is that the costumes have been removed, FIFA has folded the circus tent and now prepares its next venture: in Russia in 2018.
A sports depression took over Brazil after the national championship with its absent public and their missing star players returned to occupy the millionaire arenas used at the World Cup. The illusion created by the World Cup was over.
If FIFA made record income at the event, the situation of Brazilian stadia is radically different. Two-thirds of the 12 arenas ended the first year with debts totalling R$120m (almost US$30m) and, worse, with no prospect of recovering the money invested.
In Manaus, the Amazonian teams have avoided using the stadium for the state championship games. The Arena, which cost $670m, needs R$700,000 per month in maintenance. But between the end of the World Cup and February 2015, the stadium staged only seven games and the upkeep exceeded R$2.7m in one year. On average, the 2015 football championship Amazonas recorded a mere 659 people per game.
In Natal, the ABC club broke an agreement with the consortium that manages the Arena das Dunas. A contract provided that the derbys were held in the stadium but, in early March, the match between ABC and America was held at another location, the Frasqueirao.
America kept their games at the Arena, but in seven matches, the average public was of only 3,500 per game – 10pc of stadium capacity.
Even Maracanã struggles to contain the financial deficit. To generate a benefit for administrators, the stadium needs at least 30,000 fans per game; in the state championship in 2015, the average attendance was no more than 3600 per game. In the case of Flamengo, the average is 16,000. Result: a debt of R$77m in the first year after the World Cup.
In January 2015, the Pantanal Arena was forced to close its doors for an “urgent” reform.
After the event in Brazil, the World Cup was followed by a series of allegations and investigations into the costs of works and contracts. One year after the end of the event, federal police launched the Operation Fair Play, using ironically the slogan FIFA calling for ethical behavior of the players on the field during the World Cup.
In August 2015, the authorities announced the investigation of evidence that the Odebrecht construction company has won the tender for the construction of the Arena Pernambuco thanks to a fraud and a overpricing of R$42.8m in the works.
The suspicion was that public officials were bribed to favour the one particular developer.
Despite high costs, Recife ended up with only five World Cup matches, including four during the first phase.
“We have indications that there was overpricing “, confirmed the Federal Police Chief Marcello Diniz Cordeiro. In June 2015, the president of the construction company, Marcelo Odebrecht, was arrested, accused of involvement in bribery in various projects.
Initially, the bidding was opened by the government of Eduardo Campos (who was killed in a plane crash in August 2014) and the expected expenditure was R$532m. But when the construction was done, the final bill was R$700m.
The contract also stipulated that the state government would pay back Odebrecht for 30 years for possible revenue shortfalls in the stadium site and in the projects that occur on the land next door.
The contract not only granted the right to build the Arena but also commercially explore a region in Recife. A study by the Court of Pernambuco noted this commitment meant that the state would transfer to the construction company a total of R$1.8bn in three decades.
Suspicions remain that Odebrecht allied itself to government officials in order to obtain financing facilities to build the stadium.
What the Federal Police also found was that the Organizing Committee responsible for the construction of the Arena Pernambuco was led by the person who was elected, three years later, the mayor of Recife, Geraldo Julio. The same committee included Paulo Camara, who later became state governor.
In 2009, when the contract of the stadium was being negotiated, they were respectively president and vice-president of the Steering Committee of the Arena.
But corruption suspicions existed not only in Recife. In the August of 2015, police operations seized spreadsheets and data in several Odebrecht’s offices in Brazil, to examine the costs relating to the construction of the Itaquerão, Maracanã and Fonte Nova.
The suspicions that the works at the Pernambuco Arena were not the only ones to present overpricing.
Also in August 2015, a report from the Bahia Court of Auditors revealed overpricing in the works of the Arena Fonte Nova in Salvador.
In 2010, the stadium was built thanks to a contract between the state government and a consortium that included Odebrecht and OAS. The Court concluded that, in the public-private partnership agreement, the amount transferred from the government of Bahia to the companies would realise more than R$107m a year by 2025, an amount of money considered “excessive”.
The report was delivered to the Federal Police, which began to investigate the case.
OAS, the company that administers the stadium, had its shares frozen by the courts as a result of the anti-corruption operations in Brazil, known as Lava Jato, the biggest investigation into corruption in the history of the country, and may be forced to sell its assets in the arena.
The corruption scandal also affected the Arena Corinthians, built by Odebrecht in Itaquera, in an area where Petrobras pipelines happened to exist.
The pipes were removed in February 2012, but when the police studied the spreadsheets of accounts operated by money dealer Alberto Youseff, also under arrest, they found the name of the stadium and works of the pipes mentioned.
At the end, the stadium’s cost reached R$1.3bn, more than 42pc higher than originally planned by the organizers.
At the outbreak of corruption scandals and suspicions related to the World Cup, not everyone refused to pay bribes. The engineering company Bilfinger, for example, confirmed in March 2015 that it had identified “possible improper payments” for contracts in the World Cup.
“In the course of internal investigations into potential violations, the Bilfinger has reviewed the activities of the group’s companies in Brazil for several months,” said a company statement. “After reviewing all transactions in recent years, reports indicate that the potential improper payment exist of US$1m in total.”
The suspicion was that Brazilian officials of a government agency would have collected bribes to offer contracts to the company.
In total in 2014, the company signed contracts with the Brazilian government valued at R$21.2m. In addition to the World Cup, the company provides services to Petrobras, the scanbdal-hit national petroleum agency, the Federal Senate and Anatel.
The supply of 1500 monitors and software for the Center for Integrated Command and Control cost R$13m in contracts. The system was considered one of the main legacies of the World Cup and led to the centralization of the security operation.
According to the German company, these accounts were audited by Ernst & Young and Deloitte.
“Bilfinger received inside information last year indicating that there may have been violations of ethical regulations by the group about providing monitors for the security centers in major Brazilian cities,” explained the company, through a statement.
“The company just opened a full investigation into the case. The complaint is linked to suspected bribery by Bilfinger employees in Brazil to civil servants and state officials.”
For anyone who was in the heart of the World Cup organization, the case of Bilfinger was just the tip of the iceberg of a system designed ensure profits not only for builders and for FIFA but also for accomplices, regional governments, civil servants and many intermediaries, even if it has meant wasting billions of reais and a non-existent legacy.
Brazil has undoubtedly been looted. And FIFA knew it.
When I asked FIFA president Sepp Blatter, after the last day of the World Cup, what he thought could be done with the Brazilian stadiums, he replied merely by drawing in the air a huge question mark.
When, a year after the World Cup, I asked a very senior FIFA official what it thought of empty stadiums and the legacy of debt, he just smiled and said: “It is no longer our problem.”
** Politica, Propina e Futebol (Politics, Bribes and Football) by Jamil Chade (published in Portuguese) by Objetiva.