HUNTING WHITE ELEPHANTS / CAÇANDO ELEFANTES BRANCOS

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11 February 2011

World Cup FAIL

What is it about Rio de Janeiro that makes everything just a little more complicated than it has to be?  Is it possible that Jared Diamond’s environmental determinism has some merit? Why aren’t the football fans in this city totally revolted by what is going on?

O Maraca já era. Foto Raul Melo Neto.
The BIG NEWS coming out of the TCU (Federal Accounting Authority) is that the Novo Maracanã project is being carried off in R$1.5 billion illegal and opaque ways. There’s no surprise but to hear the same thing that I have been saying come from the very government that is financing the project is both refreshing and sad, as there is basically nothing that can be done about it. Why? Because the TCU has no power to initiate legal proceedings. Those must be taken up by the Ministério Público (Public Prosecutor). There, a very ambitious, brave, or stupid lawyer would have to get permission from her higher ups to initiate legal proceedings against the government officials in charge of the project. There is simply never going to be enough political cover for a lawsuit to be brought to bear, so while the TCU can make recommendations and use strong language, it’s very unlikely that the jeitinho is going to change. 

Let’s look at some of the details of the TCU’s report culled from a dozen different news sources (I have not yet been able to find Valmir Campelo’s relatório on the Byzantine TCU webpage, any help appreciated).
The report was firm in declaring that the Maracanã  contract process was completely opaque and that the budget “borders on complete fiction”. The TCU highlighted the fact that while the Minerão project in Belo Horizonte presented 1309 architectural drawings and the Verdão project in Cuiabá presented 702, the Maracanã presented 37. Thirty-seven drawings for a R$709 million project!?#!@$%!?  Fala sério. In the budget for the Maracanã, “multiple items are included multiple times, there are innumerable opportunities for inflationary costs to be written in, and items included in the engineering budget have nothing to do with engineering.” Pah! Ha ha ha! Tão de brincadeira?

This is what one gets when you take the same people that managed a 1000% cost overrun for the Pan American Games, give them more power, more money, less public accountability, and fewer transparency mechanisms. The TCU, which condemned Ricardo Leyser (head of the Pan construction projects and now head of the Empresa Brasil 2016, responsible for using R$30 billion [the initial Olympic budget, sure to double] to transform Rio de Janeiro forever), noted in their report that there is a risk of “added contractual costs, over-charging, un-necessary projects, and emergency contracting procedures that will follow in the pattern of the Pan 2007.” The report cites the case of the Nova Fonte Nova in Salvador, whose price went from R$ 400 million in 2009, to R$ 591 million in 2010, to an estimated R$ 1.6 billion in 2011. Tão de sacanagem, sim.

The TCU also confirms my suspicions about Orlando Silva’s renewed position within the Ministry of Sport saying,  “there are indications of a possible lack of accompaniment on the part of the Minister, a characteristic that will make controlling the projects more difficult.” Initially, Silva was nominated as a potential head for the APO (Public Olympic Authority, which will employ Leyser’s BRASIL 2016) but after some negotiation he remained in his post as MoS because the powers behind the powers know they can count on him to turn a blind eye to the proceedings.  

What the TCU report does, in addition to bringing to light what everyone has known all along, is warn the cities that they may actually be held accountable for what they are or are not doing. The very same TCU minister that produced this most recent report warned that Fortaleza is in serious danger of having their World Cup Host status revoked. The main issue cited is the forced removal of communities that are “in the way” of transportation lines designed to bring tourists from the beach to the stadium. As I have mentioned in other posts, the Fortaleza project is more about massive real-estate projects than anything else, as a massive residential complex is in the works right next to the suburban stadium. FIFA only ever asked for 8-10 cities, so there is a real possibility that one or two cities are going to fall off the World Cup map.

So what is going to happen now? The TCU has asked that BNDES, the Brazilian National Development Bank, suspend 80% of the financing for the Maracanã until SEMOP (Municipal Works Secretary), SUDERJ (State Sports Secretary), and Rio 2014 (the consortium of Rio’s big boy construction firms) can find a way to make their jogo-do-bicho a little more palatable to government authorities. BNDES has opened R$ 400 million in financing for all of the World Cup cities, a massive stimulus for the funneling of public money to private interests.

In the meantime, nearly all of the games of the Campeonato Carioca are being played at the Engenhão. Indeed, all of Rio’s teams are going to be playing their big matches in Engenho de Dentro until 2016. Once the Novo Maracanã  is finished, sometime towards the end of 2013, it will be used sporadically for clássicos in order to test new security systems and general functioning in the months leading up to the World Cup. After the World Cup, the stadium will undoubtedly suffer more investments in preparation for the 2015 Copa América and 2016 Olympics. Then, when Rio’s real-estate bubble bursts and the only people who can afford tickets to the Novo Maracanã are jumping off of their coberturas, who will go to the games? Not that the teams really want fans to go anyway as only 8% of their income results from ticket sales. (Last year, Flamengo offered tickets for R$10, filling the Fechadão and recording their highest receipts of the year, yet the club said that this was not a viable economic model because, “it’s complicated”) .

In other fun news that I culled from the TCU webpage, two of the major infrastructure works being planned for the World Cup have been paralyzed for lack of transparency in theitr contracting process. Rio Metrô has had their Linha 3 project stopped and São Paulo’s Garulhos (international) Airport has been halted. Here are the links: https://contas.tcu.gov.br/pls/apex/f?p=2207:4:4926169036331711::NO::P4_COD_OBRA:611

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