Part of the Administrative Centre built by two private companies between 2013 and 2014, to be the new seat of the government of the Federal District, in Brasilia. The 16-building complex with 3,000 parking spaces is not being used, due to an order by the courts, which are investigating allegations of corruption. Credit: Mario Osava / IPS

By Mario Osava
BRASILIA, Nov 21 2017 (IPS)

Two white elephants – a huge football stadium that draws almost no fans and an empty 16-building complex that was to be the new headquarters of the district government – reflect Brasília’s challenges as a metropolis, beyond its role as the capital of Brazil.

The Administrative Centre, where the 15,000 officials of the Federal District (DF), and from foundations and public companies, were to be based, was built in Taguatinga, one of the largest cities surrounding the “Pilot Plan”, another name for the planned city of Brasília, which was inaugurated in 1960, after it was carved out of the jungle.

“It would be good to have the government here, able to get a closer look at the areas where most of the population lives, generating more jobs and benefits for us,” Laura Morais, a young assistant at a hairdressing salon in the centre of Samambaia, a city next to Taguatinga, told IPS.
"It would be good to have the government here, able to get a closer look at the areas where most of the population lives, generating more jobs and benefits for us." -- Laura Morais

Inaugurated on Dec. 31, 2014 illegally, according to the public prosecutor’s office of the Federal District, the centre was left unused, pending the outcome of a judicial tangle yet to be unraveled.

If the idea were to materialise, “it would turn Taguatinga into a hellhole with even worse traffic jams, but it would boost the growth of Samambaia, which has a lot of free space and few businesses,” explained Paulo Pereira, the owner of an optical shop.

“It would also help to decongest Brasília. That is, it would be better for some, worse for others,” he told IPS before complaining about the corruption that has bogged down the project.

Former DF governor Agnelo Queiroz was accused of receiving in 2014 a bribe of 2.5 million Brazilian reais (over 760,000 dollars at present), shared with his deputy governor Tadeu Fellipelli, to promote the construction of the Administrative Centre.

The accusation came from executives of the Brazilian construction company Odebrecht, which partnered with another construction firm, Via Engineering, to build the complex, in a Public-Private Partnership by which the companies would complete the work and would be subsequently remunerated with monthly fees for 22 years.

Odebrecht, Brazil’s largest construction company, which is active in dozens of countries, reached a plea deal with the justice system to cooperate in the corruption scandal that since 2014 has led to the imprisonment of dozens of businesspersons and politicians who offered or received bribes for public contracts, especially oil companies.

Laura Morais smiles in the hairdressing salon where she works in downtown Samambaia, a satellite city of the capital of Brazil. She complains about the lack of leisure and cultural activities in the city, founded in 1989, and in others that surround the Federal District. Credit: Mario Osava / IPS

Queiroz and his predecessor, José Arruda, are in prison for another corruption case, the overbilling of the works on the Mané Garrincha stadium, which was expanded to host several of the matches for the 2014 World Cup, which took place in Brazil.

With an initial budget of 210 million dollars, its cost more than doubled, requiring an additional 270 million dollars, according to investigations by the Federal Police.

Corruption has been proven in the construction of many of the 12 stadiums used in the FIFA (International Federation of Associated Football) World Cup, but the one in Brasilia was the most expensive.

Its capacity was raised to 72,788 spectators – ridiculous in a city without a strong football tradition or clubs to justify such an investment. The average attendance at local matches does not reach 2,000 fans, the local football association acknowledges.

Maintaining this gigantic stadium costs more money to the public treasury and generates permanent losses for indefinite time.

The solution would be to turn the stadium into a cultural-sports complex, with “a museum, a library, movie theaters and conference rooms, as well as a shopping center, all related to sports,” suggested José Cruz, a veteran local journalist, with decades covering sports.

“It is not something new, but would just copy what has already been done successfully in Europe,” and in Brasilia there are great sports heroes, such as runner Joaquim Cruz and the ex-Formula 1 driver Nelson Piquet, who would attract public, he told IPS.

The Mané Garrincha football stadium, one of Brasilia’s white elephants, which is currently mainly used for its parking lot, where thousands of buses park for a good part of the day, waiting to take tens of thousands of commuters back to the dormitory cities where they live. Credit: Mario Osava/ IPS

But to do this it would be necessary to outsource or grant the contract to the private sector, because “the State has no structure to manage this type of initiative,” said the journalist.

For the Administrative Centre, the way out would also be seeking another use for the group of buildings between four and 15 storeys high, in an area of 178,000 square metres, in the middle of the most populous satellite cities, such as Ceilândia, Samambaia, Taguatinga and Aguas Claras, which have a combined population of 1.08 million inhabitants, according to the Federal District Planning Company (Codeplan).

A U.S. university, which intends to open a campus in Brazil, expressed interest in the facilities.

But the judicial situation prevents short-term solutions. Odebrecht claims to have invested more than 300 million dollars in the complex and aims to recover the investment through international arbitration.

For the current government of the DF, headed by socialist Rodrigo Rollemberg, it is not viable to change its headquarters at a cost of millions of dollars per month, at a time of economic crisis and fiscal limitations.

One option is to cancel the 2009 contract, in light of the illegalities that plagued the project. In addition to the allegations of corruption, the previous government of Queiroz inaugurated the Administrative Centre on the last day of its term, based on a permit that the courts threw out as fraudulent.

Buildings grow like mushrooms in Samambaia, the second-largest city surrounding Brasilia, which has grown by about 10,000 people each year, at a rate of at least four percent. On the left, the metro rails of the capital’s Federal District, with a capacity much higher than that in use. Credit: Mario Osava/ IPS

Queiroz and the Taguatinga local authorities responsible for the permit and named one day before it was issued, were heavily fined and banned from politics as a result of the fraud.

The scandal overshadows the problems of urban development that the Federal District faces, formed by the Pilot Plan or Brasilia, seat of the national and district government, and its satellite urban municipalities, officially called Administrative Regions.

The population of the Federal District stands at 3.04 million, according to Codeplan’s District Survey of Households, six times the number of inhabitants predicted when Brasilia was built six decades ago.

The Pilot Plan currently is home to just over 220,000 people, but offers the most and best jobs, attracting a massive influx of commuters from surrounding municipalities every morning.

Ceilandia, the largest city in the area, had a population of 459,000 inhabitants in 2015, having grown 13.6 percent in four years. In the city, 28.1 percent of the active population has a job within the Pilot Plan, while 37.3 works in the municipality itself.

Other neighboring cities have somewhat higher rates of inhabitants employed in the heart of the capital, making up the crowds of commuters that move daily to the Pilot Plan and return at night to their dormitory cities.

The thousands of buses that carry the commuters every day are parked from morning to afternoon in open spaces, such as the square in front of the Mané Garrincha Stadium, until the workers finish their shifts and return to the surrounding municipalities.

A subway, with a single 39-km line that branches off into the different municipalities, is the major mass transport project, but only mobilises about 3.5 million passengers a month, with the trains sitting idle outside rush hour.
Bringing jobs to the periphery would not be a bad idea, but transferring and centralising all the local administration to the outskirts may respond more to personal appetites than to the call for better public management, as other examples show, such as Belo Horizonte, capital of the southern state of Minas Gerais.

The American Airlines Arena, a stadium and entertainment complex in Miami, Florida, is one of the many projects carried out by Odebrecht in the United States, where prosecutors have begun to produce figures reflecting the scope of the company’s corruption. Credit: Odebrecht

By Mario Osava
RIO DE JANEIRO, Feb 16 2017 (IPS)

People in Brazil have been overwhelmed by the flood of news stories about the huge web of corruption woven by the country’s biggest construction company, Odebrecht, which is active in dozens of fields and countries.

The business empire built by three generations of the Odebrecht family is falling apart after three years of investigation by the Lava Jato (car wash) operation launched by the Federal Public Prosecutor’s office in Brazil, which is investigating the corruption that diverted millions of dollars in bribes in exchange for major public works contracts from the state-run oil giant Petrobras.The business group had created a specialised bribe department. According to U.S. justice authorities, every dollar “invested” in bribes produced 12 dollars in contracts.

Marcelo Odebrecht, who headed the company from 2008 to 2015, was arrested in June 2015 and was initially sentenced to 19 years in prison.

In October he and the company reached plea bargain deals to cooperate with the investigation. A total of 77 former and present Odebrecht executives provided over 900 sworn statements to Lava Jato prosecutors, causing a political earthquake in Brazil and throughout Latin America.

In December, the U.S. Justice Department revealed that Odebrecht allegedly spent 1.04 billion dollars in bribes to politicians and government officials in ten Latin American and two African countries, including Brazil, which accounted for 57.7 per cent of the total.

The United States is carrying out its own investigation, which could end in criminal convictions, since several Odebrecht subsidiaries, such as the petrochemical company Braskem, operate there, and their shares are traded on the New York Stock Exchange.

That is also happening in the case of Petrobras, implicated in the corruption scandal and under investigation at the initiative of shareholders in the U.S.

The U.S. and Switzerland, where banks were allegedly used to funnel bribes or launder money, signed cooperation agreements with legal authorities in Brazil, as part of the ongoing offensive against corruption in Latin America’s giant.

The impacts are overwhelming. In Brazil, the revelations about Odebrecht are expected to provoke a tsunami in the political system. Two hundred parliamentarians and government officials may have received bribes, including senior members of the current administration and legislature.

The business group had created a specialised bribe department. According to U.S. justice authorities, every dollar “invested” in bribes produced 12 dollars in contracts.

That estimate is based on more than 100 projects carried out or in progress in Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Peru and Venezuela, plus Angola and Mozambique in Africa.

Part of the Caracas valley seen from the San Agustín Metrocable, one of the many works assigned to Odebrecht in Venezuela during the government of Hugo Chávez (1999-2013), when the Brazilian company became the biggest construction firm in the country. Credit: Raúl Límaco/IPS

The arrest warrant issued by a court in Peru against former Peruvian president Alejandro Toledo (2001-2006), who has been living in the United States, and allegations implicating current Colombian President Juan Manuel Santos and Panamanian President Juan Carlos Varela, are just the tip of the iceberg.

What was revealed by Odebrecht executives and former executives, as well as former directors of different departments, such as external affairs, infrastructure, industrial engineering or logistics, has not yet been made public.

New figures involving alleged bribes are expected to come out over the next few months, added to those already disclosed in the United States, including 599 million dollars distributed in Brazil, 98 million in Venezuela, 92 million in the Dominican Republic, 59 million in Panama and 50 million in Angola.

In Peru the total revealed so far is “only” 29 million dollars since 2005. The sum is small, considering that for the Southern Peru pipeline – still under construction – alone, the projected investments amount to seven billion dollars. The Peruvian government has decided to terminate the contract with Odebrecht for the project.

Besides Odebrecht, the Inter-Oceanic Highway, which runs across southern Peru from the Brazilian border to Pacific Ocean ports, is being built by three other Brazilian construction firms – Camargo Correa, Andrade Gutierrez and Queiroz Galvão – which are also under investigation for suspicion of corruption.

During the presidency of Alan Garcia (2006-2011), Peru and Brazil signed an agreement for the construction of five large hydropower plants in Peru, which was cancelled by his successor, Ollanta Humala (2011-2016), who, however, is suspected of receiving three million dollars from Brazil for his election campaign.

Odebrecht, which has a concession to manage Chaglla, the third biggest hydroelectric plant in Peru, with a capacity of 462 MW, was to be the main construction company in charge of building the new plants.

The growing wave of local and industry scandals sheds light on the reach of Odrebrecht’s tentacles. Braskem is accused of distributing 250 million dollars in bribes to sustain its leadership position in the Americas in the production of thermoplastic resins, with 36 plants spread across Brazil, Mexico, the United States, as well as Germany.

The empire, born in 1944 as a simple construction company, started diversifying in the last half century into activities as diverse as the sugarcane business, the development of military technologies or oil services, logistics or shipbuilding companies.

In the early 1970s the group built the Petrobras headquarters in Rio de Janeiro, sealing a connection that led to the current disaster which destroyed the reputation of the company that was so proud of its “Entrepreneurial Technology”, a set of ethical and operational business principles to which its fast expansion was attributed.

But Odebrecht’s success could actually be attributed to a strategic vision and a modus operandi that proved successful until the Lava Jato operation. Part of its methods included being “friends with the king”.

Angola is the best example. The current chairman of the company’s board of directors, Emilio Odebrecht, son of founder Norberto Odebrecht, meets every year with Angolan President José Eduardo dos Santos in Luanda, to discuss projects for the country.

Officially, what they do is assess the projects carried out by the company and define new goals.

The explanation given for the special treatment received by Odebrecht is that it has such a strong presence in vital infrastructure works in the country in areas such as reconstruction, energy, water, highways and urbanisation.

Odebrecht has great prestige in Angola, since it built the Capanda hydroelectric plant on the Kwanza River between 1984 and 2007, facing delays and risks due to the 1975-2002 civil war. Now it is building the biggest plant in Angola, Lauca, also on the Kwanza River, with a capacity to produce 2,067 MW.

The conglomerate is ubiquitous in the country, managing the Belas Mall – an upscale shopping centre in the south of Luanda, Angola’s capital – implementing the water plan to supply the capital, developing the first part of the industrial district in the outskirts of Luanda, building housing developments and playing a key role in saving the national sugarcane industry.

In Cuba it also led the strategic project of expanding the Mariel Port and managing a sugar plant, to help boost the recovery of this ailing sector of the Caribbean nation’s economy.

In other countries, such as Panama, Peru and Venezuela, the number of works and projects in the hands of the Brazilian conglomerate is impressive, in fields as diverse as urban transport, roads and bridges, ports, power plants, fossil fuels, and even agriculture.

But that cycle of expansion came to an end. Heavily indebted, with a plummeting turnover and no access to loans, not even from Brazilian development banks, and carrying the stigma of corruption, the conglomerate is trying to cooperate with justice authorities in the involved countries, seeking agreements to allow it to keep operating and eventually recover.

Now it remains to be discovered whether Odebrecht is “too big to go bankrupt,” as was said of some banks at the start of the global crisis that broke out in 2008.

Belém do Pará, seen here from the Guamá river, is the epicentre of several Amazon rainforest megaprojects. Credit: Diana Cariboni/IPS

By Fabiana Frayssinet
BELÉM, Brazil , Nov 5 2013 (IPS)

South America has gone from the world’s granary to the site of innumerable international infrastructure, energy and mining megaprojects. It is now facing a new dilemma: bolstering the economy with the promise of reducing inequality, in exchange for social and environmental costs that are taking their toll.

The old developmentalist model is back. South America has grown, and with that growth has come rising demand for energy, bridges, roads and minerals – just as demand has grown in other emerging economies that today see this region as the new frontier in terms of supplies of strategic raw materials.

Latin America “has difficulties in digesting its own development…what are the traps, what are the alternatives?” Maria Amélia Enriquez, assistant secretary of industry, trade and mining in the Brazilian state of Pará, told IPS.The region that will supply electricity to half of Brazil suffers frequent blackouts. -- Fabiano de Oliveira, an activist with the Movement of People Affected by the Altamira Dams

Pará, in the extreme north of Brazil, forms part of the Amazon rainforest, which is shared by Brazil, Colombia, Bolivia, Ecuador, Peru, Guyana, Venezuela and Surinam, where 320 major infrastructure works are planned for the next 20 years, according to João Meirelles, director of the Peabiru Institute, a nonprofit that seeks to generate value for the conservation of the biological and cultural diversity of the Amazon jungle.

Hydroelectric dams comprise more than one-third of all the megaprojects in Brazil. In the basin of the Tapajós river, a major tributary of the Amazon river that runs through the states of Pará, Amazonas and Mato Grosso, 42 dams are planned, including five large ones.

“We’re talking about an annual investment of at least 50 billion reals [some 23 billion dollars], dominated by at least 10 companies, including the Brazilian firms Camargo Corrêa and Odebrecht,” said Meirelles.

The mushrooming of megaprojects can be seen throughout the region – ports, roads, freeways, waterways, mining projects, agribusiness and steelworks.

“The old hasn’t died and the new hasn’t been born yet,” said Alfredo Wagner, coordinator of the New Social Mapping of the Amazon Project, referring to the economic model inspired “in the 1930s” and oriented today towards “the international commodities market.”

These issues were discussed at an Oct. 26-28 workshop on megaprojects for journalists organised by the IPS news agency and the U.S.-based Mott Foundation in Belém, the capital of Pará.

Men peeling cassava at the Ver-o-Peso market in Belém, Brazil. Credit: Diana Cariboni/IPS

The region’s new transnational corporations, such as Brazil’s Odebrecht, are key players in the boom in megaprojects in the region, which receive financing from both private and public sources, in particular Brazil’s National Bank for Economic and Social Development (BNDES).

In Venezuela, the company is involved in three major infrastructure projects.

The Tocoma dam is the last of the four hydropower plants to be built to harness the waters of the Caroní river, the second-biggest river in Venezuela, in the south of the country.

The Nigale suspension bridge over Lake Maracaibo in northwest Venezuela, to be completed in 2018, will be the third-longest in Latin America, and the project includes the construction of 11 kilometres of roads and railways and three artificial islands.

The Mercosur bridge, which will be the third bridge over the Orinoco river, is planned for 2015, to link southern and central Venezuela. It will be the second-largest bridge in Latin America.

According to the Venezuelan government, 30 major infrastructure works are in progress, as part of the 2013-2019 “Fatherland Plan”, with a total investment of 80 billion dollars.

“Are we looking at the evolution of late capitalism?” Wagner wondered.

In Brazil’s Amazon region, the highest-profile and most controversial megaproject is also in Pará: the Belo Monte hydroelectric dam, which will flood more than 500 square km of jungle and displace over 16,000 people.

The dam, on the Xingú river, will have an installed capacity of 11,233 MW and is considered essential by the government to supply Brazil’s energy needs.

A large part of the energy generated by the dams in the Amazon rainforest will be used by industry. Several industrial corporations are interested in investing in the construction of more dams, according to Meirelles, like the U.S.-based aluminium giant Alcoa and Brazil’s Votorantim Group, which has operations in the cement and concrete, mining, metallurgy and pulp and paper industries.

“The question is who ends up with the natural wealth extracted from the Amazon, and who benefits from these projects,” said Gilberto Souza, professor of economy at the Federal University of Pará (UFPA).

The expansion of the Vila do Conde port in the Pará city of Barcarena will improve the transport of aluminium and its raw materials, as well as the export of grains from central Brazil. But it will also displace several riverbank neighbourhoods.

With the new hydroelectric dams, Pará will produce half of the energy consumed in this country of 200 million people. A large proportion of the minerals produced in the state, which is rich in minerals but has the worst development indices in the country, goes to China, the world’s biggest consumer of iron ore, Souza noted.

The population of Altamira, the closest city to the Belo Monte dam, grew 50 percent in two years. As a result, the deficit in healthcare, education and housing grew, and violent crime and prostitution soared.

The area is facing problems like increased deforestation, the deterioration of water quality, and a reduction in the river populations of fish, a staple of the diet of local communities.

Ironically, the region that will supply electricity to half of Brazil suffers frequent blackouts, Fabiano de Oliveira, an activist with the Movement of People Affected by the Altamira Dams, told IPS.

Oliveira and other people living in communities affected by megaprojects complain that they have not been duly consulted.

Resistance movements are growing, but they are facing “one of their biggest contradictions: many of the people who are being relocated are at the same time employed” on the Belo Monte construction site, he explained.

Similar resistance has emerged against two major works in Chile.

The HidroAysén project in the Patagonia wilderness in southern Chile involves the construction of five large hydropower dams in the most biodiverse area in the country.

The 2,000-km transmission line required to carry electricity to the mining industry in the north will cross eight of the country’s 15 regions. But it will not supply any of them with energy.

Work on the project has been suspended by court rulings.

Further north, the Pascua Lama gold and silver mine, owned by Canada’s Barrick Gold corporation, straddles the border between Chile and Argentina in the Andes. Numerous lawsuits over water pollution and the destruction of two glaciers led to a legal decision in April to temporarily halt construction.

The company announced on Oct. 31 that it would indefinitely suspend development of the Pascua Lama mine, due to cost-overruns and a sharp drop in the price of gold.

In the Amazon region of Beni in Bolivia, indigenous communities are waiting for information on the impacts of the construction of the Cachuela Esperanza hydroelectric plant, with an installed capacity of 990 MW and a cost of two billion dollars, which will export electricity to Brazil.

Environmentalists warn that the flooding of some 1,000 square km of land will cause environmental imbalances, besides displacing local communities.

In Pará, José Etrusco, the manager of environment, safety and health in the Albras aluminium corporation, said big hydropower dams like Belo Monte represent the best cost-benefit ratio, even if they entail the relocation of native communities.

“We have to do it, or we’ll be left in the dark,” he argued.

In Colombia, the construction of a set of tunnels at the Alto de La Línea Andes mountain pass is generating another kind of controversy.

The tunnels are essential to creating an east-west road connection, from Venezuela through Bogotá and on to Buenaventura, Colombia’s only Pacific ocean port.

The route is the backbone of Colombia’s international trade, and provides a key outlet for Venezuela to the Pacific.

But while the first tunnel is being completed, environmentalists have pointed out that since 1999, the National Geological Service has been warning about the danger of eruption of the nearby Machín volcano – something that wasn’t even taken into account in the environmental impact assessment.

Forest engineer Paulo Barreto of Brazil’s Imazon institute said the question is “what is the real cost of these works?”: the environmental costs, such as the aggravation of climate change; socioeconomic costs, like the concentration of rural land ownership; and social problems in newly urbanised areas.

“Who is going to pay the bill?” asked Barreto.

UFPA professor of agrarian law José Benatti raised another question: who will employ the workers who have been drawn from other regions by the megaprojects, once the work is done?

Pedro Bara, with WWF Brazil, proposed a methodology for analysing the long-term impacts of major infrastructure works as a whole, rather than on a project by project basis.

As a foundation for that analysis, the WWF Living Amazon Initiative’s Infrastructure Strategy, which Bara heads, carried out an exhaustive study of the different Amazon ecosystems that must be conserved in order to prevent the biome from disappearing.

That big-picture view, said Bara, should include regional planning, especially in sensitive shared areas like the Amazon rainforest.

With reporting by Estrella Gutiérrez (Caracas), Constanza Vieira (Bogotá), Marianela Jarroud (Santiago) and Franz Chávez (La Paz).