After two years of delay, CADE (Administrative Council for Economic Defense) is preparing to condemn large construction companies for forming a cartel and other infractions against the economic order in three projects worth nearly R$70 billion.
Two cases have already been assigned to the board, with the latest arriving in court this week. All were concluded by CADE’s superintendent-general, Alexandre Barreto — head of the area that investigates the cases before analysis by the councilors.
One of the processes, already with a rapporteur, analyzes contracts of the PAC (Growth Acceleration Program) of the Favelas. At the time, the program generated almost R$ 2 billion in redevelopment works in the communities of Alemão, Rocinha and Manguinhos (in Rio de Janeiro) and was divided into three lots (one for each area).
The second process refers to the construction of the Belo Monte hydroelectric plant, a project worth around R$30 billion that was the flagship of the investment program of then-President Dilma Rousseff (PT).
The third, more recent case, analyzes works by Petrobras that, according to the opinion of the SG (General Superintendence), were divided among large contractors.
Initially, the “club” of contractors analyzed by Cade had nine companies. The number later grew to 16 and also included construction companies that, sporadically, would have provided “services” to the cartel.
The contracts related to the works exceeded the value of R$ 35 billion, according to Cade’s estimates, and were signed by construction companies such as Camargo Corrêa, Andrade Gutierrez, Odebrecht, OAS and Carioca.
According to the SG, in all cases the evidence is irrefutable and reveals market division schemes between the main construction companies in the country, in addition to price combinations, bids in bids and other infractions. The recommendation is for condemnation.
This evidence was obtained through telephone interceptions and e-mails authorized by the Court.
In the midst of the process conducted by SG, some contractors chose to sign leniency agreements with the agency – a type of award-winning collaboration in which the company gets rid of any penalty in exchange for delivering the scheme.
The contractors that signed the leniency agreements were Andrade Gutierrez (PAC das Favelas), Camargo Corrêa (Belo Monte) and Setal Óleo e Gás (Petrobras).
Other contractors even called SG to try to close a deal, but the rule only guarantees immunity to the first candidate for the deal.
This did not prevent several participants from signing Terms of Cessation of Conduct (the so-called TCCs), providing more evidence of cartel activity in exchange for not being convicted.
In these cases, companies agree to pay a contribution to the Diffuse Rights Fund calculated based on the damage caused by the breach of contract values.
Calculations made by the OECD (Organization for Economic Cooperation and Development) indicate that the formation of a cartel usually generates an overprice of up to 30% in the values of the contracts.
During the investigations, the TCU (Union Court of Auditors) tried to declare the unsuitability of these contractors based on investigations conducted by Cade.
Disreputable companies are prohibited, by law, from entering into any type of contract with the federal public administration.
At the time, the technicians of the court of accounts estimated overbilling of almost R$ 29 billion in the Lava Jato contracts and wanted to demand payment of the damages to the treasury.
The TCU demanded that companies deliver more documents and, in the end, lost strength in the negotiations of leniency agreements due to the dispute of forces between the MPF (Federal Public Prosecutor), AGU (Advocacy-General of the Union) and CGU (Comptroller General of the Union ) around the subject.
Many companies resisted the TCU’s action in these processes and pressured the government not to be declared unsuitable by the court of accounts, even negotiating leniency agreements with the Federal Public Ministry and CGU.
Although they sealed the leniency agreement with CADE, the disclosures to the court are only effective from an administrative point of view, for the investigation of anti-competitive practices.
Therefore, everything that was presented to Cade by the contractors about crimes committed during the cartels’ activities was directed to the competent authorities, particularly the MPF.
The processes were practically stopped at the SG for about two years. The delay occurred, in part, due to the impasse surrounding possible declarations of unsuitability by the TCU or other bodies.
As the basis of the agreement presupposes the payment of pecuniary contributions, if these companies went bankrupt after being declared disreputable, the agreement with Cade would be compromised.
In addition, in the last two years, CADE has suffered from the delay in the appointment of new advisers by President Jair Bolsonaro (PL).
The council was only completed this year, and the position of superintendent took almost a year to fill.
Barreto, who was once president of Cade, took over the SG after a long dispute for the position fought by members of the so-called centrão, a group of parties that support Bolsonaro’s government in Congress.
Alexandre Cordeiro de Macedo, current chairman of the board and who previously held the SG chair, was criticized for being close to the current Chief of Staff, Ciro Nogueira (PL).
The accusations of Lava Jato defenders were that, for political interest, there would have been a “delay” in the handling of cases by the SG during Macedo’s administration.
Court technicians, however, claim there was no interference. The delay, they emphasize, is explained by the risk of the SG negotiating termination or leniency terms with companies that could go bankrupt if they were declared unsuitable by the TCU or other control bodies.
In addition, during the investigations headed by Macedo, negotiations with the companies were tough so that, in fact, they could deliver robust evidence that would allow the investigations to be concluded.
At that time, the SG was conducting 15 processes linked to Lava Jato in almost 20 cases investigated by the Federal Police.
Both leniency and TCCs have been used by Cade as tools in cartel cases. Altogether, the negotiations resulting from Lava Jato resulted in almost R$ 1 billion in contributions.
Any company that fails to comply with the agreement rejoins the group of defendants and can be sentenced at the time of judgment of the case by the court. The rule also applies to the company that closed the leniency.
Other side
THE Sheet sought out the president of Cade, Alexandre Macedo, but received no return. The mentioned companies were also sought after.
Through its advisory, Camargo Corrêa said that it was the first to sign leniency agreements with control bodies.
“The agreement was fully complied with,” the company said. “In addition to committing to collaborate with all investigations and maintain strict compliance policies [governança]in 2019, Construtora Camargo Corrêa paid off the fine imposed by the body.”
The company also informs that it did not participate in the Belo Monte bid and that, therefore, there was no need for an agreement with Cade.
Coesa (former OAS) stated that it closed a leniency agreement with AGU in 2019, and that it has been collaborating with the authorities. Via consultancy, he informed that he had implemented a new management, “which has been working on the restructuring of the company”, which is going through a process of judicial recovery.
Novonor (formerly Odebrecht) said it “has been collaborating permanently and effectively with the authorities in search of a full clarification of past facts”.
“Today, it is completely transformed. It uses the most recommended compliance standards and remains committed to an ethical, integrity and transparent performance”, he said through his advisory.
Andrade Gutierrez and Carioca did not respond until the publication of this report.
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