News Brief –– March 1

Ex-director of Dersa, “Paulo Preto.” He is accused of having operated a kickback scheme under São Paulo governor José Serra.
  • “Paulo preto”, ex-director under José Serra’s state government, is accused of having operated a kickback scheme during the mandate of the former governor of São Paulo.
  • The Minister of Public Security, Raul Jungmann, wants to discuss potential appointees to the Federal Police with its new director.
  • The OECD released a report outlining obstacles in the way of a Brazilian membership.

Ex-director accused of operating kickback scheme under previous SP government

There are now ten testimonies against the man who is accused of having operated kickback schemes under the São Paulo state government of then-governor José Serra (PSDB) between 2007 and 2010.

Paulo Vieira de Souza, nicknamed “Paulo Preto,” was cited in testimonies by seven people involved in crimes covered by the Lava Jato investigation and three people involved in other corruption investigations. Most of the informers were executives of Brazil’s largest corporations, such as Odebrecht, Andrade Gutierrez, OAS and Queiroz Galvão. The information was revealed by the newspaper Folha de S. Paulo which obtained a copy of the case file authored by the Polícia Federal (Federal Police) currently under review by the Supreme Court.

The case stands out because all of the testimonies are congruent, contrary to other similar cases containing information from many separate witnesses. They all accuse Paulo Preto of having charged kickback fees from companies involved in the construction of the Rodoanel Mário Covas, a 176-kilometer ring road located in the metropolitan region of São Paulo.

At the time he was head of Dersa, the state organ for road construction and maintenance. In this role he is alleged to have charged a fee of 0.75% of what the companies were paid for the contract, in this case building the southern part of the construction project, which ended up costing BRL 3 billion (slightly above USD 9 million).

The accused’s lawyer, Daniel Bialski, said that the witnesses were lying and that his client was firm with the contractors about keeping the price down. José Serra asserts that he never, directly or indirectly, consented to illegal negotiations under his government.

Jungmann wants to discuss appointees with new PF head

The minister of the recently created Ministério Extraordinário da Segurança Pública (Extraordinary Ministry of Public Safety), Raul Jungmann, wants to discuss appointees with the new head of the Polícia Federal (Federal Police), Rogério Galloro.

Last week the Polícia Federal came under the auspices of the recently created ministry. Until then it had stood under the Ministerio da Justiça e Segurança Pública (Ministry for Justice and Public Safety). The custom had been for the latter institution to choose directors and deputies whose names would then be forwarded by the Minister of Justice to the the Casa Civil, meaning the President’s Chief of Staff.

Jungmann told journalists in Brasília on Wednesday that he would discuss potential names with Rogério Galloro, who Jungmann chose Tuesday to replace Fernando Segovia as head of the Federal Police.

He told the journalist that he chose Galloro because he is in “alignment” with him, having worked closely together during the 2016 Olympics that took place in Rio de Janeiro. “From there arose a friendship and closeness,” he said, adding that he needed this to “have the best possible speed, agility and alignment of thought.”

Jungmann became head of the new Public Safety ministry on Tuesday last week. It was created by President Michel Temer to prepare for the government’s “federal intervention” in Rio de Janeiro that was announced in the wake of the intense violence that has struck the city during recent months.

Obstacles in the way of joining OECD

A report has been released outlining obstacles and solutions to Brazil joining the Organization for Economic Co-operation and Development (OECD). Being a member of the organization is considered advantageous as it would raise Brazil’s international reputation and increase investment in its economy.

The OECD wants to see Brazil improve the state’s efficiency and business environment, open up its economy, develop its financial market and reduce corruption. They stress the urgency of getting the pension reform through Congress to rein in public spending. The reform effort has been put on ice due to the intervention in Rio de Janeiro, which legally prohibits new amendments to pass through Congress.

The government made the official request to join in June last year. They expected an answer within two months and for a review to begin after that. Until now no response had been received.

According to Folha de S. Paulo, the US is the main opponent of a Brazilian membership, wanting to maintain a small group of countries whose economies are not too divergent. Members of the Brazilian government frequently travels to the US to talk with companies and government authorities. The intent is to build support for a future OECD membership.