Brazil police raid Olympics site in corruption investigation

By Brad Brooks

RIO DE JANEIRO (Reuters) – Brazilian federal police on Tuesday raided an Olympic venue set to hold 11 sports at Rio de Janeiro’s games in August, hunting for further evidence that construction firms skimmed millions of dollars from federal funding.

Prosecutors said so far they have found at least 128 million reais ($37 million) in money diverted from federal funding for the Olympics project, accounted for in earth-moving works that either did not happen or were fraudulently overcharged.

“Representatives of the consortium and authorities from the mayor’s office are giving us contradictory information about what happened,” said federal prosecutor Fernando Aguiar, part of a Rio-based anti-corruption team. “We don’t know where the money or the dirt went.”

Prosecutors presume the consortium either pocketed the money or used it to bribe politicians by funneling it into campaign coffers. That would mirror what has been seen in the separate probe into a massive kickback scheme at state-run oil company Petrobras involving the same construction firms.

Federal police said they carried out search warrants at the on-site office for the consortium made up of privately owned Brazilian construction firms OAS SA [OAS.UL] and Queiroz Galvao.

They collected computers, documents, pen drives and other storage devices that could give clues as to where the money went.

Police also raided the offices of two companies they did not name, that worked with the consortium.

The raid market an escalation of an investigation into suspected corruption involving venues and legacy projects for the Olympics due to start on Aug. 5, the first Games to be held in South America.

Previously, federal prosecutors said they found evidence of fraud in earth-moving services at the Deodoro venue, which will host Olympic sports such as shooting, equestrian events and the pentathlon.

Queiroz Galvao said in an emailed statement it was fully cooperating with authorities. It said the increased cost for earth-moving at the site was because the amount of material transported exceeded the contract’s original estimates.

OAS said in an emailed statement that it has only a minor stake in the consortium and that Queiroz Galvao is the company that manages the works at Deodoro. OAS said it has started an internal investigation.

The Rio mayor’s office said in an emailed statement it was following the investigation at Deodoro and that all payments to the consortium remained suspended until the probe is completed.

Last month, federal prosecutors told Reuters they were investigating every Olympics project that used federal funds, which includes works and services at the Olympic Park and the Deodoro area.

Five construction firms are building most of the 39 billion reais ($11 billion) worth of venues and infrastructure needed for Rio’s Olympics. All five companies are caught up in the two-year probe of Petrobras, which has seen scores of top executives and politicians jailed or charged.

The Petrobras investigation is what led federal police and prosecutors to begin looking at possible corruption tied to the Olympics.

Federal authorities have already said they are investigating the Porto Maravilha project, an 8-billion-real facelift of Rio’s dilapidated port area, and also the expansion of the city’s metro line to the Olympic area in the Barra neighborhood.

Mario Andrada, a spokesman for the Rio Olympics organizing committee, said both Rio 2016 and City Hall demand transparency from builders. He said the investigation would not impact building at Deodoro or its readiness for the Games.

“If the companies did anything wrong, they will have to respond to the law,” Andrada said.

(Additional reporting by Paulo Prada; editing by Bernadette Baum and David Gregorio)

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