Government "forgives" corruption and signs 31 more contracts with Delta.

247 – An operation by the Comptroller General of the Union (CGU) with the Federal Police (PF) identified in 2010 a corruption scheme that diverted millions of reais from the Union's coffers, committed by Delta. The irregularity, however, did not prevent the federal government from closing 31 new contracts with Fernando Cavendish's construction company, for R$ 758 million.

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BRASILIA AND RIO - After being identified as the leader of a corruption scheme that embezzled millions of reais from the Union's coffers and came to light in August 2010 — in Operation Double Hand, carried out by the Comptroller General of the Union (CGU) with the Federal Police (PF) — the construction company Delta continued to sign high-value contracts with federal agencies.

Since the government became aware of the serious irregularities committed by the construction company in highway works in Ceará, 31 new contracts have been signed with the National Department of Transport Infrastructure (DNIT), totaling R$ 758 million.

Operation Double Hand identified bid rigging, overbilling, embezzlement, bribery, improper payments, and the use of inferior quality materials in road infrastructure projects overseen by DNIT (National Department of Transport Infrastructure) and carried out by Delta and 11 other contractors. The investigation resulted in the arrest of the then-superintendent of DNIT in Ceará, Joaquim Guedes Martins Neto, who, according to the CGU (Comptroller General of the Union), had, in 2008, "income incompatible with the earnings of a public official," and of Delta's director, Aluízio Alves de Souza.

At the time, the CGU (Brazilian Comptroller General's Office) reported that it had detected "an estimated loss of R$ 5 million to the Union's public coffers, in addition to the social risk arising from the execution of road infrastructure works outside of the proper technical specifications." On Saturday, the CGU minister, Jorge Hage, acknowledged that the irregularities pointed out by Mão Dupla are serious. But this did not prevent DNIT (National Department of Transport Infrastructure) from signing new contracts with Delta, three of them (totaling R$ 9,6 million) in Ceará, where the irregularities were detected in 2010. These contracts involve the maintenance and recovery of sections of BR-116, BR-437, and BR-230 highways.

The contracts signed since August 2010 are for the construction, duplication, adaptation, or maintenance of 19 highways in 17 states. Furthermore, in September 2010, through a consortium with two other companies, Delta secured a contract worth R$ 574,5 million with the state-owned company Valec to carry out the works on lot one of the West-East Railway in Bahia. DNIT and Valec are linked to the Ministry of Transport.

The construction company recently gained prominence in the news for its links to the illegal gambling operator Carlinhos Cachoeira, arrested by the Federal Police in February during Operation Monte Carlo. Today, the Comptroller General's Office (CGU) promises to open an administrative process against Delta. The result of this investigation could render the company ineligible, which implies a prohibition on entering into new contracts with the federal government.

In addition to Ceará, contracts were signed between DNIT and Delta for works in Alagoas, Amazonas, Espírito Santo, Goiás, Maranhão, Mato Grosso, Minas Gerais, Pará, Paraná, Pernambuco, Piauí, Rio de Janeiro, Rio Grande do Norte, Rondônia, Sergipe, and Tocantins. Of the 31 contracts, only one, worth R$ 115 million in Goiás, was halted. Of that amount, DNIT has already paid R$ 8,8 million to Delta.

Twenty-five contracts, totaling R$ 611,7 million, are listed as active. Three others were registered in early 2012, totaling R$ 13,6 million, but work has not yet begun. Two contracts, worth R$ 17,8 million, have already been completed. Of this amount, R$ 15,6 million has been paid to the construction company, according to DNIT itself. In August 2010, during Operation Double Hand, the Federal Police executed 52 search and seizure warrants, 23 temporary arrest warrants, and one preventive arrest warrant. There was also the precautionary removal of eight public servants and the seizure of assets in Fortaleza and the interior of Ceará. The CGU analyzed eight contracts and detected irregularities in seven, relating to four projects, including two from the Growth Acceleration Program (PAC).

One of them is the duplication of a bridge on the BR-304 highway, over the Jaguaribe River, in the municipality of Aracati, budgeted at R$ 30 million. The work was started by Delta in 2002 and, for seven years, the foundations remained submerged in the river's waters, while the crossing was made using the old bridge. Delta, which abandoned the bridge construction, cited "increased costs that made it difficult to carry out the initial project foreseen in the tender." According to Hage, the administrative disciplinary process against the then regional superintendent of DNIT in Ceará and six other employees could result in dismissal. Last Friday, the Federal Public Prosecutor's Office filed criminal charges against DNIT employees in Ceará and against Delta for forming a criminal organization, money laundering, passive and active corruption based on the results of Operation Mão Dupla. Contacted for comment on the signing of the contracts, DNIT informed, through its press office, that it will await the decision of the Justice system and the CGU (Comptroller General of the Union) before taking action against Delta. "The company is not yet considered ineligible," the press office emphasized.

The large number of contracts with public entities obtained by Delta is reflected in its revenue. Data from the Brazilian Chamber of the Construction Industry (CBIC) shows that up to 100% of the construction company's earnings come from contracts with the public sector. Among the six largest construction companies in Brazil, Delta is the only one that dedicates itself almost exclusively to the construction of bridges, viaducts, roads, tunnels, airports, and sanitation projects. The construction company reportedly carried out works for the private sector in 2007, 2008, and 2011, but maintained a percentage above 97% of projects destined for municipalities, states, and the federal government. Delta's highest growth percentages occurred in 2006/2007 (67%) and in 2009/2010 (51%).