Haddad: Tax inspectors may also have committed property tax fraud.
Corruption revealed in São Paulo City Hall is "systemic," says the mayor of São Paulo; in a press conference, he stated that there are indications that the auditors accused of committing fraud in the collection of ISS (Service Tax) in the city also act to ensure that taxpayers pay less IPTU (Property Tax), according to an investigation by the Municipal Comptroller General; "We don't know if they are the same people. In the IPTU, certainly some of them are involved. But in the outstanding debt, we don't know if there are other bodies that may be involved," said Fernando Haddad.
By Gisele Brito, from Current Brazil Network – The mayor of São Paulo, Fernando Haddad (PT), stated today (8) that corruption in the municipal administration is revealed to be “systemic”. During a press conference, he stated that the scheme revealed by the Municipal Comptroller General (CGM) regarding corruption practiced by four tax auditors may extend to the collection of the Urban Property Tax (IPTU) and the active debt system in the municipality.
According to Haddad, the fraud under investigation consists of changing taxpayer records so that they pay less tax. "We don't know if they are the same people. In the property tax (IPTU), certainly some of them are involved. But in the outstanding debt, we don't know if other city departments might be involved," he stated.
The scheme uncovered by the Comptroller's Office diverted at least R$ 200 million from the Service Tax (ISS) during the last three years of Gilberto Kassab's administration (PSD, 2006-2012) – the agency estimates that the diversions could reach R$ 500 million. At least four secretariats show evidence of corruption: Green and Environment, Sub-prefectures, Finance, and Housing.
Operation Necator was carried out on the 30th of last month, in partnership with the Public Prosecutor's Office, and resulted in the arrest of four public servants. The investigation was conducted by the Comptroller's Office, an agency created by the mayor at the beginning of this year. "We are opening many lines of investigation. Unfortunately, it's a lot of work for too few people. But it has to be done, because we are going to thoroughly investigate all of this."
Haddad also said he was never informed of any involvement by Kassab in the scheme set up in the Finance Department.
In a recording obtained by the newspaper Folha de S. Paulo, however, one of them, Ronilson Bezerra Rodrigues, the undersecretary of the Municipal Revenue Department during Kassab's administration, states that the former mayor knew about the scheme. "They should have called the secretary and the mayor too, don't you think? Call the secretary and the mayor I worked with. They were aware of everything," said Rodrigues on September 18.
The Comptroller's Office initiated the investigation after noticing that the assets of some employees were incompatible with their salaries. Two of them worked in the ISS (Service Tax) collection sector, focused on issuing occupancy permits for newly constructed real estate developments. In the projects supervised by these employees, it was found that the tax collected was much lower than the correct percentage.
In a statement, Kassab repudiated what he called "sordid attempts" to involve his name in suspicions of irregularities against municipal public employees who were hired years ago through competitive examinations. He stated that this attitude has the sole objective of damaging his image and honor. Former Finance Secretary Mauro Ricardo Costa told the press that the accusations are unfounded.
Rodrigues, as well as the former director of the Collection and Enforcement Department Eduardo Barcelos and the former director of the Property Registry Division Carlos Augusto Di Lallo, have been in custody since the 30th, accused of money laundering and administrative advocacy, extortion and forming a criminal organization. Tax inspector Luís Alexandre Cardoso de Magalhães was released last Sunday (3) for cooperating with the investigation.
The equivalent of R$ 80 million, including apartments and boats, accumulated by the four individuals, was seized and will be used to compensate the city government.
Active posture
The Municipal Comptroller's Office initiated an investigation after discovering that the assets of some employees were incompatible with their salaries. Two of them worked in the ISS (Service Tax) collection sector, focused on issuing occupancy permits for newly constructed real estate developments. In the projects supervised by these employees, it was found that the amount allocated to public coffers was "negligible." According to the Public Prosecutor's Office, the group offered a 50% discount to the developments. Then, they charged 30% as a bribe, and only 10% went to the city hall. The remainder was used to cover expenses with intermediaries.
"The Comptroller's Office doesn't ask for permission to investigate. If it perceives that something needs to be investigated, it goes to the bottom of it, without entering the mayor's office to ask for permission. Because, with it, there are no friends and enemies of the king. It has friends and enemies of ethics," Haddad argued.
Yesterday, the city hall published a decree in the Official Gazette of the Municipality calling on those responsible for more than 600 businesses to present invoices proving full payment of the ISS (Service Tax). Haddad said, however, that those who were "extorted" but paid the tax will receive different treatment from those who did not pay the tax to avoid blackmail. "You cannot, due to blackmail, waive the tax owed. So those who paid incorrectly will have to pay twice," he stated.