Court extends detention of former officials involved in corruption ring.

Daniel Mello

Reporter from Agência Brasil

São Paulo – The São Paulo Court of Justice today (1st) ordered the extension of the temporary arrests of three of the four tax auditors accused of participating in a fraud scheme at the São Paulo city hall, which may have caused losses of up to R$ 500 million to the city's coffers.

According to a statement published on the court's website, the detentions of Eduardo Horle Barcellos, Ronilson Bezerra Rodrigues, and Carlos Augusto di Lallo Leite do Amaral have been extended for another five days. Judge Eduardo Pereira Santos Júnior, of the Department of Police Inquiries (Dipo), granted the request from the Public Prosecutor's Office. In his decision, the judge argued that the extension is necessary "for the implementation of the seizure and asset freeze orders and to proceed with the collection of testimonies from the remaining witnesses, without interference from the agents, as stated in the representation."

The fourth defendant, inspection agent Luis Alexandre Cardoso de Magalhães, who is also being held at the 77th Police District, decided to cooperate with the investigations and signed a plea bargain agreement, therefore the Public Prosecutor's Office did not request an extension of his detention.

The four employees of the Municipal Revenue Sub-Secretariat are accused of diverting funds from the tax collection system for the Service Tax (ISS), levied on real estate companies. The Public Prosecutor's Office estimates that up to R$ 500 million was diverted. The scheme defrauded the collection of the ISS, calculated on the total cost of the construction. This collection is a necessary condition for the construction company or developer to obtain the "habite-se" (occupancy permit), which allows the release of the property for occupancy.

The prosecutor said he intended to hear Carlos Augusto di Lallo Leite do Amaral, former director of the Property Registration Division, who is in custody, this Friday. However, as his lawyer did not appear, the testimony was postponed. Bodini hopes, however, that he can speak with the other three involved in the case next week, as they will remain in custody until next Friday (8).

The auditors are accused of active corruption, extortion, forming a criminal gang, and money laundering.

The prosecutor reported that he contacted representatives of the Brookfield company, who confirmed the payment of bribes to the arrested tax auditors. According to Bodini, the company stated that it had been coerced by the officials. "They [the company] believed they owed no ISS [municipal tax] at the end of the project. In their view, they were forced to pay, otherwise the project would not be legalized," said Bodini.

According to Bodini, Brookfield paid approximately R$ 4 million to a company belonging to one of the accused and his wife. "They confirmed the payment of amounts into ALP's account in exchange for the release of the ISS tax clearance certificate." The prosecutor said that it will now be up to the construction company to prove that it was coerced by the suspects.

In a press release, Brookfield stated that it is cooperating with the Public Prosecutor's Office and providing all necessary information for the investigation of the facts. "We appeared voluntarily, were heard as witnesses, and consider ourselves victims of the situation," the company said, adding that "out of respect for the confidentiality of the investigations, we remained silent and, for the same reason, will maintain this stance."

Edited by: Carolina Pimentel