Port of Santos president arrested over US$10m fraud

Port of Santos president arrested over US$10m fraud
Alex Oliva, president of Codesp

Federal Police (PF) in Brazil have arrested Alex Oliva, president of Santos Port Authority (Codesp), over allegations of fraud related to contracts worth in excess of R$37m (US$10m), mainly concerning the IT systems at South America’s biggest port.

Operation Tritão, which began in November last year, investigated contracts signed by Codesp between 2014 and 2016 and found irregularities in three: regarding the digitisation and storage of documents, software acquisition and the maintenance of computers and consulting.

As made clear by the Federal Prosecutor’s Office, this is an ongoing investigation which includes, amongst others, dredging contracts at the Port of Santos.

The alleged crimes reported by the Federal Comptroller’s Office (CGU) and the Federal Court of Audit (TCU) include fraud, favouritism, uneconomic hiring, overbilling and cartels between companies.

The investigation began after a video posted online in 2016 appeared to show the then chairman of Codesp, Carlos Antonio de Souza, discussing the winning bidder for a document scanning contract without a published bid having been made.

Along with Oliva, six others were arrested including his former adviser Carlos Antônio de Souza, Codesp’s market director Cleveland Sampaio Lofrano and Codesp’s legal director Gabriel Nogueira Eufrasio.

Chief prosecutor of the Attorney General’s Office, Thiago Lacerda Nobre, said: “We have begun to dismantle one of the largest criminal value organisations operating in the Port of Santos.

“There are indications that they have been operating in the Port of Santos for much longer than the contracts analysed, which we have begun to verify since 2016. The diversion represents scorn with the population and control organs.”

Coincidentally, the board of Codesp had a meeting scheduled for the same day as the arrests and it chose to replace Oliva and Lofrano with Luiz Fernando Garcia and José Alfredo de Albuquerque e Silva respectively.

Garcia is currently special adviser to the minister of transport, ports and civil aviation, an umbrella post for various transport modes created by the outgoing Temer government.

Perhaps, the most bizarre allegation to emanate from Operation Tritão is that a dancer Daniele Elise Rodrigues was hired as an advisor to Oliva for one week before being dismissed following pressure from unions that she lacked relevant experience to perform the role.

According to Victor Rodrigues Alves Ferreira, head of the Corruption Control Office (Delecor) of the PF Superintendence in the state of São Paulo, Rodrigues received R$154,000 (US$42,000) in three transfers made by Capital Três, suspected of participating in the transfer of bribes between public agents and those contracted in fraudulent bids.

The case has occurred at a politically sensitive time in Brazil with the incumbent Bolsonaro government pledging to root out widespread corruption and backing privatisation.

A local CM source stated that this case could potentially “accelerate” the privatisation drive in the country’s maritime sector, including that of the port authorities themselves, a long time taboo in Brazilian industry.

The intention of gradual privatising the country’s port authorities was already explicitly included in a R$180bn (US$49bn) governmental plan for Brazilian infrastructure modernisation next year, divulged during the elections period.

He stated: “During the election campaign, there were indications from the group closest to Bolsonaro that they intend to change the administration of the port authorities and the process of dredging amongst others. I think this is going to accelerate the process even further.”

Another CM source said that while the consequences of the case could have an obvious positive in reduced corruption, the process of attaining approval for projects could become “more difficult for honest businesses”.

The ongoing arbitration between Libra Terminais and Codesp could be affected, the source added, due to the reputational damage the latter may now suffer.