Contractor using a shell company has been dominating bids under Bolsonaro
In what's being called "BOLSOLÃO DO ASFALTO" [something like "Bolsonaro's asphalt corruption scandal"] on Brazilian Twitter, the contractor Engefort has won most of the Bolsonaro government's paving bids in different tenders in which it participated alone or in the company of a shell company registered in the name of the brother of its partners.
The construction company, based in Imperatriz, in the Northeastern state of Maranhão, has had their funds skyrocket in the Bolsonaro administration. It is stepping out of its tradition by also obtaining contracts for asphalting far from its base.
So far, the government has set aside around R$ 620 million (~US$ 131.88 million) from its Budget for payments to the company — the total amount already paid to it amounts to R$ 84.6 million (~US$ 17.99 million). Despite the volume, the company is a black box and is silent about its contracts and the shell firm used in bids.
The company's source of funds are contracts with Codevasf (Development Company of the São Francisco and Parnaíba Valleys), a federal state-owned company delivered by Bolsonaro to the 'Centrão' in exchange for political support, and the funds from parliamentary amendments, expanded in schemes of quid pro quo by Congress in the current government. The 'Centrão', which translates as 'Big Center', refers to a group of political parties that do not have a specific ideological orientation (although they're usually conservative, not necessarily ideologically centrist) and aim at ensuring proximity to Brazil's executive government branch in order to guarantee advantages and allow them to distribute privileges through clientelistic networks and cronyism.
Last year, Engefort Construtora e Empreendimentos led the transfers from Codevasf. Also in 2021, it was the second construction company in total volumes committed by the federal government, behind LCM Construção, which accumulated R$ 843 million (~US$ 179.04 million) in reserved funds.
The news outlet Folha de São Paulo obtained this information by analyzing documents from 99 Codevasf paving bids held in 2021 through a type of simplified bidding called electronic bidding, which takes place online.
These tenders are part of a bidding process that began to be used on a large scale under Bolsonaro to unleash billions of dollars in parliamentary amendments, distributed to deputies and senators based on criteria of politics and congressional support. The strategy leaves planning, quality, and inspection in the background, opening room for precarious services, deviations, overpricing, and corruption.
At Codevasf, the tenders involved different types of paving, such as asphalt with CBUQ (Hot Machined Bituminous Concrete), asphalt with TSD (Double Surface Treatment), concrete blocks and cobblestones.
Engefort was the only contractor that participated in all these bids in the Federal District and in the 15 states covered by Codevasf. The contractor won 53 bids, or more than half of the trading sessions. The most expressive performance was in the Southeastern state of Minas Gerais, having won 28 out of 42 bids in the CBUQ asphalt and block modalities. Although the heavy construction sector has more than 200 companies in Minas Gerais, in 10 of the 21 trading sessions for services with concrete blocks, Engefort competed alone and took the contracts.
This is permitted by law in exceptional situations. In several cases, the firm won with practically full price, having given a discount of only 0.01% in relation to the reference values of the trading sessions.
In part of Codevasf's bids, Engefort had the company of a company that Folha discovered to be a front: Del Construtora Ltda., registered in the name of one of the brothers of the partners of the leader Engefort.
One of the cases that most draw attention is the electronic auction that led to the signing of a contract worth R$ 62.5 million (~US$ 13.26 million) for paving in Northern state of Amapá. In this tender, the only two companies participating were Engefort and Del. In the documentation presented by Engefort for the dispute, Carlos Eduardo Del Castilho and Carla Cristiane Del Castilho appear as partners in the company. According to the minutes of the trading session, Del even sent a link to access its documentation, but the folder was empty. If the firm had presented the papers, it would have been possible to verify that the managing partner of Del is Antonio Carlos Del Castilho Júnior, brother of the partners of Engefort. The lack of documentation led to Del being disqualified, and Engefort also won the contract for practically the full price.
Another tender in which the two companies participated, again with the victory of Engefort, was an auction worth R$ 55 million (~US$ 11.67) for paving rural roads in the Northeastern sate of Maranhão. There is no record of Del Construtora's victories in any federal or state competition in Maranhão, according to the official portals consulted by the report.
The practical consequence of using shell companies in a bid is to give the appearance of competition when in fact there is none. The objective is to guarantee the highest possible prices. When using a shell company to make a number in a bid, a contractor may seek to avoid drawing the attention of supervisory bodies, since the lack of competitiveness can give rise to investigations. Another possible use of a shell company is for the presentation of so-called coverage proposals, which are fictitious offers placed throughout the trading sessions according to a combined script, to simulate competition when there is already a previously agreed result at the end of the bids.
In Imperatriz, the main work carried out by the contractor with resources from a contract with Codevasf is less than two years old, has already had to be renovated and has huge holes that put the safety of drivers and residents at risk. The Manoel Ribeiro Avenue, also known as the ring road, was delivered in December 2020 with a length of 2.2 km and a cost of R$ 3.8 million (~US$ 810 million), to serve as a link between a federal highway and neighbourhoods of the city. The ceremony was attended by the president of Codevasf, Marcelo Moreira, and federal deputy Juscelino Filho (from the party União Brasil), who allocated the value of a parliamentary amendment to the work. Four months after the inauguration, the paving already had large holes and deformities. Farmer Francisco Pimentel de Brito, 48, lives by the road and says the work also has drainage problems.
The first attempt of the journalists to contact Del representatives took place at the address indicated in the company's public records, in the village of Lagoa Verde, in Rio de Janeiro, but found that the indicated address does not exist.
The report also called the Del Construtora phone number indicated on the federal government's Transparency Portal. The attendant stated that the call had reached at Engefort. When asked, she replied: "It's on the registration form here for Del, but it is also part of Engefort. They are owned by the same owners, in fact, from the same family. They associated this number with Del. Do you want to talk to Del or to Engefort?" The report asked for the contact of a representative of the companies, but there was never a response.
The management of Engefort and Codevasf did not comment on the findings regarding the lack of competition in the bidding sessions, the use of a shell company, and the precariousness of the recent work on the ring road. At the end of March, the report spoke by phone with the commercial manager of Engefort, Fernando Teles Antunes Neto, who said that he was not aware of any competitions in which Engefort had participated alone, and, regarding Engefort's participation in trading sessions in the company registered in the name of the partners' brother, Antunes Neto said that he had no knowledge and could only respond in relation to Engefort. Then, Antunes Neto asked that new questions be asked by email. Folha sent e-mails to different Engefort e-mail addresses and tried to contact them by phone for several days, without success. On Friday (April 8th, 2022), the report managed to speak by cell phone with the contractor's internal lawyer, but she did not want to comment and refused to promote contact with any representative of the company.
Asked about the facts related to Engefort and Del Construtora, Codevasf responded in a generic way and without dealing with the cases mentioned by Folha. The state-owned company reported that its bids comply with the legislation and requires that bidders also comply with the law.
Source, translated and slightly adapted by the blogger.
