Court of Auditors Detects Irregularities in Spending in Bolsonaro’s First Year

RIO DE JANEIRO, BRAZIL – The TCU (Federal Audit Court) auditors pointed out irregularities in the spending carried out by the Jair Bolsonaro government. The audit refers to the President’s first year in office.

There was a transfer of expenses from Ministries to the State – a means of circumventing the spending ceiling rule, which limits the increase in spending above the preceding year’s inflation. The government would also have used non-technical criteria in distributing advertising funds.

The President’s accounts are expected to be approved with caveats. The trial would be held on Wednesday, June 10th, from 10 AM.

In the auditors’ assessment, the most serious breach was found in the Ministry of Defense. The portfolio directed resources such as “capital increase” to Emgepron, a state-owned company linked to the Navy Command that manages naval projects.

Later, according to the auditors, the state-owned company acquired vessels to operate in the Antarctica research base. With the operation, Defense got rid of R$7.6 billion (US$1.5 billion) in expenses in its balance.

If the purchase were made directly by the portfolio, as should have been the case, there would have been a direct impact on compliance with the spending ceiling and the federal fiscal result. This is a practice that TCU technicians call “outsourcing the execution of direct administration expenses”.

Expenses with capital increase of non-dependent state-owned companies, such as Emgepron, cannot be accounted for in the determination of the spending cap. They thus escape the primary spending limits.

The practice violates the amendment to the 95 Constitution. Since 2016, the rule has prevented the execution of public spending by a portfolio or other direct public administration bodies through state-owned companies.

The auditors also found increased capital in Telebras and Infraero. The state-owned companies received R$1 billion and R$1.5 billion, respectively, in new capital from the Ministries to which they are linked (Science and Infrastructure). However, no out of “context” spending was found at Telebras.

In Infraero, some investments in equipment for air navigation, which are the responsibility of the Aeronautics Command, were made by the state-owned company. This was not considered a cause for concern at this time because a balance is expected between Infraero and Defense once the concession procedure for the private initiative of all the state-owned airports is completed.

The TCU auditors further state that there are reports of government contributions to other state-owned airports. They have recommended the court to ensure that this outsourcing of spending practice does not become common under Bolsonaro. This would lead to a future court alert and disapproval of accounts in the extreme situation of non-compliance with the suggestions.

On another front, the number of cases involving the SECOM (Secretariat of Social Communication) of the Presidency of the Republic was brought to the auditors’ attention. Under Bolsonaro, the agency allocated more resources to media outlets with little audience, but which are aligned with the government.

Still according to auditors, although there is resistance from TCU judges in pointing out shortcomings, a recommendation would be required for these expenditures to be disclosed more clearly to the public. Several of these cases were prompted by articles in the Folha de S.Paulo newspaper.

In one of them, the newspaper showed that the SECOM directed considerably more funds to broadcasters with low ratings in the Social Welfare reform campaign.

Record, SBT, Band, and RedeTV! concentrated R$14 million in the second stage of TV advertising.

The leader Globo received R$2.6 million. Together, the four broadcasters failed to reach Globo’s audience last year, according to Kantar Ibope.