Brazilian Environment Minister Owns Unregistered Apartment That Tripled in Value

RIO DE JANEIRO, BRAZIL – Environment Minister Ricardo Salles has been prominent in the news, sometimes for mentioning updating rules in the Amazon, sometimes for public squabbling with the military, like last week. He is firmly supported by President Jair Bolsonaro, to the frustration of those who defend the environment.

Despite being shielded in his position, Salles still has to answer to the courts for his actions before becoming a Minister. His assets are under investigation, including a duplex split in two in a wealthy region of São Paulo that tripled in price over a period of two years, despite no register, deed or any legal confirmation of ownership. Officially, the apartment’s subdivision does not even exist.

Salles is under investigation by the São Paulo Prosecutor’s Office (MP-SP) for suspected unjust enrichment. The investigation was opened last year and is focused on the period from 2012 to 2018, when the Minister’s assets as declared to the Electoral Court increased by more than 600 percent from R$1.4 million (US$250,000)  to R$8.8 (US$1,6) million.

During this time, Salles held two offices in the government of Governor Geraldo Alckmin (PSDB), in São Paulo: he was the governor’s private secretary between 2013 and 2014 and, between 2016 and 2017 he held the Environment Secretariat for 13 months. The Minister’s banking and fiscal confidentiality was breached with the authorization of the São Paulo Court of Appeals (TJ-SP) and the MP’s investigations are under judicial seal.

According to the register available at the 13th São Paulo Property Recorder’s Office, the duplex that Salles divided in two never ceased to be a single legal property. The document states that the apartment covers a total area of 344.9 square meters distributed between the building’s fourth and fifth floors, located in the Jardins region, West Zone of São Paulo, with a single deed.

Thus, the split apartments may not be negotiated separately. The splitting of the apartment is acknowledged in his own statements to the Electoral Court and the press. But sources close to the Prosecutor’s Office investigation say that it is suspected that the duplex division may have been used to account for the Minister’s vertiginous asset growth.

In the 2012 elections, when running for city councilor for the PSDB and failing to be elected, the current Minister declared to the Electoral Court that he had R$1.4 million in assets. Six years later, when he ran for federal deputy in 2018, this time under the Novo party, and again unsuccessfully, Salles submitted a statement of assets in which he claimed to own, among other things, two apartments worth R$3 million each within a total estate of R$8.8 million.

In an interview with the newspaper Folha de São Paulo in January 2019, the Minister said that in 2015 he acquired the duplex where he currently lives in Jardins, conducted a major renovation, split it in half and thus one apartment became two. “I owned a property that was worth R$2 million, spent another R$800,000 in a year in renovations, which adds up to R$2.8 million, and converted it into two apartments, each worth R$3 million. That’s the figure, there’s no mystery about it”, he later reiterated to “UOL” in August last year.

Documentation issues aside, converting one apartment worth R$2 million into two worth R$3 million each is a real estate feat. “If I had this kind of foresight for this kind of business, a valuation like this in approximately two years, I would be a rich man today”, says José Augusto Viana Neto, president of the São Paulo Real Estate Brokers Regional Council (Creci-SP).

The duplex may have been split in two, but it can hardly be legalized, explains Neto.

In order to legalize the division, Salles would have had to obtain the consent of all homeowners in the building. “Even a condominium meeting with an absolute majority is not enough,” says the Creci-SP president.

Furthermore, the cost involved would also make the operation financially unfeasible. By creating an extra apartment in the building, the fraction which all owners hold in the condominium’s floor area would be altered. This results in the need for a new register and a new deed for each unit, with the ideal fraction changed downward, among other complications such as the alteration of the building’s documentation in the City Hall.

“Once everyone’s permission had been secured, all the deeds and even points in the condominium convention would need to be redone. The cost of this is unfeasible, it would be at least the cost of an apartment in the building”, explains Neto. “Who would be interested in this? It’s not worth it from any perspective,” explains Neto.

The broker claims that the opposite, i.e. converting two apartments into one duplex, is common in the real estate market. “There is no legal impediment there. The prospective owner buys two apartments in the building, one on top of the other, each with its own documentation, and converts them into a duplex after remodeling,” he says. “In the event of a sale, he can either sell the duplex or renovate it again and sell it separately, since they are originally two separate properties”.

There is yet another restriction on what the Minister argues to justify the valuation of his estate by dividing the apartment into two.

“The other owners [of the building] would have to accept a smaller fraction of the condominium to benefit a neighbor and still spend a fortune for it,” continues the Creci-SP president.

“The interested owner would have to spend that fortune himself to change the building’s documentation, should the other owners agree. But to pay for an apartment to legalize another doesn’t make sense either”.

According to Thaís Haliski, a realtor working in São Paulo for ten years, the Minister made a good deal by buying a duplex of nearly 350 square meters in a building near Paulista Avenue for R$2 million, one of the most highly valued areas in the city. However, she also found it strange that the property has appreciated so much in such a short time. “It is difficult for an irregularly divided apartment to appreciate this much, even if it is detached and with a reform costing R$1 million,” she says. She explains that the value of a property must be assigned by a professional in the area, who signs the appraisal with his/her professional license, and wonders if this was done in the case of Salles’ apartment.

Other pending issues in Justice

After being announced as Minister of the Environment by President Jair Bolsonaro shortly after the 2018 elections and before taking office earlier last year, Salles was convicted by a lower court of administrative misconduct when he was Alckmin’s government Secretary in São Paulo. In the lawsuit, he was accused of irregularly altering environmental management maps. He is appealing the sentence.

The Minister is also the target of an inquiry being processed by the 6th Public and Social Heritage Prosecutor’s Office of the MP-SP for suspected pressure on police officers and delegates.

He allegedly used personal connections and his political position as São Paulo State Secretary of the Environment to try to steer inquiries and proceedings. The MP’s inquiry also includes testimony that Salles influenced investigations at the São Paulo Civil Police’s Inspectorate, heading a scheme that falsified documents in lawsuits and actively advocating the interests of a building company while leading the state’s portfolio.

In another case, Salles became a defendant in a criminal lawsuit for a crime against urban planning and cultural heritage in December 2019. In the lawsuit, he was held liable for having ordered the removal of a bust of the guerrilla Carlos Lamarca (1937-1971) from the Rio Turvo State Park in Cajati, in the interior of the state of São Paulo, in 2017. At the time, he was Secretary of the Environment in Alckmin’s government and, according to reports of people present, he was outraged to find the bust during a visit to the area. However, in May, the TJ-SP blocked the suit.

Source: El País