Prosecutors Say Rio’s Metro Line 4 had Billions in Fraudulent Billing

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Fraudulent contracts awarded to complete Rio de Janeiro’s Metro Line 4 may have cost taxpayers more than R$3.17 billion in over billing, according to the state’s public prosecutor’s office (MPRJ).

“The original contract had the state’s participation at a 43 percent level, but, after contractual changes participation in the total scope of the work reached 89 percent,” prosecutor Liana Barros Cardozo was quoted as saying by Brazil’s official government media.

“This contribution of resources has generated enormous increase of indebtedness for the state, which today is in a situation of collapse,” added Cardozo.

According to the prosecutor, the contribution by the Rio government in the metro line, which cost about R$10 billion, increased by 675 percent from the original contract

Now prosecutors try to recover the money through legal action against 30 defendants, including former governor of Rio de Janeiro, Sérgio Cabral, and former Secretary of Transportation, Julio Lopes.

Former governor Cabral was arrested last year accused by the Lava Jato Task Force of leading a gang that received money from contractors to favor them in bids for works in the state of Rio de Janeiro. In April, the Federal Public Prosecutor’s Office (MPF) stated that the corruption scheme led by Cabral has spread through all branches of the state government.

The first concession agreement for Line 4 of the Rio Metro was signed in December 1998 by the then governor Marcello Alencar. In 2010, in the Cabral Administration with the argument of the urgency in the implementation of the line to meet the demands of the 2014 World Cup and the Rio 2016 Olympic Games several changes were made on the subway works.

One of the members of the consortium was mega-construction company Odebrecht, whose executives signed plea-bargaining agreements with federal prosecutors to tell all about bribing officials to get contracts.