Dilma Rousseff walked onto the field of Itaquera stadium, host of this year’s World Cup opener in Sao Paulo, and shook hands with the construction crew of Odebrecht SA, Latin America’s biggest builder. They gave the Brazilian president a metallic-gold hard hat and huddled around as a worker shot a group selfie.
A banner emblazoned with the company’s logo next to the words “mission accomplished” slung from the stands, even as cranes towered overhead and the wind blew back tarps hiding pockets of unfinished construction. With kickoff just weeks away, Odebrecht was hurrying to complete the arena after cost overruns and the death of two of its workers.
On the other side of this city of 19 million people, 1,500 marchers had just invaded Odebrecht’s offices, spraying walls with graffiti that denounced the funneling of taxpayer money to builders such as Odebrecht for World Cup arenas.
“Odebrecht makes billions on the blood of workers and the money of the people,” said one accusation.
Odebrecht is helping erect or expand four World Cup stadiums, financed with 1.5 billion reais ($675 million) in subsidized loans from Brazil’s state development bank. The company is one of the biggest contributors to Rousseff’s worker’s party, a relationship not lost on people critical of the World Cup’s cost to taxpayers.
“We want policies that improve the lives of residents instead of just benefiting the privately-held builders,” said Guilherme Boulos, a leader of the protest group, Movement of Workers Without Housing.
Odebrecht is the biggest among Brazil’s empreiteiros, the Portuguese word for contractors, that are capitalizing on Brazil’s first World Cup in 64 years, with taxpayers footing the bill. The protests coincide with an investigation into the nation’s military dictatorship era of 1964-1985. Known in Brazil as the Truth Commission, the inquiry has shed light on the close ties the regime had with the country’s builders, including Odebrecht, that helped them amass their wealth.
The campaign donations from Odebrecht and its peers ahead of the World Cup are fueling an attempt in the Supreme Court to ban corporate donations. Sergio Bourroul, an Odebrecht spokesman, said the firm’s campaign donations are aimed at strengthening Brazil’s electoral process and not supporting specific candidates.
Odebrecht, which is also part of a consortium that manages the Maracana stadium in Rio de Janeiro, spread its influence after the dictatorship by cultivating relationships with Brazil’s biggest state-owned companies, according to Pedro Campos, history professor at Universidade Federal Rural de Rio de Janeiro.
“Odebrecht was the most efficient of the builders at transitioning from the dictatorship to democracy, and now it’s showing,” said Campos, whose dissertation, “The Dictatorship of the Contractors,” was debated at a truth commission hearing in March. “The company may have been the biggest beneficiary of the World Cup.”
Odebrecht’s gross revenue grew 16 percent last year to 96.9 billion reais, making it the biggest closely held company in Latin America, with 175,000 employees and more than $30 billion of work in the pipeline. The company has been completing dozens of projects in 26 other nations, including highways in Angola and the expansion of the airport in Miami.
In Brazil, Odebrecht is working on the world’s largest dam under construction in the Amazon, floating production storage and offloading rigs for deep-water oil exploration, and in its latest foray, missiles and submarines for the military.
“Brazil has a lot of state-owned companies and big private firms with strong ties to governments in what I like to call Brazil Inc.,” said Peter Lannigan, managing director at broker-dealer CRT Capital Group LLC. “Odebrecht is one of those companies that gets the contracts and dominates its industry. But at the end of the day, they continue to do what they’ve always done, which is get things done.”
Odebrecht’s ability to get things done has put the family’s patriarch, Norberto Odebrecht, atop a fortune valued at more than $4 billion, according to the Bloomberg Billionaires Index. Founded in 1941, the company is divided between more than a dozen family members and another Brazilian clan that controls a 21 percent stake.
Odebrecht, 93, doesn’t draw attention to the fortune and declined an interview request for this story. His son Emilio heads the board of directors and a grandson, Marcelo, serves as Chief Executive Officer. Known for donning cream-colored suits, Odebrecht now focuses on his foundation.
After graduating from Escola Politecnica de Salvador, Norberto Odebrecht took over debts that his father’s company accrued due to inflation of construction materials during World War II.
“Norberto thought he would spend a lifetime paying off those debts, but it only took four years,” said Fatima Berbert, who runs the museum to the company’s corporate culture at headquarters in Salvador.
He started out by building shipyards, commercial centers, and a terminal for the Salvador airport. By 1973, the company had become the third-biggest builder in Brazil, earning Norberto Odebrecht the title of Empreiteiro of the Year after his “fantastic ascension” in a decade of military rule, according to a 1974 article in trade publication O Empreiteiro.
“The company’s escalation was an achievement, considering that some of its projects were sought by bigger firms armed with the combination of technical, economic and political resources that the Bahia entrepreneur didn’t possess in such abundance,” the magazine said.
The company’s government connections were personified by Eliseu Resende, a transport minister for the dictatorship who was later named an Odebrecht director, Campos said. As the regime’s grip on power slipped, Odebrecht made itself a protagonist for change, joining the commission to lead a democratic transition.
“Odebrecht always maintained the ties it needed,” said Percy Louzada de Abreu, a former Petrobras director. “He used them to take advantage of opportunities ever since the military dictatorship.”
While Odebrecht’s scale helped it win contracts, research by political science professors including Daniel Hidalgo, of Massachusetts Institute of Technology, show that campaign finance was also a factor. Donations by public works companies, including Odebrecht, in election years 2002, 2006 and 2010 showed that each real donated to campaigns of worker party lawmakers yielded 14 to 39 reais worth of contracts in less than three years, according to a report co-authored by Hidalgo.
Campaign donations from five Odebrecht units grew to 37.9 million reais in 2012, from 8.1 million in 2002, according to the electoral tribunal. Odebrecht’s building unit gave 6 million reais to the worker’s party in 2013, as incumbent Rousseff, a former guerrilla who was tortured by the military regime, seeks re-election. Units of World Cup stadium builders OAS SA, Queiroz Galvao SA and UTC Enghenaria SA also ranked among the top 10 contributors.
Supreme Court head Joaquim Barbosa said corporate campaign finance is exuding “pernicious influence” over politics, in one of six rulings by justices in April in favor of banning corporate donations. Dissenting vote Teori Zavascki argued that prohibition will drive contributions underground, as they were before the 1995 rules that allowed them. The court has yet to decide whether a ban would apply to this year’s election.
“While businesses represent important economic activity that create jobs and profits for the nation, that doesn’t mean they should be able to invest in campaigns and interfere in electoral results,” said Marcus Vinicius Coelho, president of Brazil’s Order of Lawyers, which filed the case. “Contributions are very concentrated in public works firms.”
Dilma Rousseff said in 2009 that no public money would be needed to build and reform arenas for the World Cup. Amid delays and cost overruns, the government is now providing more than 6 billion reais of the financing for 12 arenas, and government auditors say four of the stadiums are white elephants that could burden public coffers.
The price tag on Sao Paulo’s Itaquera stadium, which will house the Corinthians soccer club, surged to almost 1 billion reais in a two-year standstill between the club and Odebrecht over guarantees. The Brazilian Development Bank released the 400 million reais loan in March, after 100 million reais in interest accrued on bridge loans.
The stadium was delayed by two months after a 1,500-ton crane collapsed as it raised the final piece of the arena’s roof in November. Two workers died in the accident. A third worker who fell to his death in March while installing temporary seating worked for a different contractor. Odebrecht said it wasn’t responsible in any of the deaths.
Itaquera will hold the opening World Cup match between Brazil and Croatia on June 12.
At a tent camp near Itaquera stadium organized by Boulos’s group, squatters huddling beneath draped tarps traded stories about how the stadium drove up housing prices and made rent unaffordable. After leading the May 8 attack on the offices of Odebrecht and other contractors, the group organized a rally of 12,000 near the stadium last week and joined in yesterday as subway workers went on strike for higher wages.
Boulos, who is negotiating housing subsidies for tent camp dwellers with the Rousseff government, said the stadium subsidies show how corporate interests are given priority over social needs.
“The empreiteiros’ campaign contributions are investments, with a considerable return in the form of public contracts,” said Boulos. “They are the winners here.”
In an e-mailed response to questions, Odebrecht’s spokesman Bourroul said the company views campaign finance as a way of supporting Brazil’s long-term economic development, rather than a form of investment.
“Odebrecht promotes its donations as part of a democratic vision and while respecting the law,” Bourroul said. “Without adopting any partisan position or ideology.”
To contact the editors responsible for this story: Peter Newcomb at email@example.com Matthew G. Miller