Photographer: Dado Galdieri/Bloomberg

Police Raid Rio de Janeiro Olympic Venue on Fraud Suspicion

  • Supreme Court also authorizes investigation of Rio Mayor Paes
  • Raid and investigation add to setbacks in run-up to Rio games

Brazil’s federal police raided the offices of the consortium building the second-largest Olympics complex in Rio de Janeiro, clouding the run-up to the mega-event whose chief advocate will also face investigation in a separate case.

Authorities executed a search-and-seizure warrant at the headquarters of the Deodoro Sports Complex’s northern section, which was built by Queiroz Galvao SA and OAS SA, after investigations signaled fraud, police said in a statement. Deodoro -- the first Olympic venue facing fraud allegations -- will host events including slalom canoe, rugby, equestrian competitions and the pentathlon.

Deodoro Olympic Park showing the canoe slalom circuit, center, and BMX circuit, right.

Photographer: Felipe Dana/AP

The Comptroller General’s Office found over-billing, falsification of receipts, and the hiring of a shell company to simulate transport and disposal of material required for works, according to a statement from Brazil’s Ministry of Transparency, Oversight and Control. The consortium of the two builders said higher costs were justified.

The raid is the latest setback for Eduardo Paes, who has been the face of the Summer Olympics set to start August 5. Part of a coastal bike path Rio’s City Hall built ahead of the games collapsed into the ocean when it was bashed by waves in April, killing at least two. A light-rail tram Paes inaugurated Sunday experienced an electrical failure on its first day running. The Supreme Court on Monday also gave public prosecutors the go-ahead to investigate Paes for his role in a congressional inquiry a decade ago.

Queiroz Galvao and OAS won the tender for the Deodoro works with their bid of 644 million reais ($186 million). The fraud is equivalent to as much as 85 million reais, according to the ministry’s statement. 

Raising the costs of materials stemmed from an increase in the quantity transported, which wasn’t foreseen in the original project, the consortium’s press office said in an e-mailed statement. It has provided the necessary clarifications to authorities, it said.

Police also raided the offices of two companies that provided services to the consortium building the Olympic venue, without naming them, according to their statement.

Rio is awaiting conclusion of the investigation, and payments to the consortium will remain suspended until adequate documents and receipts are presented, according to an e-mailed statement from City Hall. The statement highlighted that City Hall didn’t make any of the payments the investigation is targeting.

Paes Investigation

The Supreme Court on Monday evening authorized an investigation into Paes for allegedly helping cover up a vote-buying operation when he was a lawmaker a decade ago. The decision by Justice Gilmar Mendes allows for a probe of Paes and two others, including Senator Aecio Neves, who was governor of Minas Gerais state when Paes sat on a committee in 2005 that investigated the alleged scheme. Paes and Neves have denied any wrongdoing.

Rio’s Mayor Eduardo Paes runs up a hill to speak to journalists at Deodoro Olympic Park in April.

Photographer: Silvia Izquierdo/AP

Former Senator Delcidio do Amaral, who had been the government’s Senate leader until he was arrested last year, said in a plea bargain that Paes was complicit in covering up financial information that would compromise Neves. The Prosecutor General’s office requested authorization from Brazil’s highest court for the probe last month.

“Mayor Eduardo Paes is available to provide clarification to the court regarding the episode related by Senator Delcidio do Amaral,” Rio’s City Hall said in an e-mailed statement. “At no time did then-governor Aecio Neves request any type of benefit in the investigations.”

Neves denies interfering with or influencing the committee’s probe, his press office said on Twitter.

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