Brazilian building firm scores on smooth move to democracy

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Dilma Rousseff walked on to the field of Itaquera stadium, host of this year’s World Cup opener in São Paulo, and shook hands with the construction crew of Odebrecht, 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 tarpaulins hiding pockets of unfinished construction.

With kick-off just weeks away, Odebrecht was hurrying to complete the arena after cost overruns and the deaths of two of its workers.

On the other side of the city of 19 million people, 1 500 marchers had just invaded Odebrecht’s offices, spraying walls with graffiti that denounced the funnelling 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 (R7bn) in subsidised loans from Brazil’s state development bank. The company is one of the biggest contributors to Rousseff’s Workers’ 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 protest group Movement of Workers Without Housing.

Odebrecht is the biggest among Brazil’s empreiteiros, the Portuguese word for contractors, that are capitalising 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 construction firms, including Odebrecht, that helped them amass their wealth.

The campaign donations from Odebrecht and its peers ahead of the World Cup are fuelling an attempt in the Supreme Court to ban corporate donations. Sergio Bourroul, an Odebrecht spokesman, said the firm’s campaign donations were aimed at strengthening Brazil’s electoral process and not supporting specific candidates.

Odebrecht, which is also part of a consortium that manages the Maracanã 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, a 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.

“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 $30bn (R318bn) of work in the pipeline. It has been completing dozens of projects in 26 other nations.

In Brazil, Odebrecht is working on the world’s largest dam under construction in the Amazon, 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, the managing director at broker-dealer CRT Capital Group. “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 $4bn, 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, declined an interview request for this story. His son, Emilio, heads the board of directors and a grandson, Marcelo, serves as the chief executive.

While Odebrecht’s scale helped it win contracts, research by political science professors, including Daniel Hidalgo, of Massachusetts Institute of Technology, shows that campaign finance was also a factor. Campaign donations from five Odebrecht units grew to 37.9 million reais in 2012, from 8.1 million reais in 2002, according to the electoral tribunal.

Units of stadium builders OAS, Queiroz Galvao and UTC Enghenaria also ranked among the top 10 contributors. – Bloomberg


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