Bloomberg News

Corruption to Blame for Some Brazil World Cup Cost Rises

May 23, 2014

Estadio Mane Garrincha

The Estadio Mane Garrincha in Brasilia. Almost every arena is more expensive than first anticipated, with the publicly funded Mane Garrincha stadium in Brasilia the most expensive at $900 million, almost three times the original estimate. Photographer: Friedemann Vogel/FIFA via Getty Images

Corruption is partly to blame for Brazil’s World Cup stadiums ending up over budget and becoming some of the world’s most expensive soccer venues, a government official said.

The latest estimate for 12 new and refurbished stadiums shows costs of about 8 billion reais ($3.6 billion), 2.7 billion reais more than the first detailed estimate issued in 2010 and almost four times the amount Brazil told soccer’s governing body stadiums would cost in its 2007 hosting file.

Almost every arena is more expensive than first anticipated, with the publicly funded Mane Garrincha stadium in Brasilia the most expensive at $900 million, almost three times the original estimate. The facility is now the second most-expensive soccer stadium behind England’s $1.2 billion Wembley Stadium.

“There must be some corruption,” Sergio Nogueira Seabra, secretary for transparency and prevention of corruption in Brazil’s comptroller general’s office, said yesterday in an interview. “If the price is too high, there is something wrong.”

The comptroller general’s office, the national accounts tribunal, or TCU, and a group of public prosecutors have all investigated projects linked to the World Cup, which has a total price tag of about $11 billion. Their work has saved about 700 million reais so far, according to the TCU, which investigated contracts and found several examples of price gouging and over-billing.

Cost Savings

Seabra said his office looked at 2 billion reais worth of contracts for work at World Cup stadiums in Manaus, Cuiaba and Rio de Janeiro, where the final will be played on July 13. After an analysis, about 200 million reais in savings was made, he said. Seabra’s team didn’t have the jurisdiction to look at other arenas. He said not all examples of overpricing could be attributable to corruption. Forbes last November estimated the cost of corruption overall in Brazil in 2013 could be as high as $53 billion.

Almost every stadium related to the World Cup has been delayed, forcing up costs as deadlines neared. Some stadiums, including the Sao Paulo arena where the opening match between Brazil and Croatia will be played on June 12, remain under construction. Contracts that normally would be required to undergo public tenders were handed out without bids under emergency regulations, according to Vinicius Panetto, a public prosecutor in Rio de Janeiro who investigated work at the Maracana stadium in Rio.

Panetto found that the original budget priced plastic diaper-changing stations in the stadium at 10,800 reais ($4,876) each. A 92 percent reduction in that cost, combined with another for bathroom tiles, brought the budget down by 7 million reais. An order for 495 gates to be used at the stadium was reduced to five, providing a further 12 million reais in savings.

Public Outcry

Last week, TCU President Augusto Nardes criticized the lack of organization and planning related to the World Cup. He said unfinished infrastructure would “shame” the country when the tournament begins, likening the center-west city of Cuiaba to a war zone.

There have also been at least eight workers killed during construction of the facilities to be used in the month-long tournament.

The costs of staging the World Cup have led to a public backlash, including the biggest protests in a generation that erupted during last year’s Confederations Cup, a warmup for the World Cup. A poll released by Datafolha in February showed support for the World Cup had fallen to a record low 52 percent.

Soccer is Brazil’s national passion. A record number of domestic fans applied for tickets as the team tries to secure a record-extending sixth World Cup championship.

“Here in Brazil when kids are born, they’re born loving football, it’s in our blood,” said Sergio Rodrigues, a 43-year-old security guard in Sao Paulo. “This is the country of football, but it’s also the country of corruption.”

To contact the reporter on this story: Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net

To contact the editors responsible for this story: Christopher Elser at celser@bloomberg.net Rob Gloster, Dex McLuskey


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