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BNDES 3: The Bank for the Four Sisters


Brazil’s development bank helped empower and heavily funds the Four Sisters, mega-construction companies with a long record of corruption, social and environmental harm.

In the third of six articles on the BNDES, LAB’s Sue Branford Branford traces the rise of the Four Sisters, and notes how BNDES loans helped empower the influential firms.

    • Billions in BNDES loans fuelled the meteoric rise of the Four Sisters — a quartet of mega-construction companies that have dominated Brazilian politics for decades. These companies have been implicated in bribery, kickbacks, rigged bids, inflated contracts, social and environmental harm. This overwhelming Brazilian corruption led to a protest on March 13, 2016 in which more than a million people took to the street around the nation.
    • As the development bank experienced rapid growth, so too did the Four Sisters, into which it poured low interest subsidized loans for gigantic infrastructure projects both in Brazil and across South America — including Amazon dams, roads, railways, ports and more.
    • The Four Sisters — Odebrecht, OAS, Camargo Corrêa and Andrade Gutierrez — have long been accused of financial crimes, with former Odebrecht CEO Marcelo Odebrecht sentenced to 19-years for corruption last week. BNDES, though it has loaned billions to the firms, has not been charged with any offenses.

Sete Quedas, one of the world’s most powerful and scenic waterfalls ceased to exist in 1982 when the Itaipu dam drowned it. That destruction was met by a loud public protest. Gigantic infrastructure projects have been funded by BNDES and built by the Four Sisters, Brazil’s largest construction companies, creating controversy over recent decades. Photo: Mario Cesar Mendonça Gomes on flickr.

The “Four Sisters”, as Brazil’s largest construction companies are known, are widely touted as enacting one of the nation’s most impressive economic and spectacular success stories of recent decades. The four firms — Odebrecht, OAS, Camargo Corrêa and Andrade Gutierrez — are household names in Brazil today, and among the leading construction companies on the planet.

While much of Brazil’s industrial sector has been finding it difficult to compete with cheap Chinese imported goods, the Four Sisters, by contrast, have been winning large contracts abroad.

According to the AEB (the Brazilian Foreign Trade Association), the companies brought US$13 billion into Brazil in 2014, helping to offset the country’s heavy current account deficit of US$105 billion.

The AEB also says that these foreign contracts provide employment to 1.2 million Brazilians, many of them working for the thousands of smaller companies that supply the construction giants with goods and services.

Four Sisters with a contentious family history

From the start, controversy has dogged the Four Sisters, whose remarkable growth wouldn’t have been possible without the torrents of money and cheap interest rates provided by BNDES (Banco Nacional de Desenvolvimento Econômico e Social), the largest development bank in the Americas, and a public institution built largely with Brazilian taxpayers’ money.

Throughout their history, the giant construction companies have been accused of corruption, power brokering and tax invasion. Cases abound. One notorious example comes from the country’s 1964-1985 period of military rule. In 1973, a Brazilian general showed the President (also a general) documentation showing that Finance Minister Antônio Delfim Netto had told a French firm that Brazil’s Camargo Corrêa would be building the Agua Vermelha hydroelectric dam — the only problem: contract bidding hadn’t yet begun!

On March 13, 2016 more than a million Brazilians took to the street to protest massive corruption born out of the close relationship between the federal government and Brazilian companies including Petrobrás (the state-run oil company), the Four Sisters (the nation’s biggest construction companies), and other companies. Photo: Tânia Rêgo for Agência Brasil published under the Creative Commons Attribution 3.0 Brazil License

The same documentation revealed that the Finance Minister would get a commission for sealing the deal (6 percent of the total value). Bribes like this one were regularly paid to bid intermediaries, according to Pedro Henrique Pedreira Campos, a lecturer in history and international relations at UFRRJ (Federal Rural University of Rio de Janeiro), who has done deep research into Brazil’s construction companies.

With so much BNDES money flowing through government to contractors, and without proper controls, it was not just politicians who grew spectacularly rich. A respected businessman, Bruno Nardini, complained in 1987: “What kind of capitalism do we live in, in which, in the space of 20 years, a person like Sebastiāo Camargo can accumulate a personal fortune of US$1 billion?… It is a system which — as a result of the concentration of political and economic power — has benefitted a mere handful of people. Our State has never served the business class, but only the monopolies and the state companies.”

The accusations of illicit enrichment have continued down to the present day. Add to that, charges of labour exploitation and environmental harm. For instance, in 2010, prosecutors from the MPF (Federal Public Ministry) charged Camargo Corrêa and other construction companies with holding workers in conditions analogous to slavery at the construction sites for the Jirau and Santo Antônio hydroelectric dams on the Amazon’s Madeira River. In a more recent case, critics charged that contractors and the government ignored the potential environmental damage that would be done by the newly completed Belo Monte dam on the Xingu River — a project largely funded by BNDES.

Queries sent to each of the Four Sisters for this article went unanswered, except by Andrade Gutierrez.

Political policies and big loans fostered mega-companies

The Four Sisters — and the power they wield — did not exist until the federal government took an active role in promoting economic development; instead, construction work all over Brazil was carried out by small, local firms.

The Jirau dam under construction. In 2010, Camargo Corrêa and other construction companies were charged with holding workers in conditions analogous to slavery at the construction sites for the Jirau and Santo Antônio hydroelectric dams on the Amazon’s Madeira River. Photo courtesy of International Rivers.

This changed in the middle of the 20th century when President Juscelino Kubitschek came to power. Keen to promote rapid growth (his motto was “50 years in 5”), the President decided to build a big new federal capital — Brasilia — in the heart of the largely unoccupied hinterland. Brazilian construction companies, eager to win unimaginably large contracts, cultivated close relations with the government. It is a lesson they never forgot: as one writer put it: “the companies built Brasília and have never left it”.

A small group of favoured firms began to win contracts all over the nation. In 1968, a consortium including Camargo Corrêa and Mendes Júnior (another large company) won the contract for the bridge linking Rio de Janeiro with neighbouring Niterói — at 13-kilometers (8.25 miles), the longest bridge in the Southern Hemisphere.

In 1975, Camargo Corrêa, Andrade Gutierrez and Mendes Júnior started work on the huge Itaipu hydroelectric dam, a joint venture with Paraguay. The dam was controversial because it led to the demolition of a natural marvel: the world’s largest cluster of waterfalls. In one of his best-known poems — published in large type across two pages of one of Brazil’s leading newspapers — renowned poet, Carlos Drummond de Andrade, lamented “the assassination of the waters killed by the hand of man, the lord of the planet.”

As the Four Sisters grew in wealth, they began distributing electoral funds to all the main political parties, assuring their close associations with government — no matter who was in power. Parties and candidates grew increasingly reliant on these donations, while the companies became dependent on the super-sized government infrastructure contracts handed out when elections were over.

This process introduced a dangerously irrational element into national infrastructure planning, say critics. The government habitually approved and undertook large construction projects that benefited the Four Sisters, without considering more modest investments in smaller projects that might have proved more cost-effective, less environmentally damaging and of greater benefit to the public good.

This close relationship between the government and the construction companies, along with the increasingly large pot of money used by BNDES used to fund mega-projects, has long worried analysts. A study from the NGO IBASE warned: “Without transparency, without social vigilance, the risk of loans being made without democratic criteria becomes great. The situation becomes even more serious when you have, on the one hand, huge corporations and, on the other, the fragile Brazilian system of electoral financing, making it possible for the ‘thank you’ for the loans to be expressed in campaign funding.”

An artist’s rendering of the Belo Monte dam on Xingu River in the Amazon. Recently, critics charged that contractors and the government ignored the potential environmental damage that would be done by the newly completed Belo Monte dam on the Xingu River — a project largely funded by BNDES. The lead contractor and the federal government have also been charged in court with ethnocide against indigenous groups in connection with the project. Photo courtesy of Wikipedia.

The construction companies, however, have long denied that they receive special favours from government. Back in 1978, Sérgio Andrade, then a young director at Andrade Gutierrez, said that “experience and technical capacity are needed to carry out complex, large projects” and “only the big construction companies have these qualities.”

Over the years, the companies grew skilful at adopting to changing political regimes: they gained national prominence during the era of giddy economic growth under democratically elected President Kubiteschek, rapidly tailored their operations to the political climate of the repressive 1964-85 military dictatorship (which provided the Four Sisters with great growth opportunities), then adapted yet again to the more liberal political climate that followed.

Journalist Samuel Wainer famously wrote in his memoirs, published in 1980: “During that period [the toughest years of the dictatorship], I realised that one figure was indispensable for unravelling the secrets of power in Brazil: the boss of a construction company”.

Judging by the ongoing Lava Jato corruption scandal, Wainer’s comments remain as relevant today as when he wrote them. In his study of Brazilian construction companies, Pedro Campos points to a single factor that may have shaped the relationship between the companies and the state: “If the dictatorship was a decisive moment for the ascension of the construction companies as powerful business groups, the continuation of their power is due precisely to the links, the presence and the control that this monopoly capital had over the Brazilian state in the period following the dictatorship and still has up to the present day.”

With investigators looking into, and sometimes finding, convincing evidence of corruption surrounding Brazil’s big construction companies and contracts for major infrastructure projects, BNDES has so far been cleared of any criminal actions. “It is a mistake, therefore, to try to associate the BNDES with illicit acts just because it provides financing to companies under federal police investigation,” the bank told Mongabay. “Recently, the BNDES itself underwent a series of investigations, including a congressional inquiry (CPI), which spent more than a semester verifying supposed irregularities in the institution’s practices,” a process with which the bank says it fully cooperated. “Not one of these investigations resulted in an accusation against the Bank, nor was there any indication whatsoever that our executives or employees were involved in any wrongdoing.”

Political connections benefit the Four Sisters

A closer look at the Four Sisters illustrates how they came to dominate Brazilian life and politics. The oldest company, Camargo Correa, was founded in 1936 by an impoverished labourer, Sebastião Ferraz de Camargo, whose first job was the transport of sand by horse and cart for road building in the interior of the state of São Paulo.

President Juscelino Kubitschek promoted rapid growth (his motto was “50 years in 5”), the President decided to build a big new federal capital — Brasilia — in the heart of the largely unoccupied hinterland. Brazilian construction companies, eager to win unimaginably large contracts, cultivated close relations with the government. It is a lesson they never forgot: as one writer put it: “the companies built Brasília and have never left it”. Photo courtesy of government of BrazilHe expanded his company during the building of Brasilia under President Kubitschek. But it was not until the dictatorship that his firm really took off. “Camargo Correa was the military regime’s pet, the one with the closest links to the dictatorship’s project”, said Pedro Campos. Sebastião Camargo openly acknowledged his sympathy for the ruling generals and, according to Campos, helped fund the notorious Bandeirantes Operation, a repressive apparatus created by the military to combat armed resistance to the military government. In return, the businessman was awarded an honorary doctorate by the Higher War College, though he could barely sign his name.

Camargo Correa won its first contract abroad in 1978, heading an international consortium for the construction of a hydroelectric power station in Venezuela. It was at about this time that the company began to diversify away from engineering, buying up cement companies, shipbuilders, clothing manufacturers and more. It has long been particularly strong in Rio de Janeiro, where it has provided funding for politicians, including R$1 million (US$250,000) for Sérgio Cabral’s successful run to be elected governor of the state in 2010. It has also won numerous contracts there, many funded by BNDES.

The company was also careful to maintain close links with Brazilian politicians in other parts of the country, a relationship that served it well in 2009 when it was accused of forming a cartel with other construction companies regarding the bid to build the Salvador subway in Brazil’s Bahia state. At huge expense, the company contracted a former Minister of Justice, Márcio Thomaz Bastos, to defend it. The legal battle finally ended in 2011, when the Higher Justice Tribunal suspended the case, saying that some evidence had been collected illegally.

Another case in which the company was deeply involved was the so-called Sand-Castle (in Portuguese, Castelo de Areia) Operation, in which Federal Police monitored illegal remittances of dollars abroad and identified such crimes as tax invasion, conspiracy, money laundering and fraud in public bids. At one stage, four Camargo Correa directors were temporarily arrested. In November 2010, the operation was suspended, for reasons never properly explained.

Márcio Thomaz Bastos. One of the four sisters, Camargo Correa maintains close links with Brazilian politicians, relationships that served it well in 2009 when it was accused of forming a cartel with other construction companies. The gitm contracted former Minister of Justice, Márcio Thomaz Bastos, to defend it. The legal battle finally ended in 2011, when the court suspended the case, saying evidence was collected illegally. Photo by José Cruz courtesy of Agência Brasil published under the Creative Commons Attribution 3.0 Brazil License.

More than the other companies, Camargo Correa has also been the target of revolts by unskilled workers on its construction sites. It has gained a reputation for maltreating its labourers, something that Pedro Campos links to its long relationship with the dictatorship and its support for the harsh methods used at the time to combat opposition. Particularly notable were the riots carried out by labourers at the Tucuruí dam in 1980 and at the Jirau dam in 2011. Campos notes that both building sites were located in isolated areas of the Amazon forest and involved tens of thousands of workers.

Odebrecht, today’s construction giant, had a stuttering start. Its story began in 1856 when Emil Odebrecht, a German engineer, arrived in the south of Brazil. He worked in road construction and his grandson set up a construction company, which went bankrupt. In 1944, his great-grandson, Norberto Odebrecht, launched the present company.

It has been much favoured by BNDES. Between 2007 and 2015, the bank provided US$11.9 billion to fund engineering works abroad, including big projects in Cuba and Angola, of which Odebrecht alone received 70 percent.

The company has long been accused of price fixing and operating cartels. Particularly notorious was the accusation that it contributed to the slush fund operated by Paulo César Farias, a close aide to President Fernando Collor de Mello, who resigned in 1992 a few hours before he would have been impeached for corruption by the Brazilian Congress.

In March of this year, Marcello Odebrecht, the former CEO of Odebrecht SA, Brazil’s largest construction company was convicted for corruption and given a sentence of 19 years. Photo courtesy of the World Economic Forum from Cologny, Switzerland licensed under the Creative Commons Attribution-Share Alike 2.0 Generic licenseIt was during this period that Emilio Odebrecht, who was to later become chief executive of the company, gave his first press interview. On being asked if he had ever paid a bribe, he gave a rambling reply: “Well, let’s first analyse what corruption is. I think that the whole of society is corrupt and it corrupts. To resolve anything, you have to give a little present and that is considered corruption.… What impresses me is that we do all this abroad and there is no problem. Everything we do in Brazil, we do abroad.”

Odebrecht has especially benefited from government contracts in recent years; it won bids in eight of ten big projects for the 2014 World Cup and 2016 Olympics in Brazil. Today it employs over 175,000 people in 25 countries in Latin America and around the world. Like Camargo Correa, Odebrecht has diversified, with big investments in real estate and oil refining.

Odebrecht too has had its share of controversy: it is deeply implicated in the recent Lavo Jato (Car Wash) scandal, which stemmed from police investigations into the state-run oil company Petrobrás. In June 2015, CEO Marcelo Odebrecht, was arrested and accused of spearheading a R$8.5 billion (US$2.1 billion) bribery scheme. In December 2015, he resigned as CEO, and this March he was sentenced to prison for bribery, money laundering and organized crime.

Otavio Marques Azevedo, the head of Andrade Gutierrez, Brazil’s second largest construction company, was arrested at the same time as Odebrecht’s CEO. Andrade Gutierrez is almost as old a company as Camargo Correa. It was established in the 1940s by brothers Roberto and Gabriel Andrade, and friend Flávio Gutierrez. Once again, government contacts were crucial to the firm’s meteoric rise: another Andrade brother, José Maurício de Andrade, preferred politics to construction and was a close ally of Juscelino Kubitschek, who in the early 1950s was governor of the state of Minas Gerais.

When Kubitschek was elected president, promising big investments in infrastructure to promote growth, the family firm benefited. In the late 1950s, Andrade Gutierrez won a major contract to build a highway from Rio de Janeiro to Belo Horizonte, the capital of Minas Gerais state. As with all the Four Sisters, Andrade Gutierrez got a taste for public works: Brazil’s leading business magazine, Exame, reported that 98 percent of the company’s income came from government contracts from 1985-90 during the José Sarney administration, the first civilian government after the dictatorship.

The Rio-NiteróI Bridge. A small group of favored firms began to win contracts all over the nation. In 1968, a consortium including Camargo Corrêa and Mendes Júnior (another large company) won the contract for the bridge linking Rio de Janeiro with neighboring Niterói — at 13-kilometers (8.25 miles), the longest bridge in the Southern Hemisphere. Photo by Juliana Swenson licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license

That dependence on public works meant that many of the contracts Andrade Gutierrez won were funded by BNDES. Critics suspect that crimes, such as price fixing, were committed by the firm during the negotiation of some of these contracts, but until recently information was sketchy. For instance, a Federal Police enquiry in 2010 revealed that in 2008 Andrade Gutierrez made an over-billing deal with Odebrecht and Queiroz Galvão, and together these companies divided up several large contracts. Andrade Gutierrez’s portion of the prize was a R$232 million (US$59 million) contract for road construction under PAC, a large government infrastructure program funded by BNDES.

The youngest of the Four Sisters, OAS was launched in 1976 by three former Odebrecht executives who got their company started by winning Odebrecht subcontracts. Soon they moved to bigger deals and, within ten years, OAS ranked among the ten largest construction companies in Brazil. Even so, until the 90s OAS only won contracts in the Northeast, where one of the founders — Cesar Araújo Mata Pires, the “A” in the name — was married to the daughter of the region’s most powerful politician, Antônio Carlos Magalhães, who played a key role in national politics as governor of the state of Bahia. Like the other Sisters, OAS expanded with BNDES loans, winning lucrative contracts all over the nation.

Dogged by controversy

The Four Sisters have been involved in some of the most contentious infrastructure projects in Brazil’s history. As already shown, they’ve been found guilty of holding labourers in conditions “analogous to slavery”, to use the term employed by Brazil’s Ministry of Labour. One notorious case involved 111 men brought down from the impoverished Northeast by OAS to construct the new airport of Guarulhos just outside São Paulo. The men were lodged in shacks unfit for human habitation and some were starving. The news was particularly shocking, as all this was going on so close to Brazil’s largest and wealthiest city.

During the previously mentioned building of the Jirau dam on the Madeira River some of the project’s 15,000 workers staged a wild cat strike, complaining that they had been given rotten food, lodged in unsafe conditions, and not been provided with medical treatment when they contracted malaria. Camargo Correa was a member of the consortium building this dam, though the lead company was the French multinational, Suez — showing that violations of labour laws are carried out by firms from all over the world, not just Brazil.

Beginning notably with the destruction of the Sete Quedas cataracts, the Four Sisters have also been periodically accused of colluding with authorities in highly environmentally destructive forms of development. One case among scores involved the demolition of a sacred indigenous site along the Tapajós River to pave the way for the São Luiz do Tapajós hydroelectric power station — destruction carried out before the plant had even been authorized. This, the first of eight dams to be built in the Tapajós basin, is to be constructed by a consortium made up of Camargo Corrêa and France’s EDF, among others. Funding will come from the BNDES, though the Bank has announced that for these future dams it will, at most, provide 50 percent of the investment.

The Four Sisters go international

Given the Four Sisters’ close links with the Brazilian military dictatorship in the past, one might expect relations to have been strained when the left-of-centre Workers’ Party (PT) came to power in January 2003. Not so, possibly because the PT was by then as heavily dependent on the construction companies’ electoral largesse as the other parties. According to data from Brazil’s Court of Electoral Accounts, the four biggest contributors to electoral campaigns between 2002 and 2012 were construction companies.

Critics say that the PT, rather than seeking reforms to rein in the construction companies, sought to use them to further its own geopolitical goals. Keen to increase Brazil’s international influence, the government instructed BNDES to lavishly fund the companies to secure contracts abroad.

The largest company, Odebrecht, took the lion’s share, winning contracts in many nations, particularly in Latin America. Illustrating the close relationship between the government and the construction firms was a comment made in 2012 by then company CEO Marcelo Odebrecht, as he travelled with President Dilma Rousseff to Cuba to announce a new, nearly US$1 billion project for the modernization of the port of Mariel. “We act in alignment with Brazilian foreign policy,” the CEO said bluntly, a statement reported by Robert Simon in Foreign Affairs magazine.

Wherever the Four Sisters went in Latin America, controversy followed.

Marcelo Antono Delfino de Almeida, prosecutor for the Federal Public Ministry (MPF) in Mato Grosso do Sul, stated in a study of hydroelectric dams in Latin America that there are no “clear norms, duly publicized, to guarantee the faithful observance of socio-economic parameters” in work funded by BNDES. “This observation is especially relevant in relation to loans conceded by the BNDES abroad.” (Italics in original).

Among these proposed international construction projects are major dams in the Peruvian Andes on the Marañón River, the main trunk of the Amazon. The planned Rio Grande 1 and 2 dams are under the direction of Odebrecht Energy Peru, a subsidiary of Brazilian Odebrecht, while the much disputed Chadin 2 dam is under the auspices of AC Energy, another Odebrecht subsidiary.

Odebrecht has enraged locals along the Marañón who accuse it of intimidation and the criminalization of protest, saying that the firm has been secretive, spread misinformation, and packed environmental impact assessment community meetings with Odebrecht employees and supporters trucked in from elsewhere.

Scientists too are concerned about Odebrecht’s Andes dams, fearing they will prevent nutrient-rich sediments from moving downstream, possibly killing the Marañón River and severely impacting Amazon basin biodiversity. The Peruvian government and Odebrecht have responded with silence and denial to repeated requests for transparency from journalists, including those doing stories for Mongabay.

Among Odebrecht’s proposed international projects are major dams in the Peruvian Andes on the Marañón River, the main trunk of the Amazon. The planned Rio Grande 1 and 2 dams have enraged locals who accuse the company of intimidation and the criminalization of protest. Scientists too worry that Odebrecht’s Andes dams will harm the Marañón River and Amazon basin biodiversity. Photo by Gato Montes licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

As with its Brazilian operations, BNDES has cloaked its new international development loans largely in secrecy. It was only after a judge in Brasilia determined that revealing details about the bank’s operations with private companies did “not violate the principles of tax and banking secrecy,” that the Federal Public Ministry was able to discover that since 1998, BNDES had made more than 2,000 loans to Brazilian construction companies funding foreign infrastructure including dams, ports, roads and airports.

The criteria used by BNDES to select countries for infrastructure projects remain mysterious. Some nations for which construction loans were approved do not enjoy close relations with Brazil, nor do they have geopolitical importance for Brasilia. For instance, the BNDES has financed the construction of both a subway (US$1 billion) and a road (US$152.8 million) in Panama, a country with which Brazil does not enjoy close commercial or diplomatic relations.

Last year a Brazilian journalist uncovered the conditions under which BNDES had funded Andrade Gutierrez to build a reservoir and hydroelectric dam in the Dominican Republic: the bank provided a US$249.6 million loan, for which it charged the Santo Domingo government only 2.3% plus LIBOR, making it one of the lowest interest rates in the world. The journalist did not obtain this information from BNDES, which remained tight-lipped, but on a Dominican government website.

Andrade Gutierrez told Mongabay that BNDES funds foreign projects such as this because “such goods and services generate jobs and income in Brazil” and that the price paid by the Dominican Republic is “compatible with the standards practiced in the international market”. It added: “all countries, developed or developing have export support mechanisms to develop local industry and industry.”

The question as to why such foreign investments have been made at all is important because BNDES-subsidized loans are heavily supported by Brazilian taxpayers — and the bank’s mission is to support Brazil’s economy and society, rich and poor.

BNDES told Mongabay that its international “projects are not only part of a strategy aimed at improving regional infrastructure, but they also play an important role, in particular, in Brazil’s economy. This is because financing exports is a federal policy and part of Brazil’s development strategy.… Exports financed by the BNDES have an extremely positive impact on our production segments, benefitting, especially, smaller companies.” The bank reported that between 2007 and 2013, local production associated with foreign exports financed by BNDES involved a production chain that included 3,500 companies, of which 2,700 are MSMEs (micro, small and medium enterprises).

Still, many economists question the wisdom of huge international infrastructure investments. Sérgio Lazzarini, lecturer at Insper (the Institute of Teaching and Research in São Paulo), has repeatedly argued that, instead of sending money abroad, BNDES should be directly funding “local companies that need resources and that would generate positive impacts for the economy”. Moreover, he has said, it is essential that the bank be transparent in what it is doing abroad.

A question of changing priorities, or business as usual

Possibly an even more important question concerns the kind of projects that the Brazilian government and BNDES are choosing to fund with their huge loans to the Four Sisters, both at home and abroad.

Critics ask if the projects are making a genuine contribution to the development of Brazil and host countries. Are they taking the needs of the people and protection of the environment into consideration? Or are they pricey projects that provide infrastructure for multinationals to use to export minerals and other products to China and elsewhere, while failing the litmus test of furthering Brazil’s economy and society, and safeguarding the environment?

With the government and economy currently in a state of tremendous flux, many critics think that change is coming, but maybe not the kind of change that is needed. In January 2016, President Dilma Rousseff used her presidential powers to allow the big construction companies to sign new contracts with the government, despite having their directors investigated for corruption. The President said: “We cannot believe that destroying companies is the proper way to combat corruption.” Since saying that, Odebrecht’s former Chief Executive Officer has been sentenced to prison for corruption.

At the end of February 2016, the government said it would be spending more on infrastructure to reflate Brazil’s struggling economy. It announced a new project, estimated at R$10 billion (US$2.8 billion), which involved the building of a railway, called Ferrogrão, to link the town of Sinop in the north of Mato Grosso with the port of Mirituba in the west of Pará. The reason: to make it cheaper to export soybeans abroad. The deal also gave the construction companies the right, in the public interest, to expropriate land in the project areas — an extraordinary extension of corporate power.

Critics from within some NGOs, while they may agree that the Ferrogrāo railway and other projects are not pernicious in themselves, are worried that the government is simply carrying on with its old model.

Márcio Santilli, a co-founder of the Social and Environmental Institute (ISA), put it as follows: “While the economy and politics continue to operate around the same criminal gangs, the economy will not recover. On the contrary, the sinister consensus to press ahead with more public works — before those already underway have been concluded, before overbilling contracts and rigged biddings have been investigated, before public money illegally obtained has been repaid, before those responsible have been punished — is a clear demonstration that there is not the political will to find new paths. For this reason there is not even the slightest chance that the underlying crisis will be resolved.”

BNDES is a public bank, and to a large extent the federal government determines the policies it will adopt. The events of recent decades suggest one overarching conclusion: that until the administration decides on root-and-branch reform in the way the bank relates with its clients, including the Four Sisters, serious problems will likely persist.

This article was first published by Mongabay on 14 March 2016. You can read the original here.

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