Feds investigate bid-rigging at company propped up by Bolsonaro’s allies

Feds investigate bid-rigging at company propped up by Bolsonaro's allies
Codevasf works close to the Sobradinho dam, along the São Francisco Valley, in Bahia. Photo: Marcello Casal Jr./ABr

Brazil’s Federal Police on Wednesday carried out 16 search warrants and one arrest as part of an investigation into bid-rigging and misappropriation of public funds at state-owned infrastructure firm Codevasf.

The investigation largely targets construction firm Construservice, based in the state of Maranhão. The company only began receiving contracts from Codevasf after 2019, and has since been awarded projects worth BRL 140 million (USD 25.8 million) — the Federal Police is investigating allegations that bidding processes from these contracts were rigged.

Today’s arrest warrant apprehended Eduardo José Barros Costa, identified as a hidden partner of Construservice. He already faces allegations of leading corruption schemes in dozens of Maranhão cities, committing crimes such as embezzling money from the Education Ministry.

Once focused on delivering irrigation projects in the backcountry of Brazil’s Northeast, Codevasf has increased its reach exponentially under the government of President Jair Bolsonaro, branching into infrastructure ventures in metropolitan areas. 

As part of his horse-trading to retain congressional support, Mr. Bolsonaro handed control of Codevasf over to the so-called “Big Center,” a group of conservative rentier parties willing to back any sitting government — for the right price.

The overriding M.O. of the Big Center is to obtain the keys to departments and state-owned companies with hefty budgets, which is certainly the case with Codevasf. Between 2018 and 2021, the share of the federal budget allocated to the company jumped from BRL 1.3 billion (USD 240 million) to BRL 3.4 billion.

The lion’s share of this increased budget came by way of opaque parliamentary grants, in what the Brazilian press has called President Bolsonaro’s “secret budget.” Codevasf received a total of BRL 2.1 billion in grants last year, compared to just BRL 302 million before the current government was sworn in.