Politics

Controversial Navy project highlights increase in Brazil’s defense spending

The Jair Bolsonaro administration has exploited several loopholes in order to fund a controversial project to build four new Navy warships

Defense spending in Brazil skyrockets under Jair Bolsonaro

Launched three years ago, the plan to upgrade the Brazilian Navy squadron has been subject to several complaints of irregularities. In the most recent chapter of this billion-Real deal, Economy Minister Paulo Guedes resorted to an accounting maneuver to transfer BRL 89 million to the Emgepron, the state-owned company in charge of the program, foreseeing the purchase of four new warships. Meanwhile, the Federal Accounts Court (TCU) has been monitoring the venture closely, already pointing out a series of faults in its execution.

The Navy submitted the so-called Tamandaré-Class project back in 2017. With an estimated cost of BRL 5.5 billion (USD 1.06 billion), it entailed the construction of four Tamandaré-class frigates, expected to be delivered between 2024 and 2028. In March 2019, the Defense Ministry launched an international tender for the project, won by the Águas Azuis consortium, led by German firm Thyssenkrupp Marine Systems, which had just acquired the Oceana shipyard in the southern state of Santa Catarina, where the vessels will be built.

In June 2019, the Navy’s head of strategic programs Vice Admiral Petronio Augusto Siqueira Aguiar told defense news site Defesa Aérea Nacional that the final cost of the project depended on “contractual details” and that there would be a need to pay royalties to the winning group. At present, the deal is estimated at BRL 7.6 billion, but this figure is expected to increase, as there are still eight years to go before the ships are to be completed.

Trade union reported alleged irregularities

At the same time, the Metallurgical, Mechanical and Electrical Material Industry Workers Union of Pernambuco filed a complaint to the TCU against the result of the tender. The union requested an injunction to cancel the contract with the consortium. The entity accused the competition of having been rigged, in addition to pointing out alleged technical impediments to the construction of said ships in the Santa Catarina shipyard. 

The trade union claimed...

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