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Brazil’s growing presence as a globally leading economy has been particularly underlined by a wide range of necessary and fundamental infrastructural investments initiated in recent years.  Colloquially referred to as the ‘four sisters’, the conglomerates largely responsible for the works are Queiroz Galvão, Andrade Gutierrez, Camargo Corrêa and Odebrecht with a collective budget of R$ 138 billion (as at May 2011).  The table below outlines the principle projects underway by the companies and their associated earmarked spending levels:

Whilst obviously welcomed, to say that progress of many projects has been plain sailing would be an overstatement (an example of which we highlighted in a previous post on delays in preparations for the World Cup 2014).  The main concern lies in the lack of transparency which, in turn, has attracted many questions which remain unanswered.

Paulo Resende, logistics and infrastructure coordinator at the Dom Cabral Foundation in an interview with the Globo Newspaper pointed to the companies having far too much control and – due to the fact certain parts of the works are subcontracted – can effectively dictate and determine (often unjustifiably) who is and who is not part of projects.  As a result, growing evidence of irregular reporting back and over-budgeted costs are becoming visible upon closer inspection of company information.  Indeed, it is being argued that the North-South Train has seen significant delays due to such issues.

Whilst all four companies are actively stating their intentions rely less on public funding (Andrade Gutierrez recently made the Vale group its principle client), sector specialists and commentators are debating that interests and agendas remain closely related with those of the Brazilian political elite, jeopardising effective project development and completion.  At R$ 1,718 billion, Queiroz Galvão relies on 100 percent of its financing from government sources, Andrade Gutierrez relies on 72 percent, Odebrecht on 62 percent and Camargo Corrêa on 35 percent.

Sergio Lazzarini’s book ‘The Capitalism of Ties: The Bosses of Brazil and Their Connections’ illustrates how the companies are regularly awarded concessional priorities to public investment funds such as the Previ, Petros and Funcef as well exclusively based credit lines via the BNDES and the Bank of Brazil.  Strong evidence has also pointed to an increasing level of financial support for political campaigning being supplied by the four prominent companies in return of the awarding of works contracts.  In March 2011, political scientist Taylor Boas of the University of Boston with Neal Richardson and F Daniel Hildalgo of the University of California published a study entitled: ‘The Spoils of Victory: Campaign Donations and Government Contracts in Brazil’ which analysed the Workers Party (PT) election campaign of 2006 (in line with the national chamber of commerce).  The study pointed that for every Brazilian Real given by the company, the donor company received 8.5 times the same value in terms of work contracts (examined over a 33 month period).  The study concluded that:  ‘amongst the Workers Party candidates who received donations from companies involved in public infrastructural works, we discovered that an electoral victory brings R$ 147,000 in additional contracts from those that contribute.  This discovery defies the belief that the Brazilian ruling elite do not use budgetary amendments to maintain a supportive coalition.’