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The São Paulo City Government has announced the commencement of a detailed investigation of suspected fraud and tax evasion being undertaken by a number of prominent Brazilian real estate development companies valued at between R$ 50 to R$ 100 million.

The City Government lawyers have discovered over 900 documents dating back to 1994 which point to several companies – including Mesarthin, Marcanni, Zabo, Vidagiro, Vasoncellos, Porte and Onoda – being part of a scheme that reportedly undertook false banking authorisations in order to receive licenses to be able to construct at heights above the standards laid out in city planning laws.  Suspected companies have had their projects embargoed due to the fact that funds have never arrived in the public coffers.

The São Paulo Government was not able to explain how these transactions have been overlooked for such a long time although it has been stated that the relevant checks are done manually by the Municipal Secretariat of Housing (SEHAB) which were not confirmed to the Secretariat of Finance.

Odebrecht stated to the Estadão newspaper: ‘we acquired authorisation in conformity with all the required legislation and paid the necessary taxes to be granted the license.’  Mesarthin and Marcanni have initiated judicial measures to be able to pay the R$ 14 million and R$ 486,000 owed respectively in order to be able to continue with the developments.