Brazilian Public Bank Aided Odebrecht in Construction of Corinthians Stadium with R$ 350 Million

10/10/2016 - 11h16

In 2014, construction company Odebrecht made a confidential transaction with Caixa Econômica Federal, a government-owned financial institution, to cover a million-dollar deficit in the construction of Itaquerão, the stadium of soccer team Corinthians, which staged the opening of the 2014 Fifa World Cup in Brazil.

The money spent by Odebrecht with the stadium does not have a deadline for repayment. To help Odebrecht recover the funds, Caixa Econômica Federal bought debentures issued by Odebrecht amounting to at least R$ 350 million (US$ 109 million).

The former president of Corinthians and current federal congressman Andrés Sanchez (PT-SP), who participated in the project to build the stadium, confirmed to Folha that the transaction was made, but said he would not comment on the deal because the agreement was made between Caixa and Odebrecht, without the involvement of Corinthians.

Odebrecht was contracted by Corinthians in 2011 to build the stadium. The original plan called for financing by BNDES, Brazil's National Bank for Economic and Social Development, in the amount of R$ 400 million (US$ 125 million) to be used to pay for part of the construction.

The rest of funds would be repaid with R$ 420 million (US$ 131 million) in credit granted by the São Paulo City Hall, the so-called Incentive Certificates for Development (CIDs).

The BNDES financing via Caixa was released in March 2014 and a stalemate regarding the CIDs paralyzed negotiations: a lawsuit questioned the validity of the municipal benefit. The news discouraged the few businessmen who were interested in buying the CIDs, even with the possibility of discounting them from their taxes.

Before buying the debentures that would help to pay for the construction of the Itaquerão stadium, Caixa Econômica Federal accepted to act in the transfer of the R$ 420 million (US$ 131 million) loan granted by the BNDES to the real estate investment fund created by Corinthians and Odebrecht.

Corinthians began to pay the financing installments in July 2015. Corinthians stopped paying the monthly installments of some R$ 5 million (US$ 1.5 million) in March 2016.

At the moment, Corinthians is delinquent with the permission of Caixa Econômica Federal. Corinthians is trying to extend the original grace period of 17 months which ended in 2015.

Corinthians maintains that the other 2014 World Cup stadium received a longer period, 36 months. Caixa is asking for more guarantees to grant the extended period for the payment of the installments.

THE OTHER SIDE

The Folha news report team tried to contact Odebrecht and Caixa Econômica Federal. Through its press office, Caixa said that the operations involving Arena Corinthians are protected by banking information confidentiality. For that reason, it said that it would not comment on the case.

The press office of construction company Odebrecht said that it would not comment on the stadium operation at the moment.

Translated by THOMAS MUELLO

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