World Cup and Olympic events in Brazil are effectively being managed by an oligarchy. Favours are traded in backrooms, the location of new infrastructure is determined by profit, and laws are introduced or suspended to protect the revenue streams of the largest conglomerates. The old boys club has its fingers in money pots all over the world, plotting developments in which labourers are expendable in the rush to create ever larger and grander mega-projects.
Yes yes, you might say, we’ve been hearing a lot about FIFA in the last couple of months. Except I’m not talking about FIFA.
I’m talking about Odebrecht S.A., the largest civil construction firm in Latin America.
There is a general tendency in international news coverage to follow large sporting events around the world. When journalists chase mega events, and need to find someone to blame for massive cost overruns, construction worker deaths, and new tax laws, it is easiest to fault the lowest common dominator: the organizing committees, like FIFA and the IOC.
But by changing our vantage point and bringing large construction firms like Odebrecht into the spotlight, suddenly FIFA is joined by some culpable partners. Don’t get me wrong, FIFA is still a corrupt, profit-driven institution that wields tremendous and violent power, but companies like Odebrecht are just as insidious as they escape critique by flying under the radar in the ‘normal’ functioning of capitalism.
What does Odebrecht have to do with the World Cup? Well, Odebrecht is the largest direct beneficiary of money invested in mega event projects in Brazil. The company is involved in constructing and managing almost all of the major projects proposed in the World Cup and Olympic bids, some of the largest being the reform of Maracana stadium, Transolimpica construction, and the Porto Maravilha (re)development. In many of these projects Odebrecht has partnered with the other ‘Three Sisters’ – the large private construction firms of OAS, Andrade Gutierrez and Camargo Correa – in consortia that control the money invested into these mega events. The budget for the projects in which Odebrecht is involved exceeds US$27 billion, all public funds.
Odebrecht did invite some unwanted attention for its involvement in the World Cup construction of stadiums in Sao Paulo and Rio de Janeiro. Three construction workers died in the building of Itaquero, in Sao Paulo, as a result of the rush to finish the stadium in time. Yes, this was a FIFA-imposed timeline, and yes, FIFA is to blame for their obscene demands. But let’s not forget that this was also an Odebrecht project, and thus the Odebrecht family, too, has blood on its hands.
FIFA and the IOC aren’t just using construction companies like Odebrecht to advance their own mega-event agendas. Indeed, the inverse is also true: Odebrecht, construction companies more generally, and members of the municipal and federal government also use mega-events to promote their own profit-seeking motives. Indeed, mega-events are often a win-win for both event organizers and the construction companies that reap massive profits in this type of development model.
Porto Maravilha is the perfect example. The Port redevelopment project only had a minor role in Rio de Janeiro’s bid that won them the rights to host the Olympic Games. But the Games provided Odebrecht and its partners with an opportunity to gain a stronghold in this ‘derelict’ port area. Due in part to the time sensitivity of hosting mega-events, the municipal government rushed through legislation and a tenders process that saw Odebrecht Infraestrutura, OAS, and Carioca Engenharia form the Porto Novo consortium. The R$7.6 billion public-private partnership signed between the Porto Novo Consortium and the Rio de Janeiro municipal government, “is the largest to be established in Brazil under the PPP category”. Now these private companies are making private profit off of all the public money invested in the project. Insidiously, this partnership and redevelopment plan were proposed before the mega-event bidding processes, but the leading actors couldn’t get it pushed through. It was the Olympic Games that provided the opportunity for this consortia to control the port area. And now it is the municipality of Rio de Janeiro and the Consortium who are trying to pressure the IOC to hold more Olympic events in the Port area to justify the expenditures, but the IOC is conceding little. A reversal of the typical IOC and FIFA-imposed pressure narrative, if nothing else.
But what is Odebrecht, and how have they become the go-to company for the Brazilian government?
What is Odebrecht?
The name Odebrecht can be deceiving: it sounds German, but the company is Brazilian in origin. The first Odebrecht family member, Emil, arrived from Germany in 1856 and became involved in highway construction in Brazil. His grandson, Emilio, followed Emil’s footsteps and established a civil construction company called Isaac Gondim e Odebrecht Ltda that, in various forms, would be passed through the male heads of the family. Towards the end of the Second World War IG&O suffered greatly under the inflated costs of construction materials, so in 1944 Emilio’s son, Norberto Odebrecht, started up a new company, Odebrecht S.A. It is this latter company that has evolved into the largest of Brazil’s ‘Four Sisters‘ – the giant companies that receive most of Brazil’s construction project tenders.
But how has Odebrecht become so powerful? Yes, the company was involved in one of the first small Petrobras projects in Brazil, but it wasn’t until the military dictatorship (from 1964 to 1985) that Odebrecht became a really large player in Brazilian construction. According to historian Bernard Balheiro, Odebrecht took off after Emilio Medici came to power (1969-1974). Medici’s government was largely linked to Baiana and Paulista bourgeois business interests, of which the Odebrechts were one of the major families. Ernesto Geisel became president of state-owned Petrobras during this era and ‘systematically’ hired the construction firm. When he took over the Brazilian presidency in 1974, Odebrecht grew from the 19th to the 3rd largest contractor in Brazil.
Brazilian political scientist Pedro Campos argues that Odebrecht was particularly adept at capitalizing on the transition to democracy in 1985. During Brazil’s ‘economic miracle’, the company was well-situated to internationalize its operations and activities. Today, Odebrecht holds contracts for some of the largest federal government infrastructure projects in Brazil, and company operations can be found in 5 continents across the globe.
Even though Odebrecht is often referred to as a civil construction firm, its activities have diversified far beyond this sector. For instance, Odebrecht has become the leading partner in Braskem, Brazil’s large petrochemical corporation, and is variously involved in mining, agrobusiness, petrochemical, and military arms construction industries. Some of Odebrecht’s S.A.’s smaller companies are incorporated, but the Odebrecht family still significantly controls company operations, revenues, and profits . Joao Roberto Lopes Pinto argues that this “family-based control is a feature of monopoly capital formation of economic groups established in Brazil” and characterizes the structure of the other ‘Three Sisters’. The Odebrecht family, in particular, has capitalized on this formation. Last year alone, Odebrecht’s revenue grew to R$96.9 billion.
A Legacy of Patronage
How does Odebrecht continue to win bids for projects like the World Cup and the Olympic Games? Many think that the answer can be found in political campaign donations. Indeed, the Four Sisters have contributed more than R$479 million to party committees and candidates in Brazil. In 2013 alone, Odebrecht invested R$11 million of the R$17 million raised by the ruling PMDB party of the Rio state government. At the federal level, Odebrecht was one of the first companies to ever support the workers party (PT), and Lula still travels the globe to promote Odebrecht’s interests abroad. Half of the former president’s travel is funded by Odebrecht and the other major Brazilian construction companies.
Of course, the bids for projects are supposed to be open to any group: the company or consortia with the lowest bid will win the contract. But these bid processes are often set up for a particular company to win. Oftentimes, for example, there is only one bidder. What is more, the massive bureaucracy that is the Brazilian government means that at any stage in the tendering process, bids can simply be dismissed because they have not dotted a proper “i” or crossed the correct “t”. As Chris Gaffney notes, “One of the terrible beauties of Brazilian bureaucracy is that there are so many forms and agencies and permissions and confusions, that there is inevitably something wrong with everything, which always provides an excuse to eliminate a company from the competition.”
Odebrecht hasn’t completely escaped corruption allegations. In Brazil, demonstrators targeted corporate offices to protest worker rights infringements in the construction of stadia, shouting ‘Odebrecht makes billions on the blood of workers and the money of the people’. There have also been allegations of corruption in Odebrecht’s contracts in Venezuela, paying off politicians in Argentina and Angola, and cartel formation in the construction of Sao Paulo’s Metro Line 5. During the 2014 FIFA World Cup, Odebrecht has made global headlines for accusations of human trafficking in relation to its construction of a biofuel plant in Angola.
But this attention doesn’t come close to the media spotlight that FIFA has occupied over the last few months. Of course FIFA has profited immensely from broadcast rights revenues, and one can neatly trace a line between FIFA imposed deadlines and the labour infringements accrued during the rush to finish constructions. But to solely blame FIFA for what is happening massively deflects attention from the people who hold the purse strings in respective host nations. We need a journalism that is willing to dig deep into how these capitalist processes function, instead of ignoring them and thus rendering them ‘normal’.
We should be angry at FIFA’s role in the mess. But we cannot simply blame FIFA for everything that is happening. Odebrecht, and the other Three Sisters, must be dragged into the spotlight and held accountable for their bloody profiting from the World Cup and beyond.