Brazil police raid Olympics site in corruption probe

An aerial view of the Rio Olympics Park in Rio de Janeiro, Brazil, in April 2016.
An aerial view of the Rio Olympics Park in Rio de Janeiro, Brazil, in April 2016.PHOTO: REUTERS

RIO DE JANEIRO (REUTERS) - Brazilian federal police on Tuesday raided the offices of a consortium responsible for construction at a site that will host 11 sports during August's Olympics Games in Rio de Janeiro, as part of a sweeping anti-corruption investigation.

Federal police said in a statement that they executed search warrants at the headquarters of the consortium responsible for Olympic projects at the Deodoro site in northern Rio, made up of privately owned Brazilian construction firms OAS SA and Queiroz Galvao.

About 128 million reals (S$50 million) in funding from state lender Caixa Economica Federal to the consortium was blocked pending the investigation, the statement said.

Police also raided the offices of two companies they did not name, that worked with the consortium.

The operation was the latest step in a growing investigation into suspected corruption involving venues and legacy projects for the Olympics, the first Games to be held in Latin America, which is due to start on Aug 5.

Federal prosecutors have in the past said they found evidence of fraud in earth-moving services at the Deodoro venue, which will host Olympic sports such as shooting, equestrian events and the pentathlon.

Queiroz Galvao said in an e-mailed statement that it was fully cooperating with authorities. It said the increased cost for earth moving at the site was because the amount of material transported exceeded what was originally estimated in the contract.

OAS did not respond to requests for comment.

Last month, federal prosecutors told Reuters they were investigating every Olympic project that used federal funds, which includes works and services at the Olympic Park and the Deodoro area.

Five construction firms are building most of the 39 billion reals worth of venues and infrastructure needed for Rio's Olympics. The figure includes at least 1.76 billion reals in federal funds, according to documents from Brazil's federal accounting court.

All five companies are caught up in an investigation into price fixing and political kickbacks at state-run oil company Petrobras. That two-year probe has seen scores of top executives and politicians jailed or charged so far.

The Petrobras investigation is what led federal police and prosecutors to begin looking at possible corruption tied to the Olympics.

Federal authorities have already said they are investigating the Porto Maravilha project, an 8-billion-real facelift of Rio's dilapidated port area, and also the expansion of the city's metro line to the Olympic area in Barra.

Mario Andrada, a spokesman for the local Olympic organising committee, said on Tuesday that both Rio 2016 and City Hall demand transparency from all builders they work with.

He said the investigation would not impact building at Deodoro or its readiness for the Games. "We have nothing to hide about the constructions in Deodoro or anywhere else around Rio," said Andrada. "If the companies did anything wrong, they will have to respond to the law."

The Rio mayor's office said in an e-mailed statement it was closely following the investigation at Deodoro and that all payments to the consortium remained suspended until the probe is completed.