By Ben Tavener, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – The Ministry for Cities has announced it is launching an inquiry into accusations that former civil servants defrauded the government’s major public housing program, known as Minha Casa Minha Vida (My House My Life), by setting up a network of front companies. The R$72 billion Minha Casa Minha Vida program is in the process of building over two million new homes throughout Brazil by 2014.
Former ministry workers set up front companies, including construction, inspection and financial businesses, required to create the illusion of competitiveness, independent regulation and fair bidding processes, according to O Globo newspaper.
These were then used to obtain contracts through the housing program in smaller, less regulated towns and cities across Brazil.
The company at the center of the investigation is RCA Assessoria, which along with the fabricated building and inspection companies, is alleged to have links to three business figures associated with the Ministry for Cities, including former director Daniel Vital Nolasco.
All those accused have so far denied involvement, including Nolasco and former Chief of Staff Erencie Guerra. Guerra took over the position in 2010 from incumbent president Dilma Rousseff and then resigned over allegations of corruption just six months into the job.
RCA operated as a seemingly normal consultant for local authorities and as an intermediary for a number of small financial institutions to transfer federal housing program funds. However, allegations have been made that the company illegally awarded itself construction tenders, inspected its own contracts and also acted as its own financial agent.
The company is accused of awarding a contract to JB Lar, a construction company, which later it was discovered shared the same address on Avenida Brigadeiro Luiz Antônio in São Paulo. Despite RCA Assessoria’s relatively short existence, the company is said to have thousands of contracts to its name throughout Brazil.
José Guimarães, the PT (Workers’ Party) leader in the Chamber of Deputies, said the importance of the Minha Casa Minha Vida program is such that its resources can not be diverted elsewhere, “If there are irregularities or complaints, the government will root them out and exterminate them, punish [those responsible] and keep the program going.”
Launched in 2009, the national program has now set out to double its original target of a million new houses, which was reached in 2012. Now with a budget of R$72 billion (almost US$36.5 billion), between two and 2.5 million homes will be built in a joint effort between the state, local municipalities, companies and non-profit organizations.
The program is destined to help Brazilians earning less than R$5,000 gross per month buying their own house and is funded primarily through the government’s revised growth acceleration program, PAC 2, with sixty percent of the new homes going to the very poorest families earning less than R$1,395 (US$705) a month.
The program has played a role in restoring favela communities in Rio de Janeiro, and it was recently revealed that it would provide residents of the Morro do Alemão community with 900 new houses in the second half of 2013, with a total of 1,900 new homes built by 2014, according to government reports.