| SAO PAULO
SAO PAULO Aug 13 Brazil's São Paulo state will
sue German engineering giant Siemens to recoup public
funds its governor said it lost to a cartel that fixed prices
for public transit construction, equipment and upkeep.
"We are going to open a case against Siemens for damages to
public coffers and the state of São Paulo and to demand total
reimbursement," Governor Geraldo Alckmin told reporters on
The lawsuit will be based on information in a complaint
against Siemens filed with Brazil's anti-trust agency by
Brazil's National Subway Operators Association, he said.
São Paulo, Brazil's most populous and economically developed
state, has been spending billions of dollars a year to expand
overcrowded roads, transit links and other public
But rising subway and bus fares combined with poor service
for the 20 million people of greater Sao Paulo city, the state's
capital, sparked nationwide protests in June and July against
political corruption and inadequate public services.
More demonstrations are planned for Wednesday in São Paulo
in response to the cartel accusations.
Paulo Stark, chief executive of Siemens' Brazilian unit,
said in a statement that the company is cooperating with
anti-trust officials as they investigate charges that Siemens
and other companies formed a cartel that raised the price of
contracts to build and operate train and subway lines between
1990 and 2007.
Siemens declined to comment on Alckmin's plan to sue.
In addition to Siemens, France's Alstom SA and
many other international engineering and railway equipment
companies have bid for transit contracts in São Paulo in recent
Alstom rigorously complied with local laws in its dealings
in Brazil, company spokesman Philippe Kasse told Reuters by
Alckmin, a leading figure in Brazil's opposition Social
Democracy Party (PSDB), said Sao Paulo state plans to hold other
companies responsible for the loss of public funds if they are
found to have participated in the suspected cartel.
Siemens was the only company the governor mentioned by name
in his remarks Tuesday.
Alckmin and other PSDB officials, who have been in control
of São Paulo state for almost two decades, have denied they were
involved in any illegal activities such as bribery and kickbacks
related to the transportation-cartel case.
The charges come as Brazilians are showing less tolerance
for corruption. The demonstrations that crippled cities across
Brazil in June and July have diminished but not died out.
In Rio de Janeiro this week, protesters took over the city
council chambers to demand an independent inquiry into possible
fixing of bus concession contracts.
Attempts to placate the demonstrators have prompted some
local governments to rescind recent transport-fare increases.
This, though, may make it harder for the government to attract
companies to build, own and operate urban transport projects.
Brazil had to postpone multibillion-dollar tenders to build
a subway line in the center of São Paulo and a high-speed rail
line between São Paulo and Rio de Janeiro this month following
investor concerns that the projects would fail to turn a profit.