* World Cup costs surging on delays, possible corruption
* Growing legal backlash could increase delays, costs
* Some projects seen ready just weeks before event
By Stuart Grudgings
RIO DE JANEIRO, Sept 28 It is a project that
should symbolize the transformational benefits of hosting the
2014 World Cup -- a sleek new monorail train gliding above
Brazil's steamy Amazon city of Manaus.
But Athayde Ribeiro da Costa has a different take on it.
With just under 1,000 days before the first ball is kicked,
the chief public prosecutor in Amazonas state sees the monorail
as part of a trend of overspending and poor planning as Brazil
rushes to make up for a slow start to its preparations.
"We are very worried about overspending," he said.
"We are in favor of the Cup -- it can bring lots of
opportunities for people and help resolve infrastructure
bottlenecks, but this can't be done at the expense of misuse of
public funds or corruption."
Concerns are mounting that Brazil's push to speed up its
preparations for the soccer tournament risks fueling corruption
and an explosion in costs dwarfing other "mega-events."
Last year's World Cup cost South Africa about $4 billion
but Brazil's official estimate already stands at about $13
billion, including transport projects, stadium construction and
airport expansions, making it certain to be the most expensive
President Dilma Rousseff spoke in March of 33 billion reais
($18 billion) in World Cup investments and some private
estimates are already way higher, putting the final bill at an
eye-popping $60 billion in one case -- bigger than neighboring
Uruguay's annual economic output.
Graphic on costs of stadiums: r.reuters.com/wez83s
Brazil infrastructure woes: link.reuters.com/xyd78r
Legal cases are proliferating as prosecutors like Da Costa
investigate suspected overspending and abuses of bidding
processes. Da Costa heads a group of 12 prosecutors focusing on
World Cup cases -- one for each host city -- and says there are
more than 80 civil investigations under way throughout Brazil.
A Sao Paulo federal judge this month ordered work suspended
on the expansion of Sao Paulo's Guarulhos international
airport, saying that bidding rules had been ignored under the
excuse of urgency. Another judge overturned that decision.
The legal cases could help save Brazilian taxpayers a lot
of money but also risk causing yet more delays to a schedule
that is already pushing the limits of just-in-time readiness.
"If you make it more transparent you might slow it down,
and therefore increase the costs," said Christopher Gaffney, a
visiting professor of urbanism at Rio's Fluminense Federal
University. "If you don't make it more transparent, you're
guaranteed to increase the costs because everyone's going to
have their hand in the till."
Spiraling costs are a familiar ritual of World Cups and
Olympic Games. In this case, though, they are sharpened by some
very Brazilian problems -- endemic corruption, bureaucratic and
legal hurdles and high construction costs driven by a lack of
capacity in its robust economy.
Some projects, including another planned monorail in Sao
Paulo, are not due to be ready until just weeks before the
start of the tournament in June 2014. Delays have already drawn
rebukes from world soccer body FIFA and ruled out two of
Brazil's 12 host-city stadiums being ready in time for the
curtain-raising Confederations Cup in 2013.
Work has yet to begin on five of the 13 airports that need
to be expanded for the month-long World Cup, this soccer-crazed
nation's first on home soil since 1950.
The government said this month it was confident that
stadiums and airports would be ready on time, but that it was
concerned over slow progress on "urban mobility" projects like
the Manaus monorail. Seven of the host cities have yet to start
any of their planned projects.
The risks to the fragile timetable were rudely exposed this
month when Rousseff visited Belo Horizonte to start the
1,000-day countdown only to be greeted by a strike by workers
building the southeastern city's stadium.
Rousseff's government has injected some urgency into its
World Cup plans, rushing through Congress in July a law that
streamlines the bidding process for events related to the World
Cup and the 2016 Olympic Games in Rio de Janeiro.
That was a red flag for transparency groups and public
prosecutors, who have slammed the change as opening the
floodgates for over-spending and corruption -- already a common
problem in major construction projects in Brazil.
"The risks of having projects without the correct
procedures and transparency are rising exponentially," said
Caio Magri, a public policies adviser at the Ethos Institute,
which works to promote corporate responsibility.
"The amount spent itself doesn't matter -- 50 billion reais
($28 billion) would be very small to make up for what is
lacking in Brazil's cities. It's not the size that's important,
it's the legacy."
Prosecutor General Roberto Gurgel has asked the Supreme
Court to declare the new bidding rules unconstitutional, saying
they risk a large-scale repeat of the Pan-American Games in Rio
in 2007, whose budget rose to 10 times the original estimate.
SKYTRAINS IN THE JUNGLE
Back in 2009, the Brazilian Football Confederation
estimated the 12 stadiums being refitted or built for the World
Cup would cost about 2.2 billion reais -- a figure that two
years later seems quaint. The government now sees them costing
more than triple that at 6.9 billion reais.
Take the overhaul of the Maracana stadium, which will host
the World Cup final. Its budget has doubled since 2009 to 859
million reais and the TCU federal accounting authority said in
February that the Maracana's contract process had been opaque
and its budget was "verging on fiction," risking a major
inflation of costs.
Gaffney calculates that as of May stadium costs had risen
by 27 percent since 2009 based on lower estimates and by 82
percent given higher estimates. The biggest budget blowouts are
occurring in stadiums being built with public money, such as
With construction costs and wages running high as annual
inflation tops 7 percent, further rises seem likely. Since
January, the cost of World Cup projects has risen by more than
10 percent to 26.5 billion reais, according to a Senate study.
Da Costa, the Manaus prosecutor, sees such forces at work
in his city 4,300 km (2,670 miles) northwest of Rio.
He calls the monorail project, budgeted at 1.46 billion
reais, "totally illegal" because it was approved by state
authorities without thorough enough studies of potential
demand, the number of stations or the fares for passengers.
He said it also underestimated the costs -- most of which
will be footed by subsidized loans from Brazil's state
development bank -- leaving ample room for expensive add-ons
during construction of the planned 20-km (12.4-mile) line.
"It will have uncountable additions with a big risk of
being paralyzed for lack of resources," he said.
Miguel Biango, coordinator of Amazonas state's World Cup
organizing body, told Reuters that a thorough study had been
conducted and had concluded that a monorail was the best
solution for the demands of Manaus' population. He said the
prosecutor's criticisms about a lack of study on the fare
structure were being evaluated.
(Editing by Kieran Murray)