Brazilian police opens investigations against world volleyball leaders

Law enforcement agencies in Brazil have launched investigations into corruption allegations involving public money which could lead to criminal charges against the leadership of the Fédération Internationale de Volleyball (FIVB).

Brazilian federal police is conducting a criminal probe, and the federal district office of the Public Prosecutors has initiated a separate civil inquiry into accusations that millions of dollars in sponsorship funds were misappropriated by companies owned by relatives and close associates of Ary Graça, the former president of the Brazilian volleyball federation (CBV) and current head of the FIVB, and Fabio Azevedo, a former CBV administrator who also moved with Graça to the FIVB.

The case is being handled by the Rio de Janeiro office of the Brazilian police, but details will not be available to the public until the investigation is concluded, the agency informed.

The Public Prosecutors’ office in Brasilia, the capital, is also conducting an inquiry into whether there has been misconduct involving public funds. They are also not able to comment on the proceedings until their conclusion, according to public information official Taiana Santos.

Graça and Azevedo have denied all allegations, which were first raised by ESPN-Brasil journalist Lúcio de Castro in a series of articles in early 2014.

“We are currently in litigation against several of the media organisations and other individuals who sought to damage our reputations,” Azevedo told Play the Game by email. Until legal action is over, he said, they cannot offer further comment.

The two men also hit Castro with four lawsuits charging him with defamation and slander. The journalist said they were “attempts at intimidation” against himself and members of the press. He stands by his allegations; two of the lawsuits have already been cleared in lower courts, he said.

Independent investigations

But Graça, Azevedo and the Brazilian volleyball federation have a lot more to worry about than Castro and his articles, as the recently-launched criminal investigations show.

Since the volleyball sponsorship money mentioned in Castro’s pieces came from a state-controlled bank, the Banco do Brasil, his allegations caught the attention of the Brazilian comptroller general. This generally well-respected organisation is known by its Portuguese acronym, CGU, and is charged with overseeing the spending the public funds and combating corruption.

They conducted an audit of CBV contracts and activities between 2010 and 2013. In a report published in December 2014, the agency found irregularities in 13 contracts that together add up to R$30 million Brazilian Reais (equivalent to approximately $12 million, using the exchange rate prevalent during that period).

It also found evidence of partnerships or connections between employees or administrators at CBV and the companies hired. In some cases, the receipts emitted by these companies were sequential, an indication that they may have had the CBV as their only client. In other cases, the physical address given by the companies was in the same down-and-out building, and appeared to not be in use, suggesting these were shell companies without real staff or offices.

There were, according to the CGU, instances in which the services for which the companies were hired appeared to not have been performed. For example, S4G Gestão de Negócios, owned by Azevedo, and SMP Logística & Serviços Ltda., owned in part by another former director of CBV, were contracted to provide the CBV with support when renewing the sponsorship deal with the bank. However, minutes of meetings with the bank show that representatives of the companies were not present during negotiations.

The report concludes by recommending the volleyball federation adopt a series of measures to prevent the funneling of public money into private pockets in the future, including new and clear contracting rules that promote transparency and efficiency and prevent the hiring of companies owned by current or previous CBV administrators, their friends or relatives. 

FIVB Director General Azevedo prepared an 18-page answer to the CGU charges, which he shared with Play the Game. In it, he charges the audit was carried out remotely, based on incomplete information, and without requesting clarification from the companies involved, and maintains there were no irregularities in the implementation of contracts between the S4G Group and the CBV.

The CGU told Play the Game that all of the arguments and documents sent by the S4G Group and others mentioned in the report have been analyzed, and have not changed their conclusions and recommendations, which include measures to “strengthen the CBV’s governance so as to meet the minimal risk standards acceptable to the Banco do Brasil”.

Furthermore, the CGU – which is an auditor and cannot take legal action – has sent its final report and the evidence gathered to the federal police and the Public Prosecutors’ office. They are now assessing the material to determine what criminal or civil charges, if any, apply.

Affecting the sport

But even before the case may reach the courts, with all the consequences that could have for the two Brazilians at the help of the FIVB and for the sport in the country, these charges of corruption have already caused much disruption for athletes and the sport.

While the CBV was engaging in “improper contracting,” the CGU’s report states, it saw administrative and operational costs rise disproportionately while spending on athletes suffered.

On the weekend following the publication of the CGU report, players took to the courts for a national championship game wearing big red clown noses, suggesting the sport federation was playing them for fools.

“All this is very bad for volleyball,” said at the time Neuri Barbieiri, vice president of CBV.

The allegations made against Graça, Azevedo and the CBV under their tenure also posed a real threat to the sports federation’s relationship to the bank that has been its main supporter for decades.

The bank’s sponsorship of the CBV is one of the longest-lasting agreements in Brazilian sports, dating back to 1991. The current deal was signed in 2012, and commits to payments of R$ 70 million per year through April of 2017 ($17.3 million at current exchange rates).

The Banco do Brasil suspended its monthly payments immediately upon the publication the CGU report in December 2014, and withheld them for two months until it had evidence the volleyball federation was following the CGU’s recommendations.

Payments returned in January only to be called off again. The bank explained in a statement the measures taken were not satisfactory and withheld the cash until June. Only then did it release a statement saying it was satisfied with the federation’s compliance and reestablishing monthly payments.

Critical time for Brazilian sport

All this comes at a critical time for Brazil, and for volleyball. With the 2016 Olympics less than a year away, Brazilians are pushing for at least 27 medals and a place among the top ten winners. And they’re counting on indoor and beach volleyball, which have won the country 20 medals over the years, to contribute substantially.

Even Carlos Nuzman, a controversial figure who led the CBV in the 1990s and now heads the Brazilian Olympic Committee and the Rio Olympics’ Local Organizing Committee, has expressed concerns.

 “What we’re worried about is 2016,” he said to the Reuters news agency regarding the on-and-off sponsorship agreements. “There are four medals in play. Of course that worries us.”

The destabilisation of a once rock-solid sponsorship agreement, plus the damaged player morale and the resulting image problems could hurt performance - and could hurt Brazil at a time when the country needs a boost.

A successful Olympics would do much for Brazilians who are struggling with a crumbling economy as they watch a national corruption scandal engulfs its state-controlled oil company, the nation’s largest construction firms and many of its leading political figures.

Then again, a real turn-around in one sports federation and what may be an appropriate punishment dished out to the responsible could also provide the country with much needed injection of hope and optimism.