Rio’s Olympics Were a Raging Success! Really!

No matter what you may have read elsewhere, Rio de Janeiro’s 2016 Olympic Games were a massive success.

OK, so the event was billed by former President Luiz Inácio Lula da Silva as Brazil’s time to shine, “an opportunity without equal, increasing Brazilians’ self-esteem, consolidating recent achievements and inspiring new progress.” On that front, it's had… well… mixed results.  

For starters, some of the key figures involved in bringing the Games to Rio, including the Brazilian Olympic Committee president, Carlos Nuzman, are suspected of paying bribes to secure Rio’s Olympic bid, investigators said at a news conference on Tuesday. (Nuzman denies wrongdoing.)

Also true: The state of Rio de Janeiro is broke, and the $20 billion extravaganza left behind a host of crumbling sports venues that have found little or no use and are exorbitantly expensive to maintain.

There’s the fact that tens of thousands of residents were forced from their homes. And that what infrastructure was built, like a metro extension and Bus Rapid Transit routes, primarily served the wealthy elite rather than the majority. And of course, you’ll remember the issue with the bay at the heart of metropolitan Rio, which because of a lack of available sewage treatment, was basically an open-air toilet. The Olympics were supposed to leverage a cleanup. Well, that didn’t happen either.

But these are only problems if you believe that the welfare of Rio’s population, of the athletes who participated, or even of the tourists who visited, were the primary focus of the event.

In which case – silly you.

If instead we recognize that the true goal of the Games was to funnel tons of public money into private pockets via the slew of lucrative construction contracts generated by the event, then the 2016 Olympic Games exceeded all expectations. In that light, securing the Olympics was a masterful touch, a capstone to an extensive and long-standing corruption scheme that fleeced Brazilians for years.

That Brazil has a problem with corruption is by now universally known. For more than three years, Brazilians have been following the telenovela-worthy twists and turns of Lava Jato, or “Car Wash,” a corruption investigation that started with money laundering, grew to involve Brazil’s largest companies and most powerful politicians, provoked a backlash intense enough to bring down one president, Dilma Rousseff, and has now come dangerously close to knocking down another, Michel Temer.

At the core of Car Wash is the close, incestuous and opaque relationship between political and economic power in Brazil by which, in exchange for rigged contracts on extremely lucrative terms, powerful contractors regaled politicians – licitly or illicitly – with cash. This was the same modus operandi that would underpin the Olympics as well.

The roots of this way of doing business are decades old. They go back to the military regime, which not only invested heavily in pharaonic public works, but also centralized much of its investment in the hands of increasingly large, powerful construction giants. Chief among them were Odebrecht, Andrade Gutierrez, and Camargo Corrêa. Together with Mendes Júnior and Cetenco, these firms went from earning one-third (31.2 percent) of the total netted by Brazil’s 100 biggest construction firms in 1978 to earning more than half (56.9 percent) of that total in 1984.

When Lula was elected in 2002, he found these same powerful entities in place – with a few changes, such as the rise of OAS, a company founded in Bahia by the son-in-law of the powerful northeastern politician Antonio Carlos Magalhães. By 2007, when Lula’s administration embarked on a national public works construction spree (dubbed PAC, or Programa de Aceleração de Crescimento) fueled by high commodity prices, an investment drive at state-run oil company Petrobras, and China’s insatiable demand for Brazil’s raw materials, these same companies – OAS, Odebrecht, Camargo Corrêa, Andrade Gutierrez and Queiroz Galvão – were the powerful core of Brazil’s construction-industrial complex. They were primed to reap the rewards.

From the perspective of these companies and many politicians, the 2014 World Cup and the 2016 Olympics were simply another source of public contracts that could flow along well-established routes and ultimately fill everybody’s pockets. By the time Brazil won the right to host both mega-events, the global community already knew they were problematic – almost always costing countries and cities more than they were worth, despite grand claims of a resulting economic bonanza. But hosting the Games would unquestionably bring a lot of new construction. Rio’s bid for the 2016 Games was the costliest of the four candidates in 2009, with an initial budget of $11.1 billion for capital investments.

And indeed, thanks in part to Olympic-related construction, the declared revenue of Brazil’s top construction companies tripled from 15 billion reais in 2004 to 44.4 billion reais in 2013 (roughly $5 billion to $20.9 billion, using the exchange rate for each year) according to the Brazilian Chamber of Civil Construction.

Odebrecht alone received half of all Olympic contracts, by value, and was involved in eight of the ten largest projects. They included the refurbishments of the Maracanã stadium, the metro extension, a renovation of the port, and a partnership to build the Athletes Village (remember the exposed wiring, clocked toilets and leaking pipes?). Odebrecht, of course, has now become notorious in the rest of Latin America as the Car Wash prosecutors continue to expose the company’s connections to politicians in Peru, Colombia, Mexico and beyond.

OAS and Andrade Gutierrez shared second place in the Olympic construction boom, with involvement in six of the ten largest projects each. OAS and Queiroz Galvão joined in a consortium to build the second-largest Olympic hub at Deodoro. It hosted 11 events, including BMX cycling, hockey and rugby. It’s now closed, and unused; the companies’ offices were raided after auditors found irregularities in the use of federal funds.

In the present day, federal prosecutors are now looking for evidence of malfeasance in all Olympic venues and services that relied on federal funds. Former Rio Mayor Eduardo Paes is under investigation for taking bribes in connection to Olympic projects. The state’s former governor Sergio Cabral has been sentenced to 14 years for corruption in connection to public works, including Rio’s Maracanã stadium, which hosted Rio’s colorful Olympic opening ceremony. Marcelo Odebrecht, former CEO of Latin America’s largest construction conglomerate, is serving 19 years in prison on similar charges. The list goes on.

After searching the house of Nuzman, the Brazilian Olympic president, prosecutor Fabiana Schneider said on Tuesday: “The Olympic Games were used as a big trampoline for acts of corruption.”

Indeed – many people had a lot to gain from the Games. The people of Rio, unfortunately, were not among them. We now know that was never the point.

-- This article was originally published in Americas Quarterly and is republished on www.playthegame.org with kind permission from the author.