Court Orders Massive Asset Freeze Over Alleged Bidding Fraud
The Court of Justice of Sao Paulo ordered the freezing of 1.02 billion reais in assets belonging to three current and former public agents alongside the municipal public lighting agency SP Regula. Issued by desembargador Dimas Borelli Thomaz Junior on Friday night, the judicial action targets individuals and corporations implicated in severe municipal procurement irregularities.
Based on reports from prosecutors Silvio Marques and Karyna Mori, the staggering total reflects 513 million reais in estimated public damages combined with a matching penalty fine. The controversy centers on allegations that the initial 2015 international bidding process was manipulated to favor a specific consortium.
According to judicial documents filed at the 13th Treasury Court on July 24, the accused parties include SP Regula president Joao Manoel da Costa Neto, former secretary Marcos Rodrigues Penido, and former director Denise Maria Ayres de Abreu. Private entities FM Rodrigues and CLD Construtora, which formed the winning Ilumina SP consortium, were also named in the lawsuit.
While the prosecution requested the immediate suspension of SP Regula president Joao Manoel da Costa Neto, the court did not grant that specific measure. The Sao Paulo municipality confirmed receipt of formal notification on Saturday and pledged to submit all necessary clarifications to the judiciary.
Allegations Detail Millions in Public Losses and Irregularities
Investigators claim that the bidding competition was steered to favor FM Rodrigues and CLD after the irregular exclusion of a competing bidder known as Consortium Walks. Prosecutors highlight that the Walks proposal was significantly cheaper per month than the winning group, generating an estimated cumulative loss of 359 million reais for municipal coffers.
Additional financial damage worth 154 million reais stems from the inclusion of traffic light maintenance and modernization services into the public lighting contract without opening a fresh bidding process. When combined and updated, material damages calculated by the public ministry total 513.3 million reais.
The disputed 20-year concession contract was signed in March 2018 for a total value of 6.9 billion reais, featuring a maximum monthly payment of 28.9 million reais. Controversy dogged the selection process from the outset due to the disqualification of Consortium Walks over technicalities involving corporate history.
Citing reports from previous legal proceedings, the disqualification involved a corporate partner allegedly linked to the historic Operation Car Wash investigations. However, superior courts later validated the annulment of that disqualification, ruling that the excluded consortium deserved full defense rights.
Defense Teams Deny Wrongdoing Amid Ongoing Municipal Scrutiny
Representatives for SP Regula maintain that public lighting contract execution proceeds in a completely regular manner under permanent supervision by the municipal accounts tribunal. The agency emphasizes that the city lighting grid underwent extensive modernization since 2018, replacing old sodium lamps with efficient LED luminaires across nearly the entire network.
SP Regula further stated that its licensing and suspension procedures strictly adhered to legal deadlines and judicial directives. "We have provided the Public Ministry with all requested information since the resumption of the licensing process, collaborating fully with control bodies," the agency noted in official statements.
Attorneys representing Ilumina SP, Abreu, and Penido previously maintained that their clients committed no irregular acts and that the core issues were successfully resolved in prior investigations. They argue that all administrative steps complied thoroughly with existing public administration regulations at the time.
As legal battles surrounding the multi-billion-real infrastructure contract continue, the municipal administration faces intense pressure to defend its contracting history. City officials have promised complete transparency and cooperation as the judicial review moves forward in the coming weeks.
