Brazil: public accusations of corruption

SAO PAULO, Brazil — Most Brazilians take it as a given: Their government is plagued by corruption. The latest scandal hit this month, featuring video that showed Federal District Governor Jose Arruda and his allies stuffing money into pockets, bags and even socks.

But though high-level scandals occasionally provide a lurid peek into greed and favor-trading at the top, lower-level shakedowns, payoffs and kickbacks are presumably far more common, and less likely to be exposed. Those involved often see more risk in coming forward than playing the game.

That makes Henrique Flory, a 42-year-old businessman and social entrepreneur, a rare case. He is accusing the Sao Paulo Secretariat of Culture of shaking him down for money to keep a reading program he founded in the Sao Paulo public schools alive, and burying the program when he would not pay.

The stakes are high, not just for the program, but for Flory. When, in September 2008, he complained in a private letter to Joao Sayad, the secretary of culture, about what had happened, the official he accused, Ronaldo Bianchi, quickly filed a defamation suit against Flory. Flory says more trouble could come from speaking publicly about the accusation, but he wants to set an example.

“There are no more corrupt people in the United States than in Brazil,” said Flory, “but the system here manages to create a sensation of impunity, and the others accept it.”

He is also fighting back legally. The Public Ministry, an independent state agency with prosecutorial powers, has opened an investigation into the case, though not about the shakedown, for which there is no hard proof. In late September, after reviewing evidence provided by Flory, it began an inquiry about what followed: the abrupt halt of funding to Flory’s programs, with little or no explanation to him.

In a series of interviews with GlobalPost, Flory laid out his case against the secretariat, providing copies of government documents to back up his story. GlobalPost also reviewed documents at the Public Ministry.

A spokesman for the secretariat, Ciro Bonilha, said the department would not comment on the case and instead would await the ruling of the Public Ministry. He also declined to answer questions about department procedure and the transparency of the funding process, or grant interviews with any of the officials involved or mentioned in this article. Furthermore, he offered no explanation as to why the secretariat refused to respond, as legally required, to the Public Ministry’s detailed request for information about the case. (The deadline passed well over a month ago.)

In September 2007, Flory founded the Brazilian Institute for Merit Incentives to give public school kids books, and a reason to read them. Its “I Deserve Success” program started 14 projects in 103 schools through which corporate sponsors paid for books about subjects like career planning, drug use and adolescence, and funded motivational visits to the schools by speakers, actors and sometimes the authors themselves. (The books mostly came, at a sharp discount, from Flory’s own publishing house, Arte e Ciencia.) Students could win prizes for themselves and their schools by going online to answer questions and perform tasks related to the books.

The program's total budget came to about 3 million reais ($1.7 million). Under a Sao Paulo law, the corporate money passed through the state Secretariat of Culture, which is charged with approving programs and monitoring expenditures, Flory said. For its first months, all had gone smoothly during his and his colleagues’ many trips to the office to file proposals and reports, which largely sailed through, Flory said.

Government documents seem to verify his account, and the program thrived. By early 2008, “I Deserve Success” had about 20,000 students registered in its online activities and 70 speakers and artists regularly headed to schools for presentations and performances.

But in April 2008, Flory was having coffee in a bar across the street from the secretariat when he was approached by a theater producer who Flory said served as an unofficial political operative for the secretariat. Flory would “have problems” with his program unless he started providing payments of 4,000 reais — $2,200 — on a regular basis, the man said. Flory refused this and several subsequent requests, and not another penny of program funding has been approved since.

The corporate money sits unused in government coffers, and 30,000 books wait in storage to be distributed. The flow of authors, speakers and artists to participating schools has slowed to a trickle, and those who do go are paid out of Flory’s pocket. More than half of the students registered online have disappeared.

GlobalPost spoke with the theater producer whom Flory accused of attempting to shake him down. He vehemently denied the story, saying only that he knew Flory from meeting him at the secretariat — where he also had a project funded — and greatly admired Flory’s project.

Though the secretariat would not comment, internal documents written by its legal team and obtained by Flory after the defamation case against him was filed do shed some light on the agency’s point of view. It regarded “I Deserve Success” as a corrupt front, organized to benefit Flory and his partners financially, and concluded that they are a “group of conspiring individuals, apparently acting through businesses of which they are partners and associates, [to plot] these harmful and repulsive tactics to gain public resources and enrich themselves.”

That is not how school officials in Itaim Paulista, a low-income, slum-pocked neighborhood on the eastern reaches of the city of Sao Paulo, where 28 schools participated in “I Deserve Success,” portray the program. In Itaim Paulista, officials raved about the program in interviews with GlobalPost and had just one complaint: It had disappeared or slowed down considerably in the last year and a half since funding ran out.

Ana Ines Valverde, principal of the highly regarded Professor Carlos Pasquale School said it is rare that her literature teachers got their hands on enough copies of a single book to give one to every student. She said the 100 copies of “Light at the End of the Tunnel,” a memoir by a former drug user who grew up in Itaim Paulista and later succeeded as a lawyer, was a particular hit with more difficult adolescents. “It encouraged their interest,” she said. “They started to read … and actually developed a taste for reading.”

But once he refused to pay a bribe, Flory said, the money stopped coming and book deliveries ground to a halt. “Everything was in a juridical limbo,” he said. “Projects weren’t approved, and weren’t rejected. They asked for new information, and when we’d bring it, the official would go on vacation for two weeks. A month later they would ask for additional information.”

Some of the requests required exhaustive documentation. When officials found discrepancies in the number of books received, they asked for notarized affidavits from dozens of school officials across the state attesting they had received the books. They also requested proof that the seminars at the schools actually took place, and questioned the prices for which the books were purchased (despite the fact that those prices were previously approved by the department and were well below market rates). They also demanded to know why the Secretariat of Culture’s seal appeared as stickers on some of the book covers, rather than being printed on directly. (Flory’s answer: Some of the books were already in stock before the program was approved.)

Flory and his colleagues struggled under the sheer volume of the requests, seemingly designed to crush them. But even more frustrating for Flory and his partners was the lack of ability to get answers from the department about where they stood and what was causing the delay. “It’s a basic concept of democracy,” he said, “the right to information and transparency. If I’m being accused of something, I have the right to know what I am being accused of.”

In August of last year, Flory and his colleagues were granted a meeting with adjunct secretary Ronaldo Bianchi, who oversees the project approval process. At the end of the meeting (which Flory taped), Bianchi seems to offer two options: an outside investigation by the Public Ministry into Flory’s organization, “or this could be something that ends, do you understand?” Flory said Bianchi rubbed his fingers together, making the Brazilian sign for money. It was after Flory discussed the incident (and the series of 4,000-real demands that started in the coffee shop) in a letter to Bianchi’s boss, Secretary Joao Sayad, that Bianchi sued him for defamation.

It was through the defamation suit that Flory obtained the document written months earlier, outlining the department’s case against him.

One of the government’s prime concerns seems to be that Flory runs the publishing company that provides the majority of books for the “I Deserve Success” programs. (He is also the author of one of the most-used books, “Jobs Don’t Fall From The Sky.”) Flory said that this was always clear, and was done purposefully to cut book costs and to be able to bring the authors to the schools, both of which he said would be impossible without the connection.

Flory realizes he is in for a tough fight and is visibly distraught by how much of his and his colleagues’ work has collapsed. Most important now, he said, is not to let the program die before he sees the process through. “I can’t take apart what I put together,” he said. “That’s exactly what the ministry of culture wants. If it ends, they can say it never existed.”

Despite the harrowing process, he said he is glad he stood up for himself at the first sign of trouble, instead of entering the world of palm-greasing and exchanging of favors. “You open that door,” he said, “and you can never close it again.”