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AP INVESTIGATION: High costs, corruption suspicions in Brazil's World Cup on tournament's eve

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BRASILIA, Brazil - The cost of building Brasilia's World Cup stadium has nearly tripled to $900 million in public funds, largely due to allegedly fraudulent billing, government auditors say. The spike in costs has made it the world's second-most expensive soccer arena, even though the city has no major professional team.

Now, an Associated Press analysis of data from Brazil's top electoral court shows skyrocketing campaign contributions by companies that have won the most World Cup projects. The lead builder of Brasilia's stadium increased its political donations 500-fold in the most recent election.

The links between construction firms and politicians add to suspicions that preparations for soccer's premier event are marred by corruption. They also raise questions about how politicians who benefit from construction firms' largesse can be effective watchdogs over billion-dollar World Cup contracts.

"These donations are making corruption in this country even worse and making it increasingly difficult to fight," said Renato Rainha, an arbiter at Brasilia's Audit Court, which is investigating the Brasilia stadium spending. "These politicians are working for those who financed campaigns."

Brasilia's arena will now cost around $900 million, auditors say. They found $275 million in alleged price-gouging — and have only examined three-fourths of the project.

Federal prosecutors say as yet no individuals or companies face corruption charges related to World Cup works. There are at least a dozen separate federal investigations into World Cup spending.

Funding for Brasilia's stadium relies solely on financing from the federal district's coffers, meaning every cent comes from taxpayers.

The auditors' report found instances of what appears to be flagrant overpricing. For instance, it says the transportation of pre-fabricated grandstands was supposed to cost just $4,700 — but the construction consortium billed the government $1.5 million. The consortium is made up of Andrade Gutierrez, a construction conglomerate, and Via Engenharia, an engineering firm.

The steel to build the arena represented one-fifth of total expenses — and auditors say wasteful cutting practices or poor planning added $28 million in costs, the single biggest overrun.

The audit questions why the consortium had to discard 12 per cent of its steel in Brasilia when Andrade Gutierrez, using the same cutting methods, lost just 5 per cent of steel at another stadium in Manaus and virtually none at a Cup arena in the city of Cuiaba.

Andrade Gutierrez did not respond to an AP request for comment on the accusations of cost overruns. It noted its political donations were legal.

But Claudio Monteiro, the head of the government's World Cup committee in Brasilia responsible for oversight, said the audit court's allegations are simply wrong and that all the spending would be justified.

"This report comes out just 100 days before the Cup? That's why I say they're trying to spoil the party," Monteiro said from his office outside the stadium. "We're going to show how this report is off base."

But suspicions abound in Brazil, where in a poll last year three-fourths of respondents said the World Cup construction has been infused with corruption.

That helped fuel widespread, often violent, anti-government protests last June that sent more than a million Brazilians into the street. Many protesters railed against corruption and the billions spent to host the Cup.

The overall price of the 12 stadiums, four of which critics say will become white elephants after the tournament because they are in cities that cannot support them, has jumped to $4.2 billion in nominal terms, nearly four times the estimate in a 2007 FIFA document published just days before Brazil was awarded the tournament.

At the time, leaders also promised the stadiums would be privately funded.

Critics raise questions about the ties between big business and the government determining how funds are spent.

Andrade Gutierrez, which was awarded stakes in contracts totalling nearly one-fourth of the Cup's total price tag, contributed $73,180 in 2008 municipal elections. Four years later, after it was known which cities were hosting Cup matches and thus which political parties controlled the local governments that awarded and are overseeing Cup projects, the company's political contributions totalled $37.1 million.

While those campaign contributions were legal, they're likely to soon be banned by Brazil's Supreme Court. A majority of justices voted last month to end corporate donations, citing corruption concerns. A single justice demanded to delay a final vote, meaning the reform won't take effect for months, after the Cup is over.

Many think the rise in spending on stadiums and cuts in investments in badly needed public transportation projects means the nation blew its chance to use the Cup to make real advances.

"I'm not against the Cup, but I'm frustrated with the spending and the corruption we all know it involves," said security guard Paulo Rodrigues as he stood in the Brasilia stadium's parking lot on a recent afternoon. "When politicians build a road, even if there are kickbacks, at least at the end we have a road. With this stadium, we have nothing."

___

Bradley Brooks on Twitter: www.twitter.com/bradleybrooks

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