Brazil seeks arrests in price-fixing scheme

AP News
Posted: Mar 28, 2014 3:05 PM

SAO PAULO (AP) — Brazilian prosecutors are seeking the arrest of 13 foreign executives from three international companies allegedly involved in a cartel to raise prices for the construction and upkeep of subway and train systems in Sao Paulo.

The press office of the Sao Paulo State Prosecutor's Office said Friday that none of the 13 executives are in Brazil, and if necessary the federal police will ask the international police agency, Interpol, for help.

Eleven of the 13 work for Siemens of Germany, one for Bombardier of Canada and another for South Korea's Hyundai Rotem.

Siemens would only say in a statement that it wants a "full investigation of the irregularities committed."

Neither Bombardier nor Hyundai Rotem had immediate comment.

Earlier this week, prosecutors charged 30 executives in the cartel formation case. It was not immediately clear if the arrest of the remaining 17 executives will be sought.

Besides Siemens, Bombardier and Hyundai Rotem, the list included CAF of Spain, Mitsui of Japan and Alstom of France.

The prosecutor's office charged in a statement that the companies engaged in price fixing and said those that won bids then contracted the losing companies to provide services. Five contacts signed between 1998 and 2008 are being investigated.

Judges must decide if they will accept the charges and try the executives, who included both Brazilians and foreigners.

Last week, Brazil's antitrust agency began legal proceedings against these and other major international companies for allegedly forming cartels for the construction and maintenance of public transportation systems in Sao Paulo, Brasilia, Belo Horizonte, Porto Alegre and Rio de Janeiro.

The Administrative Council for Economic Defense, known as CADE, said 18 companies were part of a cartel involved in 15 projects valued at $4 billion.

CADE said the companies used anticompetitive strategies such as the prearrangement of offers tendered in bidding processes. At times, it said, the cartel would also determine which company would win a bid by allowing only one to tender an offer.

In 2013, Siemens struck a plea agreement with authorities and revealed the existence of the price-fixing scheme, CADE's statement said.