Tarcísio's secretary gave positions in public companies to partner

The Secretary of the Civil House under Governor Tarcísio de Freitas, Arthur Lima, gave his partner, Carlos Augusto Duque Estrada, seats on the Boards of Directors of Desenvolvimento SP, the São Paulo government's economic development agency, and the Waste Processing Company. Data from the State of São Paulo (Prodesp). In the first council, Duque Estrada receives a gross of R$11,500 per month. In the second, another R$14.7 thousand per month, totaling R$26.2 thousand. Two months after Arthur Lima joined the company, their office closed a deal worth R$20 million in advance of fees involving an employee lawsuit against the airline Varig.

Duque Estrada's appointments, as well as those of all company advisors, came from Lima's pen since, in January of last year, Tarcísio published a decree that obliges all secretaries to submit their nominations for boards of state companies to the Civil House, which began to centralize appointments for these positions. According to the rule, the department sends the names to the State Capital Defense Council (Codec), also chaired by Lima, which then requests a compliance assessment from the companies' eligibility and advisory committees. The Codec command, however, can also carry out an assessment subsequent to that carried out by the companies' internal bodies. As a result, it is Lima who, in practice, nominates and endorses all nominations.

According to the Civil House, nominations for boards of directors are made strictly taking into account compliance with the requirements set out in laws, requirements and prohibitions set out in the Bylaws of the state-owned company, in addition to having their nomination scrutinized by the Eligibility Committee. In the case of Desenvolvimento SP, even the Central Bank has a role in approving the nominee. According to the secretariat, the counselor previously complied with all the requirements set out in the legislation. The secretary also denied that there was any conflict of interest in the nominations.

When contacted, Prodesp stated, in a note, that Duque Estrada was appointed with the approval of the eligibility committee and in full compliance with the requirements of art. 17 of the State Law. Desenvolvimento SP said that the lawyer met the legal requirements, that the appointment does not violate the entity's bylaws and that the appointment was authorized by the Central Bank.

Office closed deal worth R$20 million after secretary joined

Officially, Arthur Lima became a partner at the law firm Duque Estada Advogados Associados in February last year, one month after becoming head of the Civil House of Tarcísio de Freitas. Two months later, the office closed a deal worth R$20 million with the Lassie 1 fund, created by Lass Capital and managed by BTG Pactual. This involves the sale of the rights to receive R$80 million in legal fees in the action in which Duque Estrada represented the Airline Workers Union against the former airline Varig, which went bankrupt. In practice, the office received R$20 million from the fund immediately, without having to wait for the resolution of any legal imbroglio related to the case. The fund will now be entitled to R$80 million when compensation for employees of the former company is paid, having the chance to earn a profit from the operation, as it paid R$20 million for it.

Arthur Lima was not part of the office when the case against Varig was initiated in court in 2005, but only now, when the office received the amount. In addition to the two, there is a third partner: Carlos Henrique Dosciatti. To the Estadãoover the phone, the secretary said he had helped with the case in 2022, when he was not yet part of the São Paulo government, although his name does not appear in the files.

Subsequently, in a note, the Civil House stated that he “did not participate in the transaction of the Varig case nor did he receive any amount, since the legal fees assigned” were those of the services provided by the lawyer Duque Estrada. He also said that, in practice, his work at the office began in 2022, but was only formalized the following year due to the duration of bureaucratic procedures at the Brazilian Bar Association (OAB). The Civil House also says that Arthur Lima is away from the office. This removal, however, only means that he is absent from the day-to-day activities of the office, does not sign documents or petition on behalf of Duque Estrada Advogados Associados, but maintains a shareholding.

To the EstadãoDuque Estrada says he invited the secretary for society because he wanted to expand his operations to the area of ​​Public Private Partnerships (PPPs), but had to postpone the plan with Lima's entry into the government.

Part of the payment may end up being made by the SP government itself

To guarantee payment to the Lassie 1 fund, if Varig's credits do not yield the agreed R$80 million, credits were offered from another bankrupt airline, Vasp, whose employee union is also represented by Duque Estrada. In this case, however, the payment could end up leaving the coffers of the São Paulo administration itself, of which Arthur Lima is a member. This is because, since 2018, Duque Estrada himself and other creditors have been trying to force the Public Treasury of São Paulo to pay R$4 billion in labor debts. The strategy was used after both the Regional Court of the 2nd Region (TRT-2) and the Superior Labor Court (TST) recognized the State's subsidiary responsibility in commitments with creditors, due to the shareholding that the government held in the company. The case is now being analyzed by the Federal Supreme Court (STF).

When questioned, the Lassie 1 fund said, in a note, that Lima and Duque Estrada “have no influence on the payment of acquired credits”. He also recalled that this function falls to the State Attorney General's Office, which, in January, expressed its opposition to the payment of the debt by the State in an extraordinary appeal presented to the STF.

Regarding the deal carried out with the Duque Estrada office, the fund stated that negotiations for the purchase of credit rights “started at the beginning of 2022, when there was not even an expectation of who the new governor would be, much less his secretaries”. BTG Pactual informed that, as administrator of Lassie 1, it has no influence on the management, purchase and sale of assets.

Develop SP lent R$1 billion to private companies last year

Desenvolvimento SP is the main channel available to the São Paulo government to boost the economy through credit at subsidized rates. In 2023, Tarcísio's first year in office, the agency gained even more relevance. It lent R$1 billion to municipalities and private companies, 36% more than in the previous year.

Prodesp is the state government's IT company, created to develop and implement electronic government, management and citizen service solutions. Prodesp operates in both the Executive, Legislative and Judiciary branches, with Internet solutions, data center services, consultancy, advice and technical support, project development and installation of networks and training.

For José Rogério Cruz e Tucci, professor of Procedural Law at the Faculty of Law of the University of São Paulo (USB), the corporate participation of the secretary, in itself, does not violate the Code of Ethics of the Brazilian Bar Association (OAB) , but raises questions about a conflict of interest.

“Strictly speaking, there is no impediment. The OAB
code of ethics does not provide for cases like this, but it is clear that there is a conflict of interests. First, for placing his partner on the board of a public company and, second, for joining an office in litigation against the government. The last thing to come out of this is coincidence. In this case, it seems to me that there are signs of influence peddling.”

The Civil House denies that there is a conflict of interests, as the department does not work with State attorneys in their legal defenses, nor does it have the authority for the secretary himself to represent the State before the Judiciary.