MercoPress. South Atlantic News Agency

Brazil halts sizeable rice purchase amid irregularities

Agricultural Policy Secretary Neri Geller turned in his resignation given his son's ties with a grain trading company

The Brazilian administration of President Luiz Inácio Lula da Silva Tuesday canceled a tender whereby some 263,000 tons of rice were to be purchased abroad to make up for the crops lost in the flooded State of Rio Grande do Sul. The decision was made after signs of irregularities were detected in the bidding companies. Rio Grande do Sul accounts for 70% of Brazil's rice production.

National Supply Company (Conab) President Edegar Pretto said Tuesday that the companies winning the tenders showed “weaknesses” incompatible with the government's goals. “The decision is to cancel this auction and proceed with a new one, more adjusted, to hire companies that can deliver quality rice at the best price,” Pretto said.

“Questions have been raised as to whether these companies have the technical and financial capacity to honor their commitments with the significant amount of public money [involved],” he added.

“We intend to hold a new tender, perhaps using other models, so that we can have guarantees that we will hire companies with [the proper] technical and financial capacity,” he went on.

“You can't put public money in if you have any weaknesses or doubts,” he insisted. Brazil was to disburse R$ 1.3 billion (US$ 242.55 million) to buy 87.79% of the intended 300,000 tons. The transaction was prologued by fierce opposition from local producers and opposition politicians until it was cleared by the Courts.

Agrarian Development and Family Farming Minister Paulo Teixeira stressed that Brazil must now make arrangements for a new tender involving the “CGU [the Federal Comptroller General] and the AGU [the Federal Attorney General's Office].”

“Most of the companies have weaknesses, but there are consistent companies that will take part in this auction when it happens again,” Teixeira also pointed out.

In addition, Agriculture and Livestock Minister Carlos Fávaro explained that Tuesday's move was Lula's call so that these nuisances do not “reflect on the table of the poorest.”

“The scenario is set, we are clear that the public notice needs to be improved, and the auction will be held with the government as a whole to support it, we will get a more modern and transparent public notice,” Fávaro underlined.

In this scenario, Agricultural Policy Secretary Neri Geller turned in his resignation citing a probable conflict of interests: FOCO Corretora de Grãos, one of the bidding companies belongs to his former advisor Robson Almeida de França, who is also a business associate of Marcello Geller, the son of the departing official, who nevertheless argued that he was not working for the Ministry at the time his son established the partnership and thus “there was no conflict there.”

Fávaro confirmed he had accepted Geller's resignation and admitted that although there was no “fact that is disreputable or that generates any kind of suspicion,” there was a sense of uneasiness in grain trading circles.