Why the MP wants to cancel the billion-dollar public lighting contract in SP

The action, based on the anti-corruption law, points to alleged favoritism of a consortium in the bidding, carried out in 2018, and irregularities in an addendum for the maintenance of traffic lights worth R$3.8 billion.

In addition to the current president of SP Regula, the former secretary Marcos Rodrigues Penido, the former director of the Department of Public Lighting (Ilume) Denise Maria Ayres de Abreu, and the companies FM Rodrigues and CLD Construtora, which became Ilumina SP, are mentioned in the procedure.

SP Regula reported that the execution of the public lighting contract in the city takes place on a regular basis, with permanent supervision and monitoring by the Municipal Audit Court (see the full text below).

The City of São Paulo, in a statement, informed that it reaffirms its commitment to legality and highlights that the contracting was carried out with full legal support. It also highlights that the issue has been monitored by the Courts for almost ten years, a period in which there has been no recognition of irregularities.

And, that the Municipality, as soon as it is officially notified of the action, will present all necessary clarifications to the Court.

Ilumina SP says that all the points addressed by the MP have already been the subject of previous investigations, in which the concessionaire provided all clarifications. Furthermore, the execution of the contract generated savings of 67% in the city's energy consumption.

Former secretary Marcos Penido says that all actions at the time followed the dictates of the law.

The report contacted the former director of Ilumine, Denise Abreu, and is awaiting a response.

Estadão asked the president of SP Regula SP, Costa Neto, for a position, but the press office says that for now the position expressed in the note sent by the agency will be maintained.

The case

The origin of the case lies in an international competition whose notice was published on April 23, 2015 and republished in November of the same year. The objective was to grant modernization, expansion and maintenance services to the lighting network in the capital of São Paulo for a period of 20 years.

The contract was signed on March 8, 2018, worth R$6.9 billion, with monthly payments of up to R$28.9 million. The MP states that there was favoritism for the consortium led by FM Rodrigues, declared the winner on January 8, 2018, despite the Walks consortium having presented a proposal R$5.6 million lower than that of the benefited consortium, which continues to provide services.

The Walks consortium was excluded from the competition due to allegations of unsuitability and warranty failures. The company went to court and the exclusion was considered illegal. Investigations revealed that Denise Maria Ayres de Abreu, director of Ilume between January 1, 2017 and March 28, 2018, received "allowances" from FM Rodrigues to benefit the company.

Based on leaked audio of conversations between employees indicating possible payment of bribes, in March 2018, the Public Ministry recommended that the city of São Paulo suspend the public lighting PPP contract. At the time, the director was fired.

Addition of R$3.8 BI

According to the prosecutor's office, even with contrary recommendations, then secretary Marcos Rodrigues Penido signed the contract worth R$6.9 billion. PPP management passed to SP Regula in 2022. On August 31 of that year, addendum no. 5 was signed, which included the traffic light network in the lighting contract without bidding, generating an addition of R$3.8 billion to the contract until 2038.

According to the MP, the current president of SP Regula, João Manoel da Costa Neto, appointed on February 16, 2023, ignored final and unappealable decisions from the Superior Court of Justice (STJ) on May 16, 2023 and from the Federal Supreme Court (STF) on December 18, 2024, which ordered the resumption of the original bidding.

There were also complaints from managers and employees about the actions of SP Regula, including the disappearance of a physical volume of the administrative process.

The petition is signed by prosecutors Silvio Marques and Karyna Mori, from the Public and Social Heritage Public Prosecutor's Office in the capital. The MPSP's requests will still be analyzed by the Court.

What SP Regula says

According to SP Regula, since 2018, the city's public lighting system has undergone extensive modernization with the replacement of old sodium lamps with LED lamps, a more efficient technology and present in practically 100% of the network. Until June this year, 623,800 lighting points had been remodeled and 42,647 expanded.

SP Regula also says that the resumption and suspensions of the bidding process strictly followed the deadlines and determinations of the Judiciary, in accordance with the legislation. Furthermore, SP Regula made available to the Public Prosecutor's Office all the information requested since the resumption of bidding, collaborating fully with the control bodies.

What Ilumina says

Ilumina SP reported that it was surprised to receive the public civil action filed by the Public Ministry of the State of São Paulo, eight years after signing the contract. And that all the points addressed by the MP have already been the subject of previous investigations, in which the concessionaire provided all the clarifications.

"Gaeco, the MP body that investigates criminal practices, archived the investigation into the case. The contracts were validated by the control bodies. On October 4, 2024, the 13th. The Public Finance Court of São Paulo dismissed a popular action that made requests similar to those formulated by the public civil action", states the statement.

Ilumina SP also says that, in 2023, the STJ determined the recovery