December 9, 2016 / 7:53 PM / a year ago

Court freezes assets of Rio mayor in Olympic golf course probe

RIO DE JANEIRO (Reuters) - A state court froze the assets of Rio de Janeiro Mayor Eduardo Paes on Friday after a request by public prosecutors probing whether he improperly waived an environmental fee for a company that built the golf course, used in the recent Olympics.

Rio de Janeiro mayor Eduardo Paes speaks at the C40 Mayors Summit in Mexico City, Mexico December 1, 2016. REUTERS/Henry Romero

The decision, which also froze the assets of the builder, is based on Brazilian legislation that seeks to ensure that those who deprive public coffers of revenue, through administrative or other means, remain responsible for the funds.

The ruling, just four months after the Games ended, casts further shadow on the contracts for venues and infrastructure built in Rio and elsewhere in Brazil when the country was preparing to host the 2014 World Cup and the 2016 Rio Games.

Prosecutors and public auditors have found evidence of overbilling by builders at some World Cup stadiums and have said they are also looking into graft in contracts for new roads and other public works.

Police last month arrested Sergio Cabral, a former Rio governor, as part of an investigation of projects connected to the World Cup and other infrastructure contracted between 2007 and 2014.

Mayor Paes, now in the final month of his second four-year term and facing a fizzled Rio boom amid an ongoing recession, has not been charged with any crimes. He said on Friday he would appeal the move to block his assets.

The court accused the mayor of finding a “magic formula” for the builder to avoid a fee associated with altering the landscape at the golf course site, thereby “causing evident damage to the municipal treasury.”

In a statement, Paes said the builder in question, Fiori Empreendimentos Imobiliarios, was in fact billed for the environmental fee, equal to about $530,000 (£421,858), but that the company had not made the payment. Fiori, based in the southern city of Florianopolis, did not return calls seeking comment.

Paes said the golf course, built in an environmentally sensitive marshland along the Atlantic Ocean, was constructed in accordance with regulations. He criticized the court for suggesting that his planned year as a visiting professor at Columbia University in 2017 would somehow prevent the city from recouping any funds were he found responsible for them.

The mayor, who has said he hopes to run for governor of Rio state in 2018, said his planned return to Brazil is a matter of public record.

Reporting by Paulo Prada and Tatiana Ramil; Editing by Dan Grebler

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