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Economy

These Brazilian Companies Were Ruined By The 2014 World Cup

A worker walks inside the Sao Paulo Arena
A worker walks inside the Sao Paulo Arena
Wálter Nunes

SÃO PAULO — Daniel Okamoto has bad memories of the 2014 World Cup, but not because of Brazil's historical and humiliating 7-1 defeat to Germany. "My company went virtually bankrupt because of the World Cup," the businessman says.

The firm, Dahouse Events, won a modest bid for a 300,000-real contract ($83,000) to make costumes for the opening and closing ceremonies. But Okamoto never got the money.

"At first we received approximately 86,000 reais ($24,000), but the rest wasn't paid," he says. "I took a loan from the bank, I hired people and I didn't get what was agreed to. Since then I've had to lay off my 12 employees and sell some property to pay off the debt." Okamoto says he still owes money to suppliers, banks and even the tax office related to the contract that wasn't paid.

Dahouse is one of 14 companies that went to court in São Paulo over debts related to services provided for the World Cup"s opening and closing ceremonies. Together, they provided scenic design, sound equipment, logistics, security, lighting and communication services, and they're claiming damages which add up to a total of more than 4.2 million reais ($1.17 million).

The company responsible for paying the suppliers is Spirit Comunicação, an agency contracted by the Local Organizing Committee of the World Cup (COL) to organize the two ceremonies. The committee transferred money to Spirit, which in turn was supposed to pay the contractors. The payments were made normally at the beginning. But the money stopped coming in a month before the World Cup.

"I signed the contract in August 2013 and until May 2014, everything was normal. From then on, they stopped paying me," explains Ricardo Alves, owner of Blau Agência de Viagens, which charged 411,000 reais ($114,000) for event organizers travels and accommodations.

Payment outstanding

Those who signed contracts with payments to be made after the World Cup didn't see a single penny. Gabisom, which provided sound system and musical equipment, signed with Spirit a contract which included a one-time payment of 746,700 reais ($207,500) in October 2014. The payment was never made.

The largest creditor listed in the trial is Mchecon, which won the bid for "all services necessary for the assembly and disassembly of set design pieces" for 2.5 million reais ($693,000). In court, Mchecon tried to prove that it was actually COL executives, and not Spirit employees, who had dealt with suppliers. Emails showing conversations between people from the committee and the company were attached to the lawsuit.

In one of the emails, the lawyers argue that the COL's executive director, Joana Havelange, "actively interferes in the organization of the events." She is the granddaughter of João Havelange, former FIFA president (1974-1998) and the daughter of Ricardo Teixeira, former president of the Brazilian Football Confederation.

The COL said in a statement that it had hired Spirit to organize the opening and closing ceremonies of the World Cup and that "all obligations (...) with said company have been duly complied with." Alan Cimerman, owner of Spirit Comunicação and now marketing manager of soccer team São Paulo FC, tells Folha that the overspend in the World Cup budget can be blamed on the many last-minute alterations that made the opening and closing ceremonies more expensive than planned.

These changes, he claims, brought the total cost to 20 million reais ($5.5 million), instead of the planned 17 million. He blames the COL. "I also was damaged by the whole affair," says Cimerman. "I've lost my apartment and my car. I'm talking to the suppliers and trying to pay them little by little, so I can get my life back."

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