Viga d'Ouro case - former Silves mayors must repay €267,000

13 March 2018

The audit of Silves council finances, ordered by the Public Prosecutor's Office and carried out in the last quarter of 2017, has resulted in the Court of Auditors issuing a (reduced) demand for €260,000, to be paid by the former mayors Isabel Soares and Rogério Pinto.

Their fiscal crimes relate to events between 2004 and 2006, culminating in the infamous Viga d’Ouro case. The mayors' proven ‘financial infractions’ resulted from her refusal to pay a debt to three banks, thus incurring hefty interest and default charges of €668,000.

Mayor Soares ran up debts with a local construction company, Viga d’Ouro Construções Lda, which was contracted directly to undertake civil engineering works in the council area. This debt ended up with BES, BCP and Caixa Geral which pursued payment from the council, finally taking the municipality to court and winning.

The newly formed council executive under Rosa Palma ended up having to deal with around €5 million in debt to these banks for work that had not been subject to a competitive tendering process and that had not represented 'value for money' - even using the most generous of criteria.

According to the Court, 'the person responsible was Isabel Soares who acted with an ethical and personal attitude of indifference, acting unlawfully and with fault, since she did not comply in the specified time with the obligation to settle the bank debts she took on, on behalf of the Municipality of Silves and, by suspending payments, led the municipality to assume financial burdens higher than those initially due, in breach of the legal rules to which it was obliged.’

Rogério Pinto took over the presidency of Silves council from Soares when she, rather conveniently, slipped off to run Águas do Algarve. Pinto did nothing to regularise the council’s precarious financial position with regard to this huge debt and has been held accountable.

Silves council says that Isabel Soares and Rogério Pinto appealed to the Court to let them off any personal financial responsibility but this was rejected by the judge. However, the court did reduce the amount payable from €668,000 to €267,000 as the two have no (proven) history of financial infractions and the sum would harm them personally.

True to form, Isabel Soares has appealed her conviction, thus dragging out the legal process that has been going on for well over a decade.

Soares arranged to contract and pay Viga d’Ouro Construções Lda, without going through a tendering process. Some 1,220 invoices were submitted in batches by the company, each below the amount that would have required a tender to have been issued.

Soares, laughably, blamed this arrangement on her finance department despite her authorising the work with a company that was 'well known' to her - with the inescapable inference that there had been some financial incentive for her to contract this company and allow it to overcharge ratepayers on a monumental scale.

The auditor’s report outlined a litany of gross errors with the Viga d’Ouro contract, including -

The work clearly should have gone to public tender
The work went ahead without the council going through the correct procedures and establishing the bona fides of the contractor.
The supply of material was contracted to Viga d’Ouro Lda which took full advantage of this fact and overcharged with gusto.
The works were commissioned without checking the quantity of materials to be supplied by the builder.
There was no formal way of dealing with unexpected areas where more money would be needed.
The work started with no work plan and no way of assessing work done compared to invoiced amounts.
The invoices were submitted to the council, 1,220 of them, for €4,987 or less to remain below the price point where a formal tendering process would be triggered. These mostly were issued in batches dated on the same day.
The contractor significantly overcharged for the work when compared to similar project costs.

For the municipality, "this is another black chapter of the Viga D'Ouro case that has ended, in which Isabel Soares and Rogério Pinto are now condemned to pay to the Municipality of Silves a part of the damages they caused to the public purse.”

Isabel Soares and Rogério Pinto

For background to this case of local council corrupption and mismanagement, see:

1. Silves council to sue former mayors Soares and Pinto (News) ... Silves, Isabel Soares and Rogério Pinto." The council statement, municipal speak for "sue them", reads that council members want to take the mayors to court for wasting council money in the Viga d’Ou ... Created on 29 July 2016

2. Silves: former mayor Isabel Soares responsible for 'gross procurement errors' (News) ... nd services as well as the work contracted with the construction company Viga D'Ouro.” The auditors add that the city accounts contained suspicious omissions dating back to 2011 which made the 2011 and ... Created on 04 July 2016

3. Silves auditor's report – former mayor 'acted illegally' (News) The infamous Viga d'Ouro case is based on events between 2004 and 2006 when Silves council awarded the eponymous building company a substantial range of projects for drainage, sewage and water supply wor ... Created on 02 October 2015

4. Silves mayor wants multi-million loan for 'essential works' (News) ... gone down the path of debt reduction, aimed at consolidating public finances." Palma also explained her plan to reduce the debt related to the Viga D'Ouro scam left by Isobel Soares for her to clear u ... Created on 07 June 2015

5. Local council transparency index led in the Algarve by Loulé (News) ... Rosa Palma currently gives the impression of a more open style; anything is an improvement on the previous regime of Isabel Soares whose dubious property dealings and Viga D'ouro corruption case necess ... Created on 07 November 2014

6. Silves council beggared by Viga d'Ouro payments ... (News) A sad day for Silves ratepayers as reports are made public that their council has started to make payments in the Viga d’Ouro scandal. The municipality transferred €480,000 to Banco Espirito Santo in ... Created on 10 June 2014

7. Silves budget crippled by Soares legacy (News) ... but the major problem is the Viga d’Ouro fiasco which is to cost the ratepayer €6 million in 2014 which can not be spread over many years. The Viga d'Ouro lawsuit, which has been through court to th ... Created on 30 December 2013

8. Silves’ new mayor lifts the lid on the Council’s finances (News) The new mayor of Silves, Rosa Palma, said today that she may have to resort to an external audit of various aspects of the council’s fiscal past, including the disastrous Viga d'Ouro contract which lef ... Created on 13 November 2013