Brazil court blocks Olympic funds on suspicion of fraud -source

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A federal court in Brazil has blocked funding for the construction of an Olympic venue on suspicion of corruption, a source involved in preparations said on Tuesday, throwing fresh scrutiny on the Rio de Janeiro Games four months before they start.

Financing from state lender Caixa Economica Federal was blocked from reaching one of the consortiums building the Olympic Deodoro complex where 11 sports, including Rugby Sevens, BMX biking and kayaking, will be held, the source said, confirming a report on Tuesday by the news site G1.

The suspended funds totalled 128.5 million reais (24.5 million pounds), G1 reported. According to the report, prosecutors in Rio say they found evidence of fraud in earthmoving services at the venue.

The Deodoro consortium is made up of builders Queiroz Galvão and OAS, a separate source told Reuters. The two companies are already deeply ensnared in the far-reaching investigation into corruption at state-run oil company Petrobras.

Queiroz Galvão and OAS did not immediately respond to requests for comment. The federal prosecutors’ office in Rio and federal court officials declined to confirm the blocking of the funds, saying the case was under seal. The mayor’s office and Caixa would not comment, saying they had not yet been notified.

Deodoro is Rio’s second-largest Olympic cluster with nine venues being built at a cost of 800 million reais. Seven have already been completed, with the shooting and equestrian venues still under construction.

Police and prosecutors previously said they suspect corruption in Olympic building projects because they were carried out by the same major construction and engineering firms that have already been charged with graft in the Petrobras case.

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