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The headquarters of the Oswaldo Cruz Foundation in Rio de Janeiro. Brazilian prosecutors allege that Guilherme Franco Netto, a prominent public health scientist at the foundation, was involved in a corruption scheme, but he has denied the charges.

Fernando Souza / AGIF via AP

Massive fraud investigation targets prominent Brazilian health researcher

Guilherme Franco Netto, a prominent public health scientist in Brazil, was sound asleep in his Rio de Janeiro apartment when his daughter woke him early on 6 August. She looked alarmed. Three federal police officers were at the door.

Soon, Franco Netto found himself behind bars, under suspicion of aiding a scheme to defraud the government by manipulating the award of a funding contract for a public health research project.

News of his arrest sparked outrage among his colleagues. They collected thousands of signatures on a petition demanding his release, convinced that his imprisonment was the result of a misunderstanding, an abuse of power, or both. After Franco Netto had spent 3 days in custody, a justice on Brazil’s Supreme Court ordered him released. He now awaits trial on several charges of fraud.

Franco Netto, who works at the prestigious Oswaldo Cruz Foundation (Fiocruz), adamantly denies the allegations. “This judicial process will make it clear that I have done nothing wrong,” he says. “I will be worthy of everyone’s trust and appreciation.”

Many Brazilian scientists hope Franco Netto is right. But whether he is proved guilty or innocent, they fear the case has shown the tentacles of corruption that grip many aspects of Brazilian life have also entangled the research establishment.

The charges against Franco Netto have their origins in a major ongoing corruption investigation, called Operation Car Wash, that began in 2014. It has revealed evidence of corruption at the highest levels of several Latin American governments, and resulted in the successful prosecutions of presidents, ministers, legislators, and other prominent figures.

According to documents obtained by ScienceInsider, one offshoot of that investigation, dubbed Operation Dardanários, found evidence of a bribery scheme devised by Alexandre Baldy, current secretary of transportation in the Brazilian state of São Paulo; his cousin Rodrigo Dias; and businessmen Ricardo Brasil and Edson Giorno. In 2014, the four men conspired to provide Baldy with a large campaign donation in exchange for his help in securing payments owed to Pró-Saúde, a nonprofit that employed Brasil and Giorno at the time. It was, prosecutors wrote, “an arrangement that united the public agents’ interest in receiving bribes and the entrepreneurs’ profit-driven desire.”

According to statements provided by Brasil and Giorno, that arrangement later led to other kickback schemes, including one involving Franco Netto and Fiocruz. It began in mid-2016, prosecutors say, after Baldy appointed his cousin Dias as president of Brazil’s National Health Foundation (Funasa). Dias proposed that Funasa hire a company started by Brasil and Giorno to conduct a phone survey of people’s perceptions of the behavior of the mosquito Aedes aegypti, which spreads the viruses that cause dengue, chikungunya, and Zika.

Initially, prosecutors say, Dias wanted Funasa to directly hire the company, called Vertude. But by law there had to be an intermediary: a research or teaching institution with a solid reputation. Funasa chose Fiocruz as the intermediary, and the Fiocruz employee who oversaw the survey project was Franco Netto.

In November 2017, Franco Netto outlined the terms of the contract and sent them to FIOTEC, an independent foundation that provides administrative support for Fiocruz. FIOTEC then solicited several bids. Days later, it named Vertude the winner of the contract, which was worth about 4 million reais ($1.2 million). Vertude took about 20% of the total as profit, according to prosecutors. And they allege that the company in 2018 sent Baldy and Dias cash payments, sometimes hidden in necktie gift boxes, that totaled 900,000 reais and 250,000 reais, respectively. Baldy has denied participating in the scheme.

In his statement, Brasil alleged that Franco Netto helped rig the bidding, but Brasil said he didn’t know whether the researcher received any money. (Prosecutors have not alleged that Franco Netto received kickbacks.) Brasil suggested only that Franco Netto participated in the bid rigging because it was an “opportunity for Fiocruz to receive funds from Funasa … since part of the money stayed with Fiocruz.”

Franco Netto denies the accusation. “I vehemently refute the statement of Ricardo Brasil that I rigged the bid for Vertude,” he wrote in a statement released by his lawyer. Brasil “is a whistleblower … involved in other crimes,” Franco Netto notes, “and to soften his situation he had to reveal facts to the federal prosecutor. Only that in my case he is not telling the truth. … For me, it was completely irrelevant which company would perform the service demanded by Funasa.”

Given Brazil’s corruption problems, it’s not unthinkable that the kickback scheme existed, says Ivar Hartmann, a law professor at the Getulio Vargas Foundation, a higher education think tank. But the charges against Franco Netto are “hard to believe,” he says, given what he calls “the very thin evidence” collected by Operation Dardanários. The record does suggest something “shady going on,” Harmann says. “That is not the same as [Franco Netto] having a corrupt role.”

Now, as Franco Netto awaits trial, he is riding a wave of support. Backers have called attention to his reputation as a world-class public health researcher, noting he helped created Brazil’s unified health care system, which is one of the largest in the world. And they have highlighted his role in coordinating responses to several disasters last year, including the deadly collapse of a waste dam at a mine and a major oil spill.

Many of his colleagues are watching the case with trepidation. “Brazilian justice acts correctly most of the time, but in some situations it’s arbitrary and goes beyond its constitutional duties,” says Leo Heller, an environmental health researcher at Fiocruz. “You never know how these [accusations] proceed and end in Brazil.”