European engineering giant Siemens faces the prospect of legal action from the Brazilian government following accusations of price fixing during the bidding process for the construction of the metro and train systems of the cities of Sao Paulo and Brasilia.
The government of the state of Sao Paulo announced in a statement on its official website that Siemens had confessed to authorities in May of this year that it had participated in the cartel.
Gerald Alckmin, governor of the state of Sao Paulo, told local media that Siemens is accused of involvement with the cartel during a period stretching from 2001 to 2007, which is believed to have fixed prices for bids to build Sao Paulo's metro system.
The Sao Paulo governor said the cartel's actions had been injurious to the city's finances and demanded compensation for economic damage incurred.
"Twice the company was asked to collaborate with the investigation and twice it refused to do so," Alckmin said in the official statement. "This is why we are taking legal action against the company to get total reimbursement."
The announcement by the Sao Paulo government follows statements made by Sao Paulo state prosecutor Marcelo Mendroni last week that there were "strong indications that a criminal cartel was formed to bid for construction and maintenance contracts."
Other companies alleged to have been members of the cartel by local newspaper "Folha de Sao Paulo" include Spain's CAF, France's Alstom, Japan's Mitsui, and Canada's Bombardier.
While Paulo Stark, the head of Siemens Brazil, confirmed the company was cooperating fully with an investigation launched by local authorities, he has refused to disclose further information for the time being due to the confidential nature of the case.
The alleged participation of Siemens and other foreign firms in a cartel involving urban metro and rail systems taps an especially raw nerve for Brazilians, given that the economic burden caused by exorbitant transportation costs was one of the key factors prompting a recent spate of nationwide protests.