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 work without going to public tender.
This and other 'illegalities' were in clear breach of the rules governing public organisations when commissioning work.
The resulting invoices sent to Silves council were 'factored' by Viga d'Ouro Construções Lda meaning the council then owed the money to the banks, not the builder, which rather cleverly ensured the council was almost certain to lose in court should it dispute the amounts payable.
We use the word ‘amounts’ justifiably, the council was sent 1,220 separate invoices between 2004 and 2006 each for under €4,987.98 which ensured the work commissioned avoided the legal necessity of going out to public tender to get the best value for money for Silves ratepayers.
Isabel Soares, the mayor of Silves (pictured below) at the time, now running Águas do Algarve, defended the council’s defiance of procedural rules - and herself against accusations of 'abuse of power' - in a case that mysteriously was archived in 2012.
Soares blamed others, saying she ‘merely signed the documents’ that authorised payment.
“No mayor, not even in the smallest council in Portugal can be aware of everything. We must trust people in each department at the town hall to do their jobs correctly before documents come to us to be signed,” said, Soares shifting the blame onto her minions in the time-honoured manner.
Soares' micro-managament style was legendary at the council but her signing off 1,220 invoices to the same builder seems to have caused her no concern as it was she that commisisoned the work. The Silves ratepayers want to know why this contract was given to one company without tender - but suspect they already know the answer with rumours of backhanders and illicit payments continuing to foul the air.
The mayor moved on before her time at Silves council was up, leaving her deputy Rogério Pinto as a caretaker mayor until the next municipal elections when in a surprise victory, Rosa Palma took over the infested council pledging to clean out the corruption, fiscal mismanagement and autocracy that had developed during Soares' reign.
Viga d’Ouro Lda denied all accusations levelled against it by the new council and claimed it was owed €6 million for the construction works, payment having been suspended by the council in August 2006 due to the opening of an enquiry into the precise circumstances surrounding the awarding of the work and the seemingly endless stream of small invoices from the contractor submitted to the council.
Viga d’Ouro Construções Lda then factored those invoices and the banks later took the council to court for repayment, a case which it won and the Silves ratepayer has been forking out ever since.
It is not clear why the banks took on the invoices that already were subject to suspension and scrutiny. The bankers knew that the vast amount of small invoices they accepted were creted specifically by their client to avoid having to compete in a public tender and that this might cause payment problems in the future.
The new broom at Silves council, Rosa Palma, commissioned an external audit of various aspects of the council’s fiscal past, including the disastrous Viga d'Ouro contract as the council now was faced with an €8 million payment to the banks which included interest and court costs, a hefty rise from the original invoice value of around €6 million.
The auditor’s report now has been published and, based on the findings, many Silves councillors of the Communist (CDU) persuasion want swiftly to move forward with a court case against ‘Dr Maria Isabel Fernandes da Silva Soares and Dr. Rogério Santos Pinto.’ 
The problem is that the CDU is in a minority in the council chamber but this will not delay the submission of the report to the Court of Auditors.
The CDU are after Pinto and Soares to be prosecuted for lacking in ‘financial responsibility’ and found to be ‘financially liable’ for the Viga d’Ouro contract that clearly broke all the procurement rules, and for the extraordinary level of payment to an associated firm of lawyers, PLMJ Sociedade de Advogados PL, which received over €1 million in fees between 2006 and 2013 despite no contract.
Some say the town got its new drainage, so why bother? Because the ratepayer was ripped off.
The auditor’s report outlined a litany of gross procurement errors, 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.
The inference from this report is that the council leaders, Soares and then Pinto, in some way benefitted from this huge and sloppy commissioning of works that lacked the most basic cost control, management accounting, and procurement and engineering progress checks.
If you are going to be ripped off by the builder, this is how to go about it and this is why councils have inbuilt checks and balances to stop rogue executives commissioning crooked companies which overcharge and later share out the proceeds which have in reality been stolen from local ratepayers. Whether this happened in Silves seems not to be the point of these investigations as the two former mayors are set to be charged with 'fiscal incompetence' rather than corruption.
The Court of Auditors exists in part to review council fraud and it is hardly surprising that mayor Rosa Palma wants compensation for her ratepayers from the previous regime’s puppeteers. The auditor’s report will be forwarded to the Court of Auditors as soon as Silves councillors have stopped bickering over when, in fact the report already has spent six months in Palma's bottom drawer for no good reason.
The eventual Court of Auditors conclusions may not be enough to make Soares and Pinto suffer the humiliation that seems so richly deserved so Rosa Palma also is insisting that the council approves her motion that the council gets advice and assesses whether a parallel case for financial liability against the pair can be mounted. 
This part has been voted down as Palma does not have a majority in the council chamber, but this is only a temporary matter as the grounds for the ‘no’ vote were the looming election and the political affect such a move might have on local voters.
What of Soares? In April 2012, an ‘abuse of power’ claim against her and two councillors was filed and she continues in her role at the head of the Algarve’s regional water company, a job that was not advertised and that necessitated the then current head of the company to be moved back to a council position which itself had been filled. Such is the merry-go-round of public sector appointments.
With regard to any new charges resulting from the council taking the former Silves mayors to court for recompense, Isabel Soares and Rogério Pinto are said to be ‘considering their options.’
For Portuguese speakers interested in the auditor's report, there is a Documents dowload
