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November 26, 2013

Brazil Is Entranced by a Tale of Love, Taxes and Bribery

By SIMON ROMERO

RIO DE JANEIRO — There were the boxes of Cuban cigars, which cost about $500 each at a shop in Vila Nova Conceição, one of the most exclusive districts of São Paulo, and the $2,260 bottles of Vega Sicilia Único, a legendary Spanish red. Throw in a Porsche Cayenne, speedboat jaunts to tropical islands and all-night soirees with high-end escorts, and what do you get?

The unlikely lifestyle of a Brazilian tax inspector.

In one of the most salacious corruption scandals to captivate Brazil in years, the municipal government of São Paulo, the nation’s largest city, is reeling from revelations of a scheme in which investigators claim that a group of tax inspectors allowed construction companies to evade more than $200 million in taxes in exchange for bribes.

“We always had marvelous dinners, excellent trips by private plane to Angra dos Reis,” Vanessa Alcântara, 27, the former companion of one of the inspectors charged with accepting bribes, said in a televised interview, referring to the oceanfront city that is a playground for Brazil’s elite.

The titillating details of the scandal are emerging as an offshoot of a custody battle between Ms. Alcântara and Luis Alexandre Cardoso de Magalhães, 41, a low-ranking São Paulo official. Brazilians are absorbing their confessions and accusations against one another, some of which have been nationally televised, in a case that underlines how political corruption remains entrenched despite landmark efforts to send corrupt officials to jail.

So far, the scandal has tinged the administration of São Paulo’s current mayor, Fernando Haddad, and of his predecessor, Gilberto Kassab. Investigators say the bribes to Mr. Magalhães and his colleagues were largely used to gain approval for real estate projects.

A top aide to Mr. Haddad, Antonio Donato, resigned after tax inspectors implicated in the scheme told prosecutors that some of the bribes were channeled to Mr. Donato when he was a city councilman. Mr. Donato denied that claim on Tuesday, and Mr. Haddad said in a statement that his administration put an end to the inspectors’ actions shortly after he took office this year.

Intercepts of phone calls by Mr. Magalhães suggest that he met Ms. Alcântara in 2011 at Bamboa, a São Paulo nightclub frequented by prostitutes. She disputes that account, which Mr. Magalhães repeated over the weekend on the Globo television network, contending that they met when she tried to sell him a cellphone plan.

But when it comes to living high from ill-gotten gains, the estranged couple seem to agree on a lot of things.

Mr. Magalhães, who chose to cooperate with investigators after his arrest in October, described how developers delivered bags of cash, some containing about $30,000, on a weekly basis to his office. The money was then divided among four municipal officials, he said, recounting how he burned through much of his haul by spending more than $4,500 a night on prostitutes.

“I spent because the money was coming in,” he said. “I wanted to live.”

In telephone intercepts and newspaper interviews, Ms. Alcântara said she and Mr. Magalhães, who had a child together, would count the money in her living room, on occasion finding more than $180,000 on their hands. Prosecutors estimate his fortune at $8 million, an amount difficult to reconcile with his annual salary of about $82,000.

Ms. Alcântara said he used some of the money to decorate her apartment at a cost of $50,000, and local newspapers have reported that they would splurge on $2,200-a-night suites at a designer hotel and meals at steakhouses with $380 bottles of Charmes-Chambertin Grand Cru, a coveted French wine.

The high life apparently ended when Ms. Alcântara became enraged over what she saw as the meager monthly child support Mr. Magalhães offered her after they separated, prompting her to talk to prosecutors.

As is sometimes the case in the cycle of Brazilian corruption scandals, celebrities can emerge from such intrigue.

One aspirant to such status is Nagila Coelho, 38, a personal trainer who is now a romantic companion of Mr. Magalhães. She is planning to start her own line of bikinis, according to a report in Folha de São Paulo, a Brazilian newspaper. Ms. Alcântara, meanwhile, is mulling a venture into politics.

She said she already had a slogan: “Being a thief is easy; I’ll be honest amid all the thieves.”