SAO PAULO CITY OFFICIAL TALKS ABOUT GOVERNANCE, POLITICS,

UNCLAS SECTION 01 OF 03 SAO PAULO 000878

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/TPP/IPE JENNIFER BOGER
STATE FOR WHA/BSC, INR/IAA, INR/R/AA
STATE ALSO FOR DS/IP/WHA, DS/DSS/ITA, DS/DSS/OSAC
STATE PASS USTR FOR KATE DUCKWORTH AND JENNIFER CHOE GROVES
STATE PASS USPTO
NSC FOR TOMASULO
TREASURY FOR JHOEK
USDOC FOR 4332/ITA/MAC/WH/OLAC
USDOC ALSO FOR 3134/USFCS/OIO
SOUTHCOM ALSO FOR POLAD
USAID FOR LAC/AA

E.O. 12958: N/A
TAGS: PGOV PINR KCRM KIPR SNAR ETRD ASEC BR
SUBJECT: SAO PAULO CITY OFFICIAL TALKS ABOUT GOVERNANCE, POLITICS,
AND FIGHTING PIRACY AND OTHER CRIME

REF: (A) SAO PAULO 767; (B) 05 SAO PAULO 848
(C) RECIFE 87

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

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SUMMARY
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1. (SBU) Calling the operations of street vendors a "racket," Sao
Paulo assistant Mayor Andrea Matarazzo told Consul General (CG) that
he has been cracking down on the sale of pirated and counterfeit
goods by both stores and vendors. He associated the vendors'
activities with organized criminal activity perpetrated by the First
Capital Command (PCC) in Sao Paulo and drug traffickers in Rio de
Janeiro, saying that "today's pirated CD is tomorrow's stray
bullet." Matarazzo, a friend and advisor of Governor Jose Serra,
decried what he referred to as the "glamorization of the favela"
(urban slum),as evidenced by the popularity of the movie "Tropa da
Elite." He also praised Governor Serra's tough stance against
crime, pointing to the long and continuing period of tranquility in
Sao Paulo's streets and prisons since the 2006 PCC uprising, and
citing the Serra administration's success at preventing cell phone
use by state prisoners and the Governor's efforts to better control
the military and civil police and improve their performance. Septel
will report Matarazzo's perspectives on the national political scene
and prospects for the 2008 and 2010 elections. End Summary.


2. (SBU) CG called on the Assistant Mayor in his City Hall office
on October 22. Matarazzo wears two hats in the municipal
government, both appointed positions: he is Assistant Mayor
responsible for the downtown (Se or Cathedral) district, and is
Secretary in charge of coordination of Sao Paulo's 31 administrative

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districts ("subprefeituras"). Matarazzo, who served as a Minister
and later an Ambassador under President Fernando Henrique Cardoso
(FHC),went to work in the city government in January 2005 when his
friend and colleague Jose Serra assumed office as Mayor. When Serra
resigned in March 2006 to run for Governor, Matarazzo stayed on, in
part to help the new Mayor, Gilberto Kassab, find his way, and in
part to ensure that Serra would continue to exercise influence in
City Hall.

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RUNNING THE CITY
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3. (SBU) He appears to be carrying out these mandates with vigor.
He occupies the Vice-Mayor's office one floor above the Mayor's -
since Kassab replaced Serra, there is no incumbent Vice-Mayor.
Matarazzo serves as de facto chief operating officer for a city of
11 million residents and a budget of more than USD 10 billion.
Matarazzo referred to "Serra's different management model" as the
city's organizing principle and spoke as if he and Serra jointly
personify the municipal government, and as if Mayor Kassab were
merely an appendage or an afterthought. At one point he commented
that Kassab (see ref A),a member of the Democratic Party (DEM),"is
doing well in a PSDB administration," a reference to Serra's Social
Democracy Party of Brazil (PSDB). He estimated that about 80% of
City Hall officials are PSDB members.


4. (SBU) Matarazzo said he and Serra had picked the Assistant

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Mayors, trying to reform a machine system in which each Assistant
Mayor was beholden to a City Council member and was mainly
responsible for looking after that Councilman's friends and other
interests in the district. Under Serra (and now Kassab),he said,
Assistant Mayors are expected to shun corruption and favoritism and
deliver competent administration, and Matarazzo's job is to ensure
uniformity across the 31 districts. He claimed to have just shut
down three projects in the upscale Jardins neighborhood that were
being run by friends of his.

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NO NEED FOR STREET VENDORS
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5. (SBU) There are two kinds of street vendors ("ambulantes" or
"camelos" in Portuguese) in Sao Paulo, Matarazzo explained. Some
are employed by the PCC to sell stolen goods, while others sell
contraband smuggled into Brazil by the organization of master
smuggler Law Kim Chong, who recently completed a three-year prison
term for bribery. Of all the vendors in Sao Paulo, according to
Matarazzo, only about 4,000 have licenses and can be considered
legal, most of them working downtown or in adjacent neighborhoods.
Matarazzo plans to get rid of the licensing system by the end of the
year, because he believes the city has no need of street vendors.
"It's a racket," he said. He claims that 60% of street vendors are
Bolivian illegal aliens who sell pirated products and contraband,
and many of the rest are Nigerians who sell drugs.


6. (SBU) According to Matarazzo, in Marta Suplicy's last year as
Mayor (2004),authorities seized 30,000 pirated CDs in the city. In
2006, "I seized 1.5 million, and this year it will be over two
million." (Note: Post has not verified these numbers. End Note.)
He claimed to have gotten rid of all the street vendors in Santo
Amaro, the district in southern Sao Paulo where the Consulate is
located, and to have several times closed down the notorious "Stand
Center" on Avenida Paulista in the heart of the business district,
acknowledging that "when they can demonstrate their license is in
order and they're complying with the law," he has to let it re-open.
"I play the bad guy," he said with some relish, noting that he had
taken a similar approach in implementing Mayor Kassab's "Clean City"
program, which aims to reduce visual pollution by banning billboards
and restricting the number and size of store signs. Matarazzo
recently hired Delegado Mario Jordao Toledo Leme, a Consulate
contact who just stepped down as Chief of the state Civil Police, to
coordinate efforts to crack down on piracy and organized crime.


7. (SBU) Matarazzo indicated that the city is close to unveiling a
major program to clean up the notorious, aptly-named, run-down
"Cracolandia" downtown neighborhood (see ref B). There will be 25
new projects, he said, with a variety of incentives for businesses
to locate in the area, and the creation of 23,000 new jobs.
According to press reports, Mayor Kassab put on a hard hat last
Friday and operated a wrecker as the city began to demolish
condemned buildings in Cracolandia. It hopes to destroy 50 in a
two-block stretch of one of the worst streets by January and to
begin construction of several government office buildings.

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STATE VS. PCC
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8. (SBU) Matarazzo asserted that Governor Serra's hard-nosed
approach to governance has been particularly effective in fighting
crime. In contrast with previous administrations, he said, Serra
has shown "no weakness." Since he took office in January, there
have been no new PCC outbursts. Law enforcement authorities have
succeeded in disrupting cell phone conversations between PCC members
in prison and those on the outside. More importantly, Serra and his
Secretary for Public Security, Ronaldo Marzagao, have regained

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control over the military and civil police, which Matarazzo said,
without elaborating, had been lost during the administration of the
late Governor Mario Covas (1995-2001). Serra's approach to
combating crime is both preventive and repressive, Matarazzo said,
and is delivering results.


9. (U) Matarazzo deplored what he referred to as the "glamorization
of the favela" by media and the entertainment industry. This, he
said, explains the enormous popularity of movies like current hit
film "Tropa da Elite" (see ref C),about a special operations unit
in Rio de Janeiro's slums. "Everybody loves cops and robbers, good
guys and bad guys," he said, but the public still sometimes
underestimates the real damage done by urban organized crime
activity. "Today's pirated CD is tomorrow's stray bullet," he said
in justification of the city's no-nonsense approach to combating
piracy.

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COMMENT
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10. (SBU) Comment: Matarazzo - descendent of one of Brazil's
wealthiest and most prominent families - comes across as a
self-promoter, satisfied and comfortable with the authority he
derives from the Mayor and Governor and clearly enjoying its
exercise. Some of the successes he reports on both the city and
state levels may be exaggerated, and not all his claims can be
verified. But the city and some of its grittier neighborhoods are
noticeably cleaner, less disorderly, and more vendor-free than they
used to be (though traffic remains horrendous),and the PCC has in
fact been quiet, if not entirely quiescent, for more than a year.
One thing Matarazzo is not exaggerating, in our view, is his
closeness to Governor Serra. If Serra had not lost the 2006 PSDB
presidential nomination to Geraldo Alckmin, Matarazzo would have
been his senior campaign manager, and if Serra runs for president in
2010 and wins, he is almost sure to be named a Minister. Post will
report septel his comments on the national political panorama. End
Comment.


11. (U) This cable was cleared by Embassy Brasilia.

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