Chronology

1992, January: Work starts on the building of the Regional Labor Tribunal Court house in São Paulo under the supervision of Nicolau dos Santos Neto. A total of thirty bids were received. The contract was awarded on 21 February 1992 to a consortium known as Incal Incorporações Ltda, made of Monteiro de Barros Investimentos S/A (whose partners are  Fàbio Monteiro de Barros Filho and José Eduardo Corrêa Teixeira Ferraz) and Grupo OK Construções e Incorporações S/A (owned by Luiz Estevão de Oliveira). The award of the contract to Incal was unusual as it emerged later that this company did not participate in the bidding process. Before the contract was signed Nicolau allowed several payments to Incal. In the end the amount of those payments was about 36 million UFIR (Brazilian Tax Reference Units).

1998: US$165 million had been paid, yet official estimates showed that only US$44 million had actually been spent on the project.

In April 1998 work stopped when just 64.15 percent of the construction had actually been done, and Incal had received 98.7 percent of the project funding. Judge Nicolau dos Santos Neto appeared before a congressional commission to deny any wrong doing.

It emerged that the national treasury paid the money for the construction of the tribunal to Incal, which then passed it down to Grupo Ok. Between 1992 and 1998 Incal Incorporações paid US$ 34,286,217.5 to the Grupo OK.

1999: The Department of Justice informed the Brazilian Court of Audit (TCU) that the deadline for the construction of the Tribunal had passed but the work was not completed. TCU conducted an audit and on 28 July 1999 determinated that the partners of  Incal Incorporaçoes Ltda. (Fabio Monteiro de Barros Filho and Jose Eduardo Correa Teixeira Ferraz), Nicolau and others should pay back the money to the National Treasury. 

1999: A congressional inquiry revealed that Nicolau Dos Santos Neto had a role in the irregularities.  1 Other people linked to the irregularities are:

• Maria da Glória dos Santos (Nicolau's wife)
• Fàbio Monteiro de Barros Filho
• José Eduardo Correa Teixeira Ferraz
• Luiz Estevão de Oliveira Neto (propriator of OK Group or Grupo Ok)
  
• Antonio Carlos da Gama e Silva
• Gilberto Morand Paixão

1999, April: Further investigations led to more implicating evidence to which Judge Nicolau dos Santos Neto responded by by vanishing for several months. It was rumoured that he was living in Europe, the United States of America, Argentina, Uruguay or somewhere in Sao Paulo, protected by one of his powerful friends. 2

1999, June: Brazillian senate expelled one of its members who was believed to have been involved in the fraud.

1999, July: Allegations linked the corruption in this case to the president's office. It was reported that a former secretary general to the president, Eduardo Jorge Caldas Pereira (between 1995 to 1998) had at least 117 telephone conversations with Nicolau dos Santos Neto during the period the alleged theft took place. The telephone calls were most numerous in the days leading up to the release of new funds from the National Treasury for the construction project. This connection was dismissed by the Finance and the Planning and Budget ministries. Then it was argued that the executive branch of government does not interfere in resources earmarked for the judicial branch. 3

November 1999 - Reports showed that out of the US$233 million earmarked for the project, US$165 million had been paid, representing 72 percent of the total cost, yet officials estimated that only US$44 million had actually been spent on the project. It emerged that Neto operated 17 bank accounts in 11 countries, and was accused by his former son-in-law of having US$4.5 million in offshore accounts. Other properties included US$1.6 million apartment in Miami, a BMW, a Porsche, two Mercedes, and many other items that were beyond Nicolau's declared means, that is, his monthly salary of US$3,500.  Santos Neto denied any connection to diversion of funds, and claimed instead that he had inherited his fortune from his uncle, a tailor. 4

2000, June: Senator Luiz Estevao of Sao Paulo, a member of the government coalition, was impeached on being found guilty of violating parliamentary decorum, stripped of his parliamentary immunity,and then arrested on charges that a construction company he owned pocketed the bulk of the missing money. 5

2000, Decembeer: Nicolau surrendered himself to the police after spending 9 months in hiding. He was later convicted of being the 'king pin' in the 'cost over run' and sentenced to 26 years in prison. He also paid a fine of R$1.2 million. 

2002, June 26: Santos Neto is sentenced to an eight-year prison term for his role in the embezzlement scheme, but Estevão is acquitted. 6  The sentences are in respect of  five years for money laundering, and three years for trafficking of influence. A fine of 5 minimum wages for 320 days (Criminal Proceeding No. 2000.61.81.001198-1). Furthermore, as an effect to the money laundering conviction, the sentence confiscated all Neto's assets belonging to account Nissan n. 51706, held at Bank Santander in Geneva, Switzerland.  Mr. Nicolau's sentence was appealed to the Federal Court of Appeals of the 3rd Region, whereas the decision was challenged not only by the defendant but also by the Prosecution.

2003, July: Judge ordered that Nicolau dos Santos Neto serve his sentence under house arrest due to his precarious health.  But, another judge reversed this decision on the groound that his health was not precarious.  On 24^th Jan., Nicolau was jailed at the Federal Police unit in Sao Paolo, awaiting a vacancy in the SP state prison system. 7

2005, April 4: The Federal Court of Appeals upheld the judgment of the trial court, but also increased the sentence to 14 years imprisonment. The fine was adjusted upwards to R$600,000.00 and the confiscation order was also upheld.

2005, August 1: Federal Court of Appeals deny Mr. Neto's appeal for clarification of said decision.

2006, May 3: The Federal Court of Appeals upheld the judgment of the trial court and increased the sentence imposed to Mr. Nicolau dos Santos Neto to 26 years and 6 months in prison, in addition to the pre-established fine and the confiscation order.

2007, January 29:  Federal Public Prosecutor's Office issued a legal opinion against Neto's appeal, noting that all legal and constitutional aspects were observed throughout the criminal proceedings.

2008, March 4: Neto's legal team petitioned the court to examine the files claiming financial difficulties of the defendant, his difficulties to travel, and the complexity of the case. The request was granted by the court, but its extension, also requested in March, was denied as it had no legal provision.