By Ueslei Marcelino and Alonso Soto
MANAUS/BRASILIA (Reuters) - Brazilian prosecutors on Thursday demanded a multi-million dollar private prison contract in Amazonas state be axed due to signs of corruption as the government blamed mismanagement for the country's bloodiest prison massacre in decades.
Amazonas' accounting court prosecutor, Carlos Almeida, said he found signs of payment irregularities in a contract the state signed with the Pamas consortium to manage all its prisons, including the Anisio Jobim penitentiary where 56 inmates died in an uprising this week.
The killings have raised questions about whether private companies should be running prisons in Brazil, especially in Amazonas where the inmate population has more than doubled since 2010.
The Pamas consortium, made up of Umanizzare Gestão Prisional e Serviços Ltda and LFG Locaçoes e Serviços Ltda, received about 400 million reais ($125 million) in 2016 to co-manage Amazonas' prisons, Almeida said.
That was after Umanizzare signed a contract with Amazonas in 2015 for the consortium to run state prisons for 27 years at an estimated cost of 205 million reais a year, and received a payment of 198 million reais at the time of signing, said Almeida.
The difference between the 2016 payment and the estimated cost of the contract raised prosecutors' suspicions, as did the original price tag which was well above similar agreements in other states, Almeida said.
"There are indications those payments could have been inflated," Almeida told Reuters, adding that he had warned state authorities about problems with the contract and recommended they not sign the deal.
Umanizzare and LFG did not respond to requests for comment.
Brazilian Justice Minister Alexandre Moraes said the private prison management model is not to blame for the massacre, but pointed to mistakes by the administrators of the prison, which had three times as many inmates as its capacity.
Moraes said Umanizzare failed to act on intelligence reports indicating that inmates planned a prison break during the holidays and that weapons were easily smuggled into the facility during a New Year's eve party.
The office of Brazil's Prosecutor-General said on Thursday it has launched an investigation into the conditions of the prison systems in Amazonas, Pernambuco, Rio Grande do Sul and Rondonia. The probe could lead to the federal takeover of those prisons, the office said in a statement.
WHO IS TO BLAME?
Umanizzare said in a Wednesday statement the state was responsible for the armed surveillance of the inmates, while the company was only responsible for cleaning, medical treatment and electronic surveillance.
But Moraes said at a news conference on Thursday that the company was also responsible for security at the prison.
The guards hired by the company were poorly trained and could be easily bribed because of their low salaries, according to a ministry report on conditions at the prison in 2016.
Amazonas Governor Jose Melo's press office said that the hiring of the consortium by the state was done through the correct legal means.
Melo denied reports that he received campaign funds from Umanizzare in 2014. His press office said that he received 300,000 reais in donations from another company, Auxilio Agenciamento de Recursos Humanos e Servicos Ltda, which provided prison management services until 2013.
Prosecutor Almeida said that Auxilio changed its name to Umanizzare that year, meaning both companies are controlled by the same family group.
In a response to further enquiries by Reuters, Melo's press office said the donations by Auxilio were legal and fully declared to electoral authorities.
Private management of prisons is relatively new in Brazil, with less than two dozen penitentiaries under the model.
Yet it remains an attractive alternative for heavily indebted state governments as Brazil remains mired in recession.
Watchdog groups say this week's massacre in Manaus shows profits and prison management cannot mix.
"An inmate is not a commodity and cannot be the object of a contract," said Marcos Fuchs, vice president of the National Council of Criminal and Prison Policies. "This model is ripe for corruption... Brazil should not follow in the steps of the United States."
The United States has more private prisons than any other nation, but the model has come under harsh criticism by human rights groups, who say it only gives incentive for more incarcerations to sustain profits. The United States has the world's biggest prison population.
In Amazonas, the number of inmates rose to 10,333 in 2016 from 4,979 in 2010, according to prison authorities, a rise Melo blamed on increased drug trafficking from neighboring Colombia and Peru, the world's top two cocaine producers.
Seven of Amazonas' 19 prisons are under private management.
(Reporting by Alonso Soto; Editing by Andrew Hay and Alan Crosby)