Odebrecht ‘strikes deal with Peru over graft scandal’
December 10 2018 01:14 AM
GULF TIMES
GULF TIMES

Reuters/Lima

Brazilian builder Odebrecht’s Peruvian unit has signed a deal with Peruvian authorities to pay a multimillion dollar fine that will allow it to continue operating in the country in return for providing evidence about officials it bribed, three sources related to the matter said.
Two sources said the fine would amount to approximately $182mn to be paid over 15 years.
It would also admit that it paid bribes to win six contracts related to four infrastructure projects, they added.
The third source said Odebrecht would pay a total of some $200mn and the deal would include reference to a fifth project for which it has already admitted paying bribes.
Odebrecht has been at the centre of Latin America’s largest graft scandal since admitting in a 2016 plea deal with US, Brazilian and Swiss authorities that it had bribed officials in a dozen countries to secure public works contracts, including $30mn in bribes in Peru.
The three sources told Reuters that the plea agreement with the Peruvian authorities was signed in the early hours of Saturday, after 12 hours of final negotiations between representatives of the prosecutor’s office, the attorney general’s office and Odebrecht in Peru.
The agreement allows Odebrecht to continue operating in Peru in exchange for its executives giving evidence against Peruvian officials and politicians who allegedly received bribes over almost 20 years.
Odebrecht’s representatives in Peru declined to comment.
After Brazil, Peru has seen the greatest fallout from the Odebrecht scandal.
All four of its most recent former presidents, and its opposition leader, are under investigation in connection with payments from Odebrecht. All deny wrongdoing.
In the agreement, Odebrecht accepts it paid bribes in relation to six contracts, two sources said.
Two involve the construction of a road linking Brazil and Peru during the government of former president Alejandro Toledo, between 2001 and 2006, while two more relate to the construction of Lima’s Metro under former president Alan García (2006-2011), they added.
Two more involved the extension of a coastal road in Lima and construction of a highway in the Andean city of Cusco.
A final contract, referenced by the third source and for which it has already admitted paying bribes, relates to a road project in the Ancash region north of Peru.
“The 15 years’ time frame was established for the payments because Odebrecht is technically bankrupt,” one of the sources said.
Peruvian prosecutors are expected to begin questioning several Odebrecht executives in Brazil in January, including the former head of the firm in Peru, Jorge Barata.
Meanwhile, the group insists it has turned a corner. “The most critical period has passed,” said the CEO of the Odebrecht conglomerate’s core engineering and construction division, Fabio Januario, 47, named to his post following the scandal.
He emphasised in an interview that the company is forging on with business, while acknowledging that some corruption cases were still hanging over the company from probes in Brazil, the US, Switzerland, the Dominican Republic, Guatemala, Panama and Ecuador.
He did not give details of those cases because “we have to maintain confidentiality.”
Odebrecht, however, is far from having recovered its sheen.
It lost its investment grade rating following the revelations that formed part of the sprawling Car Wash corruption probe in Brazil that has claimed numerous corporate and political scalps.
In December 2016, the US justice department announced Odebrecht S A and its petrochemical joint venture Braskem would pay a $3.5bn fine - a record in international corruption cases - after admitting to paying $788mn in bribes across 12 countries.
Brazilian officials discovered Odebrecht had been especially active in bribing politicians to help secure inflated construction contracts and to influence legislation.
Latin American governments are now wary of giving Odebrecht public contracts, with Colombia notably looking to block it from competing for tenders for 20 years.
And ratings agencies say the Brazilian company is burning through cash, reducing liquidity.
Januario, however, was upbeat, noting that 11 of 18 public works it was handling were outside Brazil. He said Odebrecht’s “transformation” should reassure public and private sector contractors, and asserted that cash-flow was “healthy.”
He also dismissed any suggestion of changing Odebrecht’s name to put distance between the company and its recent disgrace.
“Despite the problems, the brand is recognised for its competence, for its technical excellence,” he said. “Nobody combines cement, sand and steel and has more capability to carry out projects than our company.”



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