Odebrecht to name government officials bribed in Peru

By January 7, 2017

In cooperating with Peruvian prosecutors, Brazilian construction firm Odebrecht will name officials it paid $29 million in bribes between 2005 and 2014.

Odebrecht acknowledged last month in a deal with prosecutors in Brazil, the United States and Switzerland that it had paid $29 million in bribes to officials in Peru in its efforts to win billions of dollars in public contracts including the Southern Gas Pipeline.

Odebrecht’s cooperation in the graft scandal threatens to expose officials from Peru’s last three governments led by Alejandro Toledo, Alan Garcia and Ollanta Humala. Victor Garcia, one of the legislators on the congressional commission investigating the company, said calling each president to testify was “inevitable.”

Police in Brazil said last year that they had obtained evidence of bribes paid by Odebrecht to Ollanta Humala. Other documents linked to the Panama Papers show an associate linked to Alejandro Toledo may have received payments from Odebrecht.

Odebrecht agreed this week to make a voluntary deposit of $8.9 million to Peru’s treasury as an act of good faith. The payment is in addition to criminal fines Peru’s courts will later levy on the company. President Pedro Pablo Kuczynski said the deposit was not enough, and that it needed to deposit at least $26.7 million.

Cabinet chief Fernando Zavala said Odebrecht would be barred from participating in any future bids for contracts from the government.

Congress has requested that Odebrecht’s assets in Peru be frozen pending the civil penalty.

Investigations into Odebrecht corruption led to a stoppage of work on the $7.3 billion Southern Gas Pipeline. If the consortium licensed to build the pipeline cannot replace Odebrecht’s 55% stake by a Jan. 17 financing deadline, the contract will be annulled.

Last month Reuters reported that Odebrecht had struck a deal to sell its stake to Canadian builder, Brookfield. Bloomberg reported a week later that China National Petroleum Corporation was competing with Brookfield to purchase the stake.

However no deal has been announced less than two weeks from the financing deadline. Sempra Energy backed out of negotiations in November when the government refused to absolve the company if it learns Odebrecht committed acts of corruption in winning the license, which would void the contract under Peruvian law.

Under those circumstances, any buyer of Odebrecht’s stake would face the risk of losing the contract. Finance minister Alfredo Thorne on Friday reiterated on Radio Capital that the government would not make an exception to the corruption statutes and would hold a new public auction if the deadline passes without financing.

With its future in Peru doubtful, Odebrecht is trying to keep its projects currently under construction.