Odebrecht scandal

Odebrecht, a family-owned conglomerate with businesses in engineering, construction, real estate, chemicals and petrochemicals, agreed on Wednesday to pay at least $3.5 billion to Brazilian, U.S. and Swiss prosecutors. The US settlement was the largest penalty ever in a foreign bribery case. As part of its plea, Odebrecht admitted to paying officials to help secure lucrative construction contracts in 12 countries.

Experts on corporate bribery said the Odebrecht admissions of giving bribes in a dozen countries - including Venezuela, Guatemala, Peru, Ecuador, Argentina, Panama, Colombia, Dominican Republic, Angola and Mexico as well as Brazil - could subject Odebrecht to new investigations.

Nearly 80 Odebrecht executives and employees have agreed to turn state's witness as part of a leniency deal, and their testimony is expected to provide even more evidence about corruption in several nations.

Peru's president and a Venezuelan opposition leader said Odebrecht should explain the payments in their countries, while Ecuador opened an investigation and Colombia's government asked the attorney general's office to move forward with one.

"Prosecutors will have to bring people from Odebrecht here so that they explain who they paid this money to," Peruvian President Pedro Pablo Kuczynski told reporters, referring to the $29 million Odebrecht said it paid officials in the Andean nation between about 2005 and 2014, spanning three presidencies.

A culture of graft

Guilty pleas in a US court on Wednesday from Odebrecht and Braskem SA , the petrochemical company it jointly owns with Brazil's state-run oil company Petrobras, followed a nearly three-year investigation in Brazil. Odebrecht and Braskem were charged with conspiring to violate the U.S. Foreign Corrupt Practices Act (FCPA), which is aimed at deterring companies from bribing officials overseas.

Odebrecht said it paid $439 million outside Brazil, with the largest foreign bribes paid out in Venezuela, the Dominican Republic, and Panama. Brazilian prosecutors singled out Panama for not cooperating with their investigation.

Panama's presidency said it supported an investigation by local prosecutors that would "punish the companies and persons involved in these acts." Panama's national prosecutors' office said it was requesting information from the United States.

The widening graft scandal began in Brazil, with the discovery of massive kickbacks to Brazilian politicians related to their ability to approve contracts between state-run companies, mainly Petrobras, the mostly state-owned oil company, and engineering conglomerates like Odebrecht. That scandal, known under the rubric "Operation Car Wash," generated political upheaval and led to 80 convictions in Brazil. More than 50 politicians there are under investigation.

Roads, tunnels, subways, and Swiss bank accounts

Family-run Odebrecht blossomed during an economic boom in Brazil under former Presidents Luiz Inácio Lula da Silva and Dilma Rousseff, and its executives regularly rubbed shoulders with elites across Latin America. It became the region's largest engineering conglomerate, building tunnels and subways in major cities, and parts of a road across the Amazon jungle. The company now has over 180,000 employees, and operates in 23 countries.

CEO Marcelo Odebrecht (picture at top), a grandson of the founder, was sentenced to 19 years in prison in Brazil in March 2016 for his role in the company's habit of bribery. Brazilian prosecutors believe Odebrecht's way of doing business in Brazil, where it is accused of paying $2 billion in bribes in the past 15 years, was how it operated globally.  

Argentina and Peru had already opened probes into Odebrecht construction contracts for suspected kickbacks to former politicians. Prosecutors in Peru recently returned from an investigative trip to Switzerland, which has turned over information to Brazilian authorities on about 1,000 bank accounts suspected of being linked to the country's wide-ranging corruption scandal.

Brazilian police say Odebrecht may have paid bribes to former Peruvian President Ollanta Humala, and to various Argentine officials, including a former transportation secretary. Humala, who is already under investigation in an unrelated money-laundering case, denies wrongdoing. Kuczynski, who was not named in the Brazilian investigation but was prime minister or finance minister when Odebrecht agreed to bribe a high-ranking official in 2005, said he was not involved in any corrupt scheme.

Ecuador's attorney general, Galo Chiriboga, said on Thursday he had requested information from Brazil and the U.S. Justice Department. "We will find out who Odebrecht bribed," he told state-run media.

The head of Guatemala's special anti-corruption prosecutor's office told Reuters he had already been investigating Odebrecht bribes to a government official, and President Jimmy Morales said the government would check all Odebrecht contracts.

Mexico's government and state oil firm Petróleos Mexicanos, known as Pemex, said they would review the allegations, but Francisco Burquez, an opposition senator, argued that local officials were unlikely to do much because of the prevalence of corruption. "It's the government that covers it up," he said.

Pattern of corruption

The Argentine prosecutor handling the Odebrecht probe, Sergio Rodriguez, said Wednesday's plea deal would directly impact their case, which is looking at four Odebrecht projects, and he was trying to reach Brazilian prosecutors to find out more. "We have a preliminary case open," Rodriguez told Reuters. "We will need to incorporate the information from the [plea] agreement sooner or later."

Sources close to Odebrecht and Brazil's federal prosecutors have said it was mostly the work of the Brazilian investigators that led to the Odebrecht's record-setting corruption settlement. But if the settlement negotiated in Brasilia had been announced in Brazil, its legal system would have required that details remain sealed and not disclosed to the public, two sources close to the negotiation told Reuters on Thursday.

The hope among Brazilian officials is that by having the plea agreements with Odebrecht and Braskem made public, authorities in the other countries will now come under public pressure to follow up and investigate. "The corruption we've uncovered in Brazil was systematic and complex, and Odebrecht's central role in it is now obvious," Brazilian federal prosecutor Carlos Lima said earlier this year.

"We've found that wherever Odebrecht has worked, there has been this pattern of corruption, and we're carefully collaborating with several other countries on this [investigation]."

nz / (Reuters, dpa)