Odebrecht, the corruption scandal spreading through Latin America

The Brazilian media operation, known as 'Lava Jato' ('Car Wash' in Portuguese), has Odebrecht as its main corrupting agent, which is supposed to have such important figures in Latin American politics on its payroll as former Brazilian presidents Lula (2003-2011) and Michel Temer (2016-2018); and those of Peru, Alejandro Toledo (2001-2006), Ollanta Humala (2011-2016) and his ubiquitous wife Nadine Heredia, and Kuczynski.

It was late in 2016 when some senior executives of the Brazilian firm Odebrecht acknowledged before the U.S. courts that bribes worth more than 700 million euros (US$772.62 billion) had been made throughout the region. Stock image
It was late in 2016 when some senior executives of the Brazilian firm Odebrecht acknowledged before the U.S. courts that bribes worth more than 700 million euros (US$772.62 billion) had been made throughout the region. Stock image

The Brazilian construction company Odebrecht has made corruption almost an institutional issue in more than a dozen Latin American countries, in what is already one of the largest and most mediatic investigations against the purchase of favors in the entire subcontinent, with former presidents implicated, such as the Brazilian Luiz Inácio Lula da Silva, the Peruvian Pedro Pablo Kuczynski or the Paraguayan Horacio Cartes.

It was late in 2016 when some senior executives of the Brazilian firm acknowledged before the U.S. justice system that bribes worth more than 700 million euros (US$772.62 billion) had been made throughout the region in order to win contracts for more than 100 projects throughout the region, from the Dominican Republic to Argentina.

The Brazilian media operation, known as 'Lava Jato' ('Car wash' in Portuguese), has Odebrecht as its main corrupting agent, which allegedly would have on its payroll such important figures in Latin American politics as former Brazilian presidents Lula (2003-2011) and Michel Temer (2016-2018); Peru's Alejandro Toledo (2001-2006), Ollanta Humala (2011-2016) and his ubiquitous wife Nadine Heredia, and Kuczynski.

Investigations have even been opened to find out if the election campaigns of other former presidents such as Panama's Ricardo Martinelli or Colombia's Juan Manuel Santos were financed, or to discover, for example, if Cartes (2013-2018), who is the subject of an arrest warrant, had anything to do with a money-laundering scheme linked to 'Lava Jato'.

The corruption cases in which Odebrecht has woven its networks have ended the careers of politicians and businessmen. The case of former Peruvian President Álan García (2006-2011), who chose to shoot himself in the head when he was about to be arrested, stands out for its tragic nature. He left a note defending his innocence and said he was leaving his body "as a sign of contempt" for his opponents.

Also in Peru, Kuczynski became president in 2016, but two years later, he was forced to step down after being accused of criminal association and money laundering in connection with the Lava Jato case. He is currently serving a 36-year sentence under house arrest.

It is in the Andean country where the Brazilian company seems to have woven its most extensive networks of corruption, not counting Brazil, since in addition to those already mentioned it is also being investigated for its alleged involvement Keiko Fujimori, the daughter of former president Alberto Fujimori (1990-2000).

The head of Fuerza Popular, Peru's main opposition party, was released from prison last November after almost a year in pre-trial detention, awaiting a final decision by the courts on whether to convict Fujimori of money laundering for allegedly receiving bribes from the Brazilian construction company.

Five years ago, Brazil's Public Prosecutor's Office was investigating a corrupt plot related to the oil company Petrobras, 64% of which belongs to the Brazilian State, when it began to focus its investigations on Marcelo Odebrecht, former president of the construction company, who had been financing Brazilian political parties in exchange for public contracts.

The relationship with Petrobras was uncovered in 2014, after Brazilian authorities discovered a money-laundering exchange house at a gas station in the capital, Brasília.

Thanks to the testimonies provided by several businessmen of the construction company, in exchange for criminal benefits, the Brazilian Public Prosecutor's Office began to arrest numerous politicians of the country, who in turn became informants to avoid entering prison or greater penalties.

The Workers' Party (PT) was the most prominent political group, with hundreds of its members arrested. The judicial authorities denounced that Odebrecht and other large construction companies had shared out the millionaire concessions of Petrobras in exchange for money for the then ruling party and its allies.

However, there are some voices that denounce that the investigations are based only on the denouncements, with no other evidence than the same declarations of people who when they gave testimony were being investigated for corruption and agreed to speak in exchange for favorable treatment, not only in Brazil, but also in other countries of the subcontinent.

In this sense, the PT denounced that Lula was suffering "political persecution" since it was made public that he aspired to run in the 2018 elections, to which he could not attend after being arrested, and finally convicted. The winner of these presidential elections was the ultra-conservative Jair Bolsonaro.

Bolsonaro elected Judge Sergio Moro, one of the most prominent figures of 'Operation Lava Jato', as Minister of Justice. Together with his prosecutors, Moro arrested several PT politicians on charges of collecting bribes to finance the formation.

Among them is former Finance Minister Antonio Palocci, one of the few accused of getting rich off these bribes, and precisely the main witness for the prosecution against Lula. Like others involved, Palocci sealed a collaboration agreement in exchange for information that could implicate the former president and other members of the PT.

Although uncovered years ago, the Odebrecht case continues to bring shocking revelations that make it impossible to predict when it will end up paying off at the political level, in a regional context of agitation over the protests that have erupted in several countries with allegations ranging from social inequality to corruption.

By Mexicanist Source Europa Press

IMPACT ON WORK IN PROGRESS AND EMPLOYMENT

The arrest of Marcelo Odebrecht on June 19, 2015, anticipated the chronicle of an announced fall. The then president of the largest construction company in Latin America was being investigated for alleged involvement in the Petrobras case.

The Brazilian construction company Odebrecht acknowledged having paid bribes in Brazil, Mexico, Argentina, Angola, Colombia, the Dominican Republic, Ecuador, Guatemala, Mozambique, Panama, Peru, and Venezuela.

According to the document distributed by the Department of Justice of the United States, with these payments the company obtained worldwide contracts of 12 billion dollars between 2001 and 2016.

The consequences will not only hit the South American giant Brazil but several countries in the region, including Colombia, Venezuela, Peru or Panama, will continue to be concerned about the development of the process and evaluate the consequences it will entail.

The first to react was the vice president of Colombia. Germán Vargas Llera said that "any international condemnation of bribery" would disable the hiring and execution of construction work in the Andean country for 20 years. 

Odebrecht was the seventh construction company in Colombia with an income of about 150 million dollars and was in charge of five works, two of the most important ones that were developed in the country: the navigability of the Magdalena River, between Barranquilla and Puerto Salgar, It covers 908 kilometers of river and the construction of a sector of the Ruta del Sol. For both projects, a little more than 2 billion 200 million dollars were budgeted.

In the case of Venezuela, the relationship with Odebrecht comes from afar. Since it started work in the State of Zulia 23 years ago, the company, which had 12,000 employees in the country, was growing steadily. Chávez distrusted the Venezuelan businessmen and preferred to favor foreigners. Frequently, the late president mentioned Brazilians as model entrepreneurs of autonomous national development.

In Venezuela, the following projects were in charge of Odebrech: the Nigale Bridge or the second bridge over Lake Maracaibo; line 5 of the Caracas metro; the Mercosur bridge or third bridge over the Orinoco river; the subway between Caracas and Guatira and the metro Caracas-Los Teques. The works had budgets that together amounted to 5 billion dollars.

With the change of presidential management, Ecuador developed the audits of Odebrecht contracts and shortly after the general prosecutor of Peru, Pablo Sánchez, assured that a delegation of prosecutors from the Andean country will travel to Brazil to conduct a series of investigations and collect data on possible illicit concessions. The question ended with a deposed president and the suicide of a former president (Alan García).

The focus was on alleged bribes from Odebrecht executives to inflate the cost of a highway linking the Brazilian Amazon with the Peruvian Pacific ports that was built between 2005 and 2011, under the governments of Alejandro Toledo and Alan García. 

The relationship between García and Odebrecht was marked by the Christ of the Pacific, a replica of the Corcovado of Rio de Janeiro valued at $ 830,000 that was donated by the Odebrecht Association. From the company, they assure that the donation went to the country, not to the president, and defend that this was done through a public act and with knowledge of the authorities.

Odebrecht has developed multiple projects in Peru for 35 years, where it has 15,000 workers, 99% of the Peruvian. According to the construction company, the projects in which it has participated have led, in the last 10 years, 13 billion 257 million of private investment and concessions for an equivalent of 1 billion 819 million dollars of public investment.

The Odebrecht subsidiary in Argentina has eight works in progress in different areas, awarded between 2005 and 2013, most of them integrating consortiums in different transitory unions of companies (UTE) with other firms. Odebrecht Argentina has been present in the country since 1987.

The company of Brazilian origin works or worked in numerous projects: laying gas pipelines, purifying water, obtaining potassium and burying the Sarmiento railroad, among other projects, many of them tied to the financing obtained by the company in the BNDES, the Brazilian Development Bank. In Argentina, the bribes reported for the works amounted to 278 million dollars.

Where the interests of Odebrecht seem to be safe is in Panama. Despite widespread allegations of corruption and overpricing, the Brazilian construction company led the consortium in charge of building the second subway line of the Panamanian capital, worth 1 billion 857 million dollars. The Spanish company Fomento, Contratas y Construcciones (FCC) participates with the Brazilian company.