HomeWorldExclusive – Brazil's Odebrecht says anti-graft backlash threatens fines, public works

Exclusive – Brazil's Odebrecht says anti-graft backlash threatens fines, public works

By Mitra Taj and Teresa Cespedes

LIMA A top Latin America executive of Brazil’s Odebrecht SA [ODBES.UL] pushed back against calls to bar the company from countries where it has admitted to bribery across the region, warning “radical” reactions would jeopardise its ability to pay penalties.

Odebrecht is “struggling to survive” in the wake of a growing graft scandal in Latin America and wants to set an example by helping authorities and paying fines, Mauricio Cruz, the new president of Odebrecht’s investment arm in Latin America, Odebrecht Latinvest, said in an interview on Tuesday.

“The company is trying to cure itself of this sickness that affects many companies,” Cruz said. “Making a company that’s collaborating with authorities disappear is going to dissuade others, and in the end everything would go on as before.”

Since acknowledging that it doled out hundreds of millions in bribes to win public work contracts in Latin America, countries from Panama to Peru have cancelled key projects and barred the company from bidding on public works in the future.

Cruz said that Peru, where Odebrecht Latinvest is headquartered, has still not approved its November deal to sell its Olmos irrigation business to Brookfield Asset Management Inc (BAMa.TO). The lack of a government permit for land use has also frozen its Chavimochic III irrigation project in northern Peru, which was 80 percent finished when work stopped in December, Cruz added.

“Our priority is that public work projects don’t suffer,” said Cruz. “Here in Peru there’s a lot of pressure … and people start to take on radical attitudes.”

Some in Peru have called for authorities to seize Odebrecht’s assets and arrest employees, as was done in neighbouring Brazil.

Peruvian President Pedro Pablo Kuczynski said earlier on Tuesday that Odebrecht, which lost its $5 billion natural gas pipeline in Peru this week after missing a financing deadline, must sell off its remaining projects and leave the country – his toughest remarks for the company since the scandal broke.

It was unclear what Kuczynski’s government might do to force the company to leave.

Odebrecht has received more than five offers to buy its Chaglla hydroelectric project in northern Peru since putting it up for sale months ago, but the company wants to keep its other projects in the Andean country, Cruz said.

Odebrecht has said it is trying to sell 12 billion reais ($3.3 billion) in assets globally.

The family-run company was once one of the region’s biggest builders, but has since come to symbolize the kind of white collar corruption that many Latin Americans say is met with impunity.

Cruz said that fewer than 100 Odebrecht employees were involved in corruption out of 200,000 workers across the world last year. The company now has just 100,000 workers, Cruz said.

“There are a couple bad apples, but the rest are good, and that needs to be preserved,” Cruz said.

Cruz stressed that the leniency deal that Odebrecht struck with Brazil, the United States and Switzerland in December was designed to allow the company to continue its operations so that it can pay off the record $3.5 billion fine.

“No project in Brazil or the U.S. was halted … no business was forced to be sold. The company kept its right to survive, to exist, to keep working to pay its obligations,” Cruz said.

But that agreement did not include reparations for nine Latin American countries outside of Brazil where bribes were distributed, or details of who was part of its kickback schemes – stoking fears that little money will be left to pay fines across the region.

Cruz said he expected a final plea deal with Peruvian prosecutors to take between two to four weeks, and asked Peruvians to be patient in the meantime.

“We ask for forgiveness,” Cruz said.

(Reporting by Mitra Taj and Teresa Cespedes; Editing by Cynthia Osterman, Lisa Shumaker and Bill Rigby)


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