(Bloomberg, Ezra Fieser, 15.Aug.2018) – Odebrecht SA, the Brazilian construction giant, paid at least $32.5 million in bribes in Colombia — three times the amount it confessed to almost two years ago when it admitted to carrying out one of the largest graft schemes in corporate history, Colombia’s attorney general said.
In an interview in his Bogota office, Attorney General Nestor Humberto Martinez described a deeper and more pervasive scandal than the one Odebrecht admitted to in a 2016 plea agreement with Brazilian and U.S. authorities. That agreement listed $11.1 million in bribes paid to win two Colombian infrastructure projects as part of a plot that reached a dozen countries in the Americas and Africa. Martinez said the $11.1 million came from Brazil and the rest from Colombian contracts, making a new total of $32.5 million.
Odebrecht bribed dozens of Colombian officials and executives to win six government contracts from 2009 to 2014, Martinez said. Almost three dozen people have already been indicted and five convicted, including an ex-senator and a former deputy minister. The prosecutor’s office has also submitted evidence to the supreme court against an additional nine politicians.
The exceptional global scope of Odebrecht’s bribery emerged in 2016 when the company reached a $3.5 billion settlement with U.S., Brazilian and Swiss authorities. It admitted to having paid $788 million in a dozen countries for more than 100 contracts in what the U.S. Justice Department called the largest foreign graft case in history.
The company has since reached settlements with several Latin American governments, including the Dominican Republic, Peru and Panama. In Colombia, the case has dragged on and Odebrecht has implied that the delay is a result of self-protective foot-dragging. In addition, Odebrecht is seeking compensation of as much as $1.3 billion for the work it did on the nation’s biggest highway before the bribery scandal stopped it. Hearings in that case have been delayed until Sept. 11.
Martinez said the probe has taken so long because it’s complex and deep, and Colombia wanted to do its own investigation. Alone in the region, Colombia rejected offers from Brazil to share evidence because they came with the condition that neither Odebrecht nor its executives could be implicated in the crimes.
“Colombia was the only country that did not agree to receive evidence from the Brazilian prosecutors,” he said. “That’s why we were able to get this investigation to the point where it is. That’s why there are three Brazilians indicted with arrest orders pending.”
The three — Amilton Hideaki Sendai, Eder Paolo Ferracuti and Marcio Marangoni — all held positions with Odebrecht or a subsidiary and are believed to be in Brazil, prosecutors said.
Calls to Odebrecht Colombia seeking comment have gone unanswered.
Conflict of Interest?
Martinez, a cabinet member in three Colombian governments, has been accused of conflict of interest in the case because before becoming attorney general in 2016, he was a key lawyer for Grupo Aval, the parent company of Odebrecht’s Colombia partner on one of its contracts. The implication has been that he’s protecting his previous employer.
Grupo Aval, Colombia’s biggest banking group and controlled by Luis Carlos Sarmiento Angulo, partnered in 2010 with Odebrecht to build a section of a 1,000-km (621-mile) road called Ruta del Sol connecting the Bogota region with the Caribbean coast. It did so through Corficolombiana SA, which it controls. A family-held construction company, Solarte Group, also took a minority stake.
Martinez rejected the conflict-of-interest accusation. He said that on the two occasions that Odebrecht cases came across his desk, he recused himself, with court permission. He showed a copy of one such court decision, dated June 21. Martinez said he would similarly step aside for any future Odebrecht cases.
Maria Paulina Riveros, the deputy attorney general who has stood in for Martinez, said one of those arrested is Jose Elias Melo, former chief executive officer of Corficolombiana. The trial against Melo, who is under house arrest, is expected to begin this month.
“It surprises me that there’s a perception of different treatment for those linked to the case,” Riveros said. Prosecutors have charged “well-known people such as Mr. Melo, as well as members of congress.”
Riveros said the case against Odebrecht is in its final stretch, and most of the investigation should conclude before the end of the year.
Odebrecht was building Ruta del Sol and had five other contracts in Colombia. Prosecutors said it set up shell companies that submitted invoices for work they never did, used the proceeds to pay expenses and middle men, and channeled whatever was left over into bribes.
The scheme began to unravel when prosecutors received cooperation from former Senator Otto Nicolas Bula Bula and ex-Deputy Minister of Transportation Gabriel Garcia Morales, both of whom were charged.
“It was like a chain,” Riveros said. “When they began to cooperate, all of these other lines of the investigation started to unfold.”
— With assistance by Matthew Bristow, and Jose Enrique Arrioja