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World Bank debars Odebrecht for fraud in Colombia

February 6, 2019

February 1, 2019 (Global Construction Review)

The World Bank has debarred Brazilian construction giant Construtora Norberto Odebrecht SA for fraudulent and collusive practices in Colombia, meaning it cannot work on World Bank-financed projects anywhere for three years.

Odebrecht paid commercial agents for confidential information during the prequalification and bidding on a $487m flood control and environmental project on the Bogota River, and tried to influence tendering on the project, for which the World Bank approved a $250m loan in December 2010.

The ban will complicate Odebrecht’s attempts to recover from fines and loss of work at home and abroad arising from its central role in a major corruption scandal that erupted in Brazil in 2014.

The debarment could have been longer but Odebrecht agreed to a settlement agreement under which the company acknowledged responsibility and agreed to set up an integrity compliance programme, the World Bank said.

The company must encourage corruption whistleblowers, produce documentation classified as privileged, and coordinate internal investigations with the bank’s anti-fraud unit, the Integrity Vice Presidency.

Odebrecht was at the centre of the sensational “Operation Car Wash” investigation in Brazil, in which construction companies were found to have formed a cartel in 2003 to overcharge national oil company Petrobras for building contracts, and to have paid some of that illicit cash back to Petrobras executives and politicians from several parties.

Marcelo Odebrecht, the company’s former chief executive, was sentenced to 19 years in prison in 2016 for paying more than $30m in bribes, but the probe led to the arrest of hundreds of others, including politicians and executives from other companies, and cascaded out to other Latin American countries.

In April 2017 Odebrecht was ordered to pay $2.6bn in fines for paying about $788m in bribes to officials in 12 countries, mostly in Latin America, to secure contracts.

In 2018 Odebrecht secured $699m from its lenders in order to stay afloat, Reuters reported, adding that the company has been in talks with countries in the region, seeking to be allowed to resume bidding for work.

2019-02-06T14:44:56+00:00