Massive Odebrecht bribery scandal implicates Ecuador and 11 other Latin American countries

Dec 23, 2016 | 10 comments

Brazilian construction giant Odebrecht SA’s admission to U.S. prosecutors that it paid hundreds of millions of dollars in bribes to win lucrative infrastructure contracts is reverberating across Latin America, where the company has built some of the region’s biggest projects during the last 15 years.

Odebrecht headquarters in Brazil.

Odebrecht told prosecutors that it paid $35.5 million to officials in Ecuador.

In total, Odebrecht paid nearly $800 million in bribes in 12 countries since 2001, providing the company with $3.34 billion in profits, according to an anti-corruption settlement released by the U.S. Department of Justice this week.

Excluding Brazil, half of that illicit money was used to pay off officials in nine Latin American nations, from market-friendly Mexico to socialist Venezuela.

“This is going to be a political earthquake in many of these countries,” said José Ugaz, a former Peruvian prosecutor and chairman of Transparency International, the Berlin-based watchdog group, who believes the revelations represent the tip of a broader scheme.

The San Francisco hydro electric plant in 2007

Although Ecuador terminated all government contracts with Odebrecht in 2008 following a dispute over work on the San Francisco Hydroelectric Power Plant in Tungurahua Province, several government officials were named by Odebrecht as having received illegal payments. The names of those officials have not yet been released.

President Rafael Correa’s administrative secretary said Thursday that although the administration had limited exposure to Odebrecht, it is unclear whether current officials took bribes before Correa took office in 2007. Alexis Mera said the government will prosecute anyone it found to have been involved in receiving bribes, including those who worked on the San Francisco hydro project.

On Thursday, Colombia’s government reacted by saying it could void infrastructure contracts that are found to have been won through illegal means after the document said Odebrecht paid $11 million in bribes. Panama President Juan Carlos Varela called for prosecutors to investigate all of Odebrecht’s contracts and prosecute as warranted.

In Venezuela, where nearly $100 million in bribes were doled out, the opposition-controlled Congress moved to begin investigating Odebrecht’s contracts, even as President Nicolás Maduros’s government remained silent. And in the Dominican Republic, prosecutors asked U.S. authorities to share information after the settlement said Odebrecht spent $92 million to win contracts.

The scandal created a political crisis in Brazil that led to the impeachment of former President Dilma Rousseff. In the wake of Wednesday’s settlement, leaders of some other countries denied wrongdoing.

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