United Nations study indicates corruption in five major Correa-era projects

Jan 7, 2019

There is sufficient evidence of corruption in five major petroleum projects contracted during the administration of Rafael Correa to warrant a criminal investigation, according to a study conducted by a United Nations review team.

The abandoned Pacific Refinery near Manta

According to the team’s audits, carried out by experts from Spain, the U.S. and Great Britain, the projects cost more than double initial estimates and suffered from poor government oversight.

“Reviewing the financial records, the cost overruns amounted to far more than would be expected in projects of this kind and we strongly believe corruption may be involved,” the team said in its report to the Ecuadorian government. “The government paid almost $5 billion for projects that were budgeted for $2.2 billion. In addition to the extra costs, we discovered many questionable and suspicious practices in the administration of the contracts.”

The projects audited by the UN team were repairs to the oil refinery in Esmeraldas, the new Pacific Refinery near Manta, the Monteverde maritime terminal, the Pascuales-Cuenca pipeline and the Bajo Alto natural gas plant.

President Lenin Moreno announced on Friday that he had turned over the results of the audit to the attorney general’s office for investigation and possible criminal prosecution.

A pumping station on the Pascuales-Cuenca pipeline that delivers gasoline from a Guayaquil oil terminal to the southern Andean region.

“The findings of the audit are so shameful and scandalous that I have forwarded the results to the comptroller’s office and the attorney general to ensure that the crimes committed against the Ecuadorian people are investigated and litigated,” he said.

Among the five projects investigated, the most extreme case involved upgrades and repairs of the Esmeraldas Refinery, according to the audit team. Originally budgeted for $754 million, the final cost came to $2.23 billion. The team also reported that less than one percent of the project went out on public bid.

The project was managed by former Energy Minister Carlos Pareja who is currently serving a prison term on other corruption charges related to the Brazilian construction firm Odebrecht.

The massive Pacific Refinery also raised concerns with auditors. Originally a joint project between Ecuador and government of Venezuela, the refinery was never completed and today is a 200 hectare vacant lot in Manabi Province. According to Moreno, the project was abandoned because the government of Venezuela was unable to provide its share of the funding.

According to Moreno, $1.5 million was invested in the project. “The money was squandered. Imagine the good uses it could have gone for if it were not for decisions made by corrupt government officials.”

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